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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>As filed with the Securities and Exchange Commission
on June 28, 2022 </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>Registration No. 333-&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</b></p><div>

</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 2pt solid; border-bottom: Black 1pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>UNITED STATES<br/>
SECURITIES AND EXCHANGE COMMISSION<br/>
Washington, D.C. 20549</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Form <ix:nonNumeric contextRef="c0" name="dei:DocumentType">S-1</ix:nonNumeric></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>REGISTRATION STATEMENT<br/>
UNDER THE SECURITIES ACT OF 1933</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><ix:nonNumeric contextRef="c0" name="dei:EntityRegistrantName"><b>Raphael Pharmaceutical Inc.</b></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Exact name of registrant as specified in its charter)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt-sec:stateprovnameen" name="dei:EntityIncorporationStateCountryCode"><span style="font-size: 10pt"><b>Nevada</b></span></ix:nonNumeric></td> <td style="width: 2%; text-align: center">&#160;</td> <td style="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-size: 10pt"><b>2833</b></span></td> <td style="width: 2%; text-align: center">&#160;</td> <td style="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-size: 10pt"><b>26-0204284</b></span></td></tr> <tr style="vertical-align: top"> <td style="text-align: center"><span style="font-size: 10pt">(State or other jurisdiction of <br/>
incorporation or organization)</span></td> <td style="text-align: center">&#160;</td> <td style="text-align: center"><span style="font-size: 10pt">(Primary Standard Industrial <br/>
Classification Code Number)</span></td> <td style="text-align: center">&#160;</td> <td style="text-align: center"><span style="font-size: 10pt">(I.R.S. Employer<br/>
Identification Number)</span></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>4 Lui Paster<br/>
Tel Aviv-Jaffa, Israel 6803605<br/>
Telephone: (972) 52-775-5072</b><br/>
(Address, including zip code, and telephone number, including area code, of registrant&#8217;s principal executive offices)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Shlomo Pilo</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Chief Executive Officer<br/>
4 Lui Paster<br/>
Tel Aviv-Jaffa, Israel 6803605<br/>
Telephone: (972) 52-775-5072</b><br/>
(Name, address, including zip code, and telephone number, including area code, of agent for service)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b><i>Copies to:</i></b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 100%">
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Oded Har-Even, Esq.</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Sullivan &amp; Worcester LLP<br/>
    1633 Broadway<br/>
    New York, New York 10019<br/>
    Telephone: (212) 660-3000</b></p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Approximate date of commencement of proposed sale
to the public: <b>As soon as practicable after the effective date of this registration statement.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.
<span style="font-family: Times New Roman, Times, Serif">&#9746;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. <span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. <span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is a post-effective amendment filed
pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. <span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of &#8220;large accelerated filer,&#8221; &#8220;accelerated filer,&#8221; &#8220;smaller reporting company&#8221;
and &#8220;emerging growth company&#8221; in Rule 12b-2 of the Exchange Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; width: 20%"><span style="font-size: 10pt">Large accelerated filer </span></td> <td style="white-space: nowrap; width: 30%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td> <td style="white-space: nowrap; width: 25%"><span style="font-size: 10pt">Accelerated filer </span></td> <td style="white-space: nowrap; width: 25%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap"><span style="font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory">Non-accelerated filer</ix:nonNumeric> </span></td> <td style="white-space: nowrap"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></td> <td style="white-space: nowrap"><span style="font-size: 10pt">Smaller reporting company </span></td> <td style="white-space: nowrap"><ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:EntitySmallBusiness"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></ix:nonNumeric></td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap">&#160;</td> <td style="white-space: nowrap"><span style="font-size: 10pt">Emerging growth company </span></td> <td style="white-space: nowrap"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:EntityEmergingGrowthCompany"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></ix:nonNumeric></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If an emerging growth company, indicate by check
market if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. <span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that
specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities
Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant
to said Section 8(a), may determine.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="margin: 0pt">&#160;</p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="color: Red"><b>The information in
this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting
an offer to buy these securities, in any jurisdiction where the offer or sale is not permitted.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="color: Red">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 34%"><span style="font-size: 10pt; color: Red"><b>PRELIMINARY PROSPECTUS</b></span></td>
    <td style="width: 33%; text-align: center"><span style="font-size: 10pt; color: Red"><b>SUBJECT TO COMPLETION</b></span></td>
    <td style="width: 33%; text-align: right"><span style="font-size: 10pt; color: Red"><b>DATED JUNE 28, 2022</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Raphael Pharmaceutical Inc.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Resale of 1,667,393 Shares of Common Stock </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus relates to
the resale by the selling security holders named in this prospectus or their permitted transferees (the &#8220;Selling Securityholders&#8221;)
of up to 1,667,393 shares of our common stock, par value $0.01 per share (&#8220;Common Stock&#8221;) issued in one or more private placements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The shares of Common Stock
that may be sold by the Selling Securityholders are collectively referred to in this prospectus as the &#8220;Offered Securities.&#8221;
We will not receive any of the proceeds from the sale by the Selling Securityholders of the Offered Securities. See &#8220;Use of Proceeds&#8221;
beginning on page 29 &#160;of this prospectus. We will bear all costs, expenses and fees in connection with the registration of the
Offered Securities, including with regard to compliance with state securities or &#8220;blue sky&#8221; laws. The Selling Securityholders
will bear all commissions and discounts, if any, attributable to their sale of the Offered Securities, except as otherwise expressly set
forth under &#8220;Plan of Distribution&#8221; beginning on page 62 of this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus describes
the general manner in which the Offered Securities may be offered and sold. If necessary, the specific manner in which the Offered Securities
may be offered and sold will be described in one or more supplements to this prospectus. Any prospectus supplement may add, update or
change information contained in this prospectus. You should carefully read this prospectus, and any applicable prospectus supplement before
you invest in any of our securities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
may offer, sell or distribute Offered Securities publicly or through private transactions. If the Selling Securityholders use underwriters,
dealers or agents to sell Offered Securities, we will name them and describe their compensation in a prospectus supplement. The price
to the public of those securities and the net proceeds the Selling Securityholders expect to receive from that sale will also be set forth
in a prospectus supplement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No public market currently
exists for our Common Stock. We have applied to have our Common Stock quoted on OTC Pink Market, and upon approval of such application,
we intend to have our Common Stock quoted on the OTCQB operated by OTC Markets Group, Inc. We cannot assure you that our Common Stock
will ever be quoted on the OTC Pink Market or OTCQB. Until such time that our Common Stock is quoted on the OTC Pink Market, OTCQB or
another existing market, if ever, the Common Stock to be sold by the Selling Securityholders from time to time will be at a fixed price
of $2.70 per share and thereafter at prevailing market prices or privately negotiated prices. Consequently, if you purchase Common Stock
in this offering you may not be able to sell your Common Stock in any organized marketplace and you may be limited to selling your Common
Stock privately. Accordingly, an investment in our Common Stock is an illiquid investment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>See &#8220;Risk Factors&#8221;
beginning on page 6</i></b>&#160;<b><i>of this prospectus for a discussion of information that should be considered in connection with
the ownership of our securities.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>The date of the prospectus is &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;,
2022.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="margin: 0pt">&#160;</p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>TABLE OF CONTENTS</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; width: 90%"><a href="#a_001"><span style="font-size: 10pt">PROSPECTUS SUMMARY</span></a></td>
    <td style="vertical-align: top; width: 1%">&#160;</td>
    <td style="vertical-align: bottom; width: 9%; text-align: center"><span style="font-size: 10pt">1</span></td></tr>
  <tr>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top"><a href="#a_002"><span style="font-size: 10pt">RISK FACTORS</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">6</span></td></tr>
  <tr>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top"><a href="#a_003"><span style="font-size: 10pt">CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">28</span></td></tr>
  <tr>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top"><a href="#a_004"><span style="font-size: 10pt">USE OF PROCEEDS</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">29</span></td></tr>
  <tr>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top"><a href="#a_005"><span style="font-size: 10pt">MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">30</span></td></tr>
  <tr>
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    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
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    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">59</span></td></tr>
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    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
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    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">60</span></td></tr>
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    <td style="vertical-align: top">&#160;</td>
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    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">61</span></td></tr>
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    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">62</span></td></tr>
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    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
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  <tr style="background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top"><a href="#a_013"><span style="font-size: 10pt">DESCRIPTION OF SECURITIES</span></a></td>
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    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">64</span></td></tr>
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    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
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  <tr style="background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top"><a href="#a_014"><span style="font-size: 10pt">MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS</span></a></td>
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    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">66</span></td></tr>
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    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
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  <tr style="background-color: rgb(204,238,255)">
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    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">70</span></td></tr>
  <tr>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
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    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">70</span></td></tr>
  <tr>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top"><a href="#a_017"><span style="font-size: 10pt">WHERE YOU CAN FIND ADDITIONAL INFORMATION</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">70</span></td></tr>
  <tr>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top"><a href="#a_018"><span style="font-size: 10pt">INDEX TO FINANCIAL STATEMENTS</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">F-1</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should rely only on the
information contained in this prospectus or a supplement to this prospectus. We have not authorized anyone to provide you with different
information. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities, in any jurisdiction
where the offer or sale is not permitted. You should not assume that the information contained in this prospectus or any supplement to
this prospectus is accurate as of any date other than the date on the front cover of those documents.</p><div>

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</div><div style="padding-right: 6pt; padding-left: 6pt; border: Black 1.5pt solid; width: 98%">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<a id="a_001"></a><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>PROSPECTUS SUMMARY</b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>This summary highlights information contained
in other parts of this prospectus. Because it is a summary, it does not contain all of the information that you should consider in making
your investment decision. Before investing in our Common Stock, you should read the entire prospectus carefully, including our consolidated
financial statements and the related notes included in this prospectus and the information set forth under the headings &#8220;Risk Factors&#8221;
and &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations.&#8221; </i></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>On May 14, 2021, Raphael Pharmaceutical Ltd.,
an Israeli company, and Easy Energy, Inc., a Nevada corporation, completed a share exchange agreement, or the share exchange, pursuant
to which the shareholders of Raphael Pharmaceutical Ltd. became the holders of 90% of the issued and outstanding share capital of Easy
Energy, Inc., while Easy Energy, Inc.&#8217;s shareholders hold, following the share exchange, 10% of Easy Energy, Inc. On May 19, 2021,
as agreed by the parties to the share exchange, Easy Energy, Inc. changed its name to Raphael Pharmaceutical Inc. Unless otherwise mentioned
or unless the context requires otherwise, when used in this prospectus, the terms &#8220;Raphael,&#8221; &#8220;Company,&#8221; &#8220;we,&#8221;
&#8220;us,&#8221; and &#8220;our&#8221; refer to Raphael Pharmaceutical Inc. and its subsidiary, Raphael Pharmaceutical Ltd., or Raphael
Israel. References to Easy Energy are to Easy Energy, Inc. Unless otherwise mentioned or unless the context requires otherwise, the information
provided in this prospectus relates to Raphael Israel.</i></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Our Company </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>History</i></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company was incorporated
in the State of Nevada in May 2007 and was formerly known as Easy Energy, Inc. On May 14, 2021, Easy Energy and Raphael Israel completed
the Share Exchange, as a result of which, Raphael Israel&#8217;s shareholders own 90% of our Company and Easy Energy&#8217;s shareholders
hold the remaining 10%. Raphael Israel was incorporated in 2019 in the State of Israel and has focused to date on developing its lead
product candidate for the treatment of rheumatoid arthritis, or RA. Easy Energy did not have any ongoing business or operations before
the Share Exchange and following the Share Exchange we adopted Raphael Israel&#8217;s business plan.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Overview</i></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a pharmaceutical drug
research and development company focused on the discovery and clinical development of life-improving drug therapies based on cannabinoids,
including cannabidiol, or CBD, oil. Unless indicated otherwise, we plan on using oil derived from CBD strains with low levels of Tetrahydrocannabinol,
or THC. All references to the use of CBD in our product candidates refer to CBD strains with less than 0.3% of THC.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are currently in the pre-clinical
development stage for our lead product candidate, our RA product candidate for the treatment of RA. In addition, we are aiming to develop
a pharmaceutical drug product for the treatment of hyperinflammatory syndrome inflammation related to COVID-19, or our COVID-19 product
candidate, which may be based on data or studies related to our RA product candidate. We successfully completed a preclinical study for
the RA product candidate at Rambam Hospital as well as a mice model trial.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February 9, 2022, we filed
an application for a clinical trial with the Medical Cannabis Unit of the Ministry of Health of Israel, or MOH. On February 16, 2022 we
submitted an application with the Helsinki Committee at Rambam Hospital for a clinical trial in COVID-19 patients. We plan to submit such
applications for our RA product during 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our goal is to become a leader
in development of CBD oil-based pharmaceutical drug products for the treatment of indications in which we believe there is a high unmet
medical need in a range of disorders, including those related to inflammation in the body, including RA and COVID-19.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to achieve our goal,
we have and will continue to build an experienced team of senior executives and scientists, with experience in all facets of pharmaceutical
research and development, drug formulation, clinical trial execution and regulatory submissions. We intend to leverage the knowledge of
our team in order to complete the clinical trials needed to receive approvals of our product candidates from applicable regulatory authorities.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Initially, we intend to obtain
approvals for our product candidates from the U.S. Food and Drug Administration, or FDA, and the Medical Cannabis Unit of the Israeli
Ministry of Health, or MOH. Upon obtaining FDA approvals, or in the event that we are not successful in obtaining such approvals, we intend
to apply for European Medicines Agency, or EMA, and other countries&#8217; governmental regulatory agencies approvals for our product
candidates. If we are successful in obtaining FDA approvals for our product candidates, we intend to enter into royalty agreements with
good manufacturing practice, or GMP, approved medical manufactures and distributors, having them using our medical formulas for the purpose
of growing, cultivating, manufacturing, and distributing Raphael Pharmaceutical medical indications in their designated territories.</p>

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</div><div>

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</div><div style="padding-right: 6pt; padding-left: 6pt; border: Black 1.5pt solid; width: 98%">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our discovery platform currently
focuses the use of CBD oil, one of the cannabinoids in cannabis plants, as the active pharmaceutical ingredient, or API, for our RA product
candidate and COVID-19 product candidate. Research results published in 2018 (&#8220;Translational Investigation of the Therapeutic Potential
of Cannabidiol (CBD): Toward a New Age&#8221;) has shown that there may be benefits to treading medical conditions, or their effects,
with cannabinoids, and more specifically, with CBD, which may help reduce chronic pain by impacting endocannabinoid receptor activity,
reducing inflammation and interacting with neurotransmitters. This research has also shown that CBD may have neuroprotective properties,
and could have the ability to (i) reduce anxiety and depression, (ii) alleviate cancer-related symptoms, (iii) reduce acne and (iv) benefit
heart health.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Over the last few years, pharmaceutical
drug products that include parts of the cannabis plant have begun to receive regulatory approvals for use in patients suffering from certain
disorders. In light of the past regulatory approvals for other pharmaceutical drug products and, more specifically, the potential beneficial
effects of CBD and other parts of the cannabis plant, we believe that a drug discovery platform based on CBD may offer new and differentiated
treatment options for patients.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">After two successful years
of pre-clinical research and studies at the laboratories of Rambam Hospital, in January 2021, we commenced a pre-clinical trial in mice
for our RA product candidate that we expect will take four to five months. Following the completion of this pre-clinical trial, we intend
on submitting an Investigational New Drug, or IND, application to the FDA and MOH. See &#8220;&#8211; Research and Clinical Development
Strategy &#8211; Clinical Development Plan&#8221; for additional information on the ongoing pre-clinical trial and our planned clinical
trial for our RA product candidate. In addition, with respect to our COVID-19 product candidate, our clinical research partners have been
focused on the effect of cannabinoids and cannabis extracts on immune cells which induce acute inflammation. This study will begin in
the pre-clinical level in immune cell models and, subject to positive results that exhibit downregulation of pro-inflammatory cytokines
by cannabis extract, the study was completed successfully. Following the completion of the pre-clinical study, a mice model was conducted
to analyze for acute inflammation, which resembles the immunopathology of COVID-19. The mice model was successfully completed and we have
registered for a clinical trial in patients with the MOH.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a pharmaceutical research
and clinical development company we do not own or operate, and currently do not intend on creating an in-house team to manufacture and
commercialize our pharmaceutical drug products, if any, that receive regulatory approval allowing for commercialization. We currently
rely, and expect to continue to rely, on third parties for the manufacturing of our product candidates for preclinical and clinical testing,
as well as for commercial manufacturing of any pharmaceutical drug products for which we may receive regulatory approval. Subject to the
receipt of such regulatory approvals, we intend on cooperating with manufacturers and other third parties to manufacture and commercialize
approved pharmaceutical drug products.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Product Pipeline</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have begun development
for our RA and COVID-19 product candidates, which are in the pre-clinical stage.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Assuming that we successfully
complete the clinical development of our RA and COVID-19 product candidates, we intend to then turn our attention to the clinical development
of cannabinoid-based drug products for the treatment of certain oncology indications. Unlike our RA and COVID-19 product candidate, the
use of our cannabinoid based drug products for the treatment of certain oncology indications will require specific dosing and potentially,
a different regulatory pathway than our existing product candidates.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We intend to apply for FDA
approval, subject to the completion of the applicable clinical trials, for our RA product candidate as well as our COVID-19 product candidate
using the FDA&#8217;s regulatory pathway for drug products.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Research and Clinical Development Strategy</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Research and clinical development
of our pharmaceutical drug product candidates is our core business. We are currently focused on developing innovative cannabinoid-based
medical indications that we aim to push through Phase 2A and Phase 2B approval from the MOH, FDA and EMA.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The research efforts that
have been conducted to date by the team at Rambam Med-Tech Ltd., or Rambam MT, are aimed at revealing the mechanism which structures the
activity of cannabinoids in human cells and organs, while applying a variety of disease models. We are using our PCR method to identify
different receptors to cannabinoids and which we believe will allow us to identify which cannabinoids receptors are participating in the
downregulation of inflammation. We believe that this strategy will allow us to identify the cannabinoids components of a chosen strain
in order to accurately administer cannabinoids targeted to the treatment of patients.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Competition and Competitive Position</i></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We face potential competition
from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions
and governmental agencies and public and private research institutions. Any product candidates for which we complete clinical development
successfully and for which we receive marketing approval may compete with existing therapies and new therapies that may become available
in the future. However, we believe, specifically with respect to our competitors not using cannabis in their pharmaceutical drug products
that our use of, and experience with, cannabinoids provides us with a potential competitive advance. Our research has shown that the use
of cannabinoids for the treatment of RA is justified based on its positive effect on pain, fatigue, sleep problems and its potential safety
profile. Growing evidence on the anti-inflammatory effect of cannabinoids provide more strong ground for their use in the treatment of
RA. We believe that our RA product candidate, if approved for commercialization by regulators, will be available to patients at a lower
price than that of other available treatments.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Cultivation of our API</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2020, we entered
into an agreement with Way of Life Cannabis Ltd., or Wolc, pursuant to which Raphael Israel is scheduled to be provided with up to 15
liters of CBD oil, from a strain of cannabis of our selection, during a term of 18 months, to be provided in two to three deliveries of
between one to seven liters of CBD oil. We believe that our current agreement with Wolc will provide us with sufficient amounts of CBD
oil in order to complete our clinical development and for initial sales of our pharmaceutical drug products.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Manufacturing</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not own or operate,
and currently have no plans to establish, any manufacturing facilities for final manufacture. We currently rely, and expect to continue
to rely, on third parties for the manufacture of our product candidates for preclinical and clinical testing, as well as for commercial
manufacturing of any pharmaceutical drug products for which we receive regulatory approval.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Commercialization Plan</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to the receipt of
regulatory approval to commercialize our pharmaceutical product candidates, our goal is to distribute our approved formulas to good manufacturing
practice, or GMP, approved medical cannabis manufacturers and global medical cannabis distributors. Depending on the expertise of the
distributors, we expect the licensing agreements to provide us with royalty-based payments for the sale of each of our approved pharmaceutical
drug products.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Summary Risk Factors </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The risk factors described
below are a summary of the principal risk factors associated with an investment in us. These are not the only risks we face. You should
carefully consider these summary risk factors, together with the risk factors set forth in the section entitled &#8220;<i>Risk Factors</i>&#8221;
beginning on page 6.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>
</div><div>

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</div><div style="padding-right: 6pt; padding-left: 6pt; border: Black 1.5pt solid; width: 98%">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">We hold no patents on our products, and our business employs proprietary technology (know-how) and information may be difficult to protect and/or infringe on the intellectual property rights of third parties.</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 48px">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify"><span style="font-size: 10pt">As a former shell company, resales of shares of our restricted Common Stock in reliance on Rule 144 of the Securities Act are subject to the requirements of Rule 144(i).</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">Our headquarters and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel.</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Corporate Information</b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The mailing address of our
principal executive office is 4 Lui Paster, Tel Aviv-Jaffa, Israel 6803605 and the telephone number is Telephone: (972) 52-775-5072. The
website address is www.raphaelpharmaceutical.com. The information found on the website is not part of, and is not incorporated into, this
prospectus.</p>

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</div><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>THE OFFERING</b></p>

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<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 26%"><span style="font-size: 10pt"><b>Common Stock offered by the Selling Securityholders</b></span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 73%; text-align: justify"><span style="font-size: 10pt">We are registering 1,667,393 shares of Common Stock to be offered from time to time by the Selling Securityholders, issued in private placements which had multiple closings between April 2021 and May 2022. </span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-size: 10pt"><b>Terms of the offering</b></span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">The Selling Securityholders will determine when and how they will dispose of the Common Stock, registered under this prospectus for resale. For additional information concerning the offering, see &#8220;Plan of Distribution&#8221; beginning on page 62.</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-size: 10pt"><b>Risk factors</b></span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">Before investing in our securities, you should carefully read and consider the information set forth in &#8220;Risk Factors&#8221; beginning on page 6 of this prospectus.</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-size: 10pt"><b>Use of proceeds</b></span></td>
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    <td style="text-align: justify"><span style="font-size: 10pt">We will not receive any of the proceeds from the sale of Offered Securities by the Selling Securityholders. </span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-size: 10pt"><b>Trading market and symbol</b></span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">Our Common Stock is not listed for quotation on any exchange or market system and there is no established public trading market for our Common Stock. We have applied to have our Common Stock quoted on OTC Pink Market, and upon approval of such application, we intend to apply to list the Common Stock on OTCQB under the symbol &#8220;RAPH&#8221;. We cannot assure you that our Common Stock will ever be quoted on the OTC Pink Market or OTCQB. Consequently, if you purchase Common Stock in this offering you may not be able to sell your Common Stock in any organized marketplace and you may be limited to selling your Common Stock privately. Accordingly, an investment in our Common Stock is an illiquid investment.</span></td></tr>
  </table>
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</div><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_002"></a></div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b>RISK FACTORS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>An investment in our securities
carries a significant degree of risk. You should carefully consider the following risks, as well as the other information contained in
this prospectus, including our historical financial statements and related notes included elsewhere in this prospectus, before you decide
to purchase our securities. Any one of these risks and uncertainties has the potential to cause material adverse effects on our business,
prospects, financial condition and operating results which could cause actual results to differ materially from any forward-looking statements
expressed by us and a significant decrease in the value of our Common Stock. Refer to &#8220;Cautionary Statement Regarding Forward-Looking
Statements.&#8221;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>We may not be successful
in preventing the material adverse effects that any of the following risks and uncertainties may cause. These potential risks and uncertainties
may not be a complete list of the risks and uncertainties facing us. There may be additional risks and uncertainties that we are presently
unaware of, or presently consider immaterial, that may become material in the future and have a material adverse effect on us. You could
lose all or a significant portion of your investment due to any of these risks and uncertainties.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Risks Related to Our Financial Condition and
Capital Requirements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We have a limited operating history and
we have incurred significant operating losses since our inception, and anticipate that we will incur continued losses for the foreseeable
future.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an emerging pharmaceutical
research and clinical development company with a limited operating history in our industry. Before the Share Exchange, we did not have
any operations dating back to 2011. To date, we have focused almost exclusively on developing our RA product candidate. Raphael Israel
has funded its operations to date primarily through proceeds from investors and from its own resources. Other than the funding that Easy
Energy received, and which was lent to (invested in Raphael Israel after the closing of the Share Exchange), Easy Energy has had no sources
of funding since ceasing its operations in 2011. We have only a limited operating history in our current industry upon which you can evaluate
our business and prospects. In addition, we have limited experience and have not yet demonstrated an ability to successfully overcome
many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the pharmaceutical
industry. To date, we have not generated revenue from the sale of our product candidates (see &#8220;Management&#8217;s Discussion and
Analysis of Financial Condition and Results of Operations&#8221; for additional information). We incurred losses in each year since its
inception and, while operational, we have never been profitable and have incurred losses since inception. We expect to continue to incur
losses until, and if, a product candidate that we are developing, such as our RA product candidate, receives approval from regulators
for commercialization. Our net loss attributable to holders of our ordinary shares for the years ended December&#160;31, 2021 and the
three months period ended March 31, 2022 was approximately $1.62 million and $185,000, respectively. As of June 28, 2022, we had an accumulated
deficit of approximately $3.0 million. Substantially all of our operating losses resulted from costs incurred in connection with our development
program and from general and administrative costs associated with our operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect our research and
development expenses to increase in connection with our planned preclinical and clinical trials. In addition, even if we obtain marketing
approval for any current or future product candidate, we will likely incur significant business development expenses as we seek to commercialize
such products, as well as continued research and development expenses. Furthermore, we expect to incur additional costs associated with
operating as a reporting company, which we estimate will be at least tens of thousands of dollars annually. As a result, we expect to
continue to incur significant and increasing operating losses for the foreseeable future. Because of the numerous risks and uncertainties
associated with developing pharmaceutical products, we are unable to predict the extent of any future losses or when we will become profitable,
if at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect to continue to incur
significant losses until we are able to commercialize our product candidates, which we may not be successful in achieving. We anticipate
that our expenses will increase substantially if and as we:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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    <td style="text-align: justify">&#160;</td>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We have not generated revenue from any product
candidate yet and may never be profitable.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to become profitable
depends upon our ability to generate revenue. We do not expect to generate significant revenue unless or until we obtain marketing approval
of, and commercialize, our RA product candidate or any other product candidate that we may seek to develop. Our ability to generate future
revenue from product candidate sales depends heavily on our success in many areas, including but not limited to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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    <td style="text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We do not believe that our current cash
on hand will be sufficient to fund our projected operating requirements. This raises substantial doubt about our ability to continue as
a going concern. In addition, the report of our independent registered public accounting firm contains an explanatory paragraph regarding
substantial doubt about our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable
terms or at all.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not believe that our
current cash on hand will be sufficient to fund our projected operating requirements. This raises substantial doubt about our ability
to continue as a going concern. In addition, the report of our independent registered public accounting firm on our audited financial
statements for each of the two years ended December 31, 2021 and 2020 contains an explanatory paragraph regarding substantial doubt about
our ability to continue as a going concern. Our audited financial statements do not include any adjustments that might result from the
outcome of the uncertainty regarding our ability to continue as a going concern. This going concern opinion could materially limit our
ability to raise additional funds through the issuance of equity or debt securities or otherwise. Further reports on our financial statements
may include an explanatory paragraph with respect to our ability to continue as a going concern. If we cannot continue as a going concern,
our investors may lose their entire investment in our Common Stock. Until we can generate significant revenues, if ever, we expect to
satisfy our future cash needs through debt or equity financing. We cannot be certain that additional funding will be available to us on
acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development
plans for, or commercialization efforts with respect to our products.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We expect that we will need to raise substantial
additional funding before we can expect to complete the development of our RA product candidate or any other product candidate. This additional
financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay,
limit or terminate our product candidate development efforts or other operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December 31, 2022, our
cash and cash equivalent were approximately $0.15 million and we had a working capital of $0.13 million and an accumulated deficit of
$2.67 million]. Based upon our currently expected level of operating expenditures, we expect that our existing cash and cash equivalents
will only be sufficient to fund operations through June 2022. In addition, our operating plans may change as a result of many factors
that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future funding requirements will
depend on many factors, including but not limited to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any additional fundraising
efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize
our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable
to us, if at all, during or after the COVID-19 pandemic. Moreover, the terms of any financing may adversely affect the holdings or the
rights of holders of our securities and the issuance of additional securities, whether equity or debt, by us, or the possibility of such
issuance, may cause the trading price of our shares to decline. The incurrence of indebtedness could result in increased fixed payment
obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional
debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could
adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative
partners or otherwise at an earlier stage than otherwise would be desirable, and we may be required to relinquish rights to some of our
technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our
business, operating results and prospects. Even if we believe that we have sufficient funds for our current or future operating plans,
we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we are unable to obtain
funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development
programs or the development or commercialization, if any, of any product candidates or be unable to expand our operations or otherwise
capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The lack of an existing trading market could
adversely impact our ability to raise working capital and adversely impact our ability to continue operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Common Stock is&#160;not
currently traded on any national securities exchange and is not quoted on any over-the-counter market (see &#8220;Risks Related to Ownership
of Our Securities &#8211; Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws&#8221;
for additional information). Because our Common Stock is considered illiquid, we may find it more difficult to raise capital.&#160;If
we are unable to raise sufficient capital in the future, we may not be able to have the resources to continue our normal operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Risks Related to Product Development, Regulatory
Approval and Commercialization</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are heavily dependent on the success
of our product candidates, which are in various stages of pre-clinical development. We cannot give any assurance that any of our product
candidates will proceed to clinical development or that they will receive regulatory approval, which is necessary before they can be commercialized.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since its inception, Raphael
Israel has invested substantially all of its efforts and financial resources to design and develop its product candidates, including conducting
preclinical studies and providing general and administrative support for these operations. Our future success is dependent on our ability
to continue these operations, and more specifically, to successfully complete pre-clinical and clinical development of our product candidates,
which will require coordination from applicable regulatory agencies, obtain regulatory approval for, and then successfully commercialize
one or more product candidates for which we receive regulatory approval. We currently generate no revenue from, and we may never be able
to generate revenue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our RA product candidate and
the product candidate that we are seeking to develop for the treatment of inflammation associated with COVID-19 are both in pre-clinical
development and will require clinical development (and in some cases additional pre-clinical development), management of non-clinical,
clinical and manufacturing activities, regulatory approval, obtaining adequate manufacturing supply, building of a commercial organization
and significant marketing efforts before we generate any revenue from product candidate sales. It may be months or years before a pivotal
study is initiated, if at all. Any clinical trials in the United States will require the approval of an Investigational New Drug, or IND,
application by the FDA, and we cannot assure that we will obtain such approval in a timely manner, or at all. We are not permitted to
market or promote any of our product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities,
and we may never receive such regulatory approval for any of our product candidates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We as a company have never
submitted marketing applications to the FDA or comparable foreign regulatory authorities. We cannot be certain that any of our product
candidates will be successful in clinical studies or receive regulatory approval or what regulatory pathway the regulatory authorities
shall designate for our product candidates. Further, our product candidates may not receive regulatory approval even if they are successful
in clinical studies. If we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We generally plan to seek
regulatory approval to commercialize our product candidates in the United States, the European Union, Israel and other foreign countries.
To obtain regulatory approvals we must comply with the numerous and varying regulatory requirements of such countries regarding safety,
efficacy, chemistry, manufacturing and controls, clinical studies, commercial sales, pricing and distribution of our product candidates.
Even if we are successful in obtaining approval in one jurisdiction, we cannot ensure that we will obtain approval in any other jurisdictions.
If we are unable to obtain approval for our product candidates in multiple jurisdictions, our revenue and results of operations would
be negatively affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The regulatory approval processes of the
FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable. If we are ultimately unable to obtain
regulatory approval for our product candidates, our business will be substantially harmed.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The time required to obtain
approval by the FDA and comparable foreign authorities is unpredictable, typically takes many years following the commencement of clinical
studies and depends upon numerous factors. In addition, approval policies, regulations or the type and amount of clinical data necessary
to gain approval may change during the course of a product candidate&#8217;s clinical development and may vary among jurisdictions, which
may cause delays in the approval or the decision not to approve an application. We have not obtained regulatory approval for any product
candidate, and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future
will ever obtain regulatory approval.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Applications for our product
candidates could fail to receive regulatory approval for many reasons, including but not limited to the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify"><span style="font-size: 10pt">the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical studies;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify"><span style="font-size: 10pt">we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a product candidate&#8217;s safety-benefit ratio for its proposed indication is acceptable;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical studies;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">the data collected from clinical studies of our product candidates may not be sufficient to support the submission of a new drug application, or NDA, in the United States or elsewhere;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify"><span style="font-size: 10pt">the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This lengthy approval process,
as well as the unpredictability of the results of clinical studies, may result in our failing to obtain regulatory approval to market
any of our product candidates, which would significantly harm our business, results of operations and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Clinical drug development involves a lengthy
and expensive process with an uncertain outcome, and results of earlier studies may not be predictive of future study results.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Clinical testing is expensive
and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical study
process. The results of pre-clinical studies and early clinical studies, if any are commenced, of our product candidates may not be predictive
of the results of later-stage clinical studies. Product candidates that have shown promising results in early-stage clinical studies may
still suffer significant setbacks in subsequent advanced clinical studies. There is a high failure rate for drugs proceeding through clinical
studies, and product candidates in later stages of clinical studies may fail to show the desired safety and efficacy traits despite having
progressed satisfactorily through preclinical studies and initial clinical studies. A number of companies in the pharmaceutical industry
have suffered significant setbacks in advanced clinical studies due to lack of efficacy or adverse safety profiles, notwithstanding promising
results in earlier studies. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses. We
do not know whether any Phase 1, Phase&#160;2, Phase&#160;3 (if any) or other clinical studies we may conduct will demonstrate consistent
or adequate efficacy and safety sufficient to obtain regulatory approval to market our product candidates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may find it difficult to enroll patients
in our clinical studies. Difficulty in enrolling patients could delay or prevent clinical studies of our product candidates.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Identifying and qualifying
patients to participate in clinical studies of our product candidates is critical to our success. The timing of our clinical studies depends
in part on the speed at which we can recruit patients to participate in testing our product candidates, and we may experience delays in
our clinical studies if we encounter difficulties in enrollment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, the process
of finding patients may prove costly. We also may not be able to identify, recruit and enroll a sufficient number of patients to complete
our clinical studies because of the perceived risks and benefits of the product candidate under study, the availability and efficacy of
competing therapies and clinical studies, the proximity and availability of clinical study sites for prospective patients and the patient
referral practices of physicians. If patients are unwilling to participate in our studies for any reason, the timeline for recruiting
patients, conducting studies and obtaining regulatory approval of potential product candidates will be delayed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the COVID-19
pandemic may affect the operations of the FDA and other health authorities, which could result in delays of reviews and approvals. The
evolving COVID-19 pandemic may directly or indirectly impact the pace of enrollment in future clinical trials, if any, as patients may
avoid or may not be able to travel to healthcare facilities and physicians&#8217; offices unless due to a health emergency. Additionally,
such facilities and offices have been and may continue to be required to focus limited resources on non-clinical trial matters, including
treatment of COVID-19 patients, thereby decreasing availability, in whole or in part, for clinical trial services. We also do not yet
know if, as a result of the COVID-19 pandemic, people who would otherwise enroll in our or other clinical trials would elect not to participate.
The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we experience delays in
the completion or termination of any clinical study of our product candidates, the commercial prospects of our product candidates will
be harmed, and our ability to generate product candidate revenue from any of these product candidates could be delayed or prevented. In
addition, any delays in completing our clinical studies will increase our costs, slow down our product candidate development and approval
process and jeopardize our ability to commence product candidate sales and generate revenue. Any of these occurrences may harm our business,
financial condition and prospects significantly. In addition, many of the factors that cause, or lead to, a delay in the commencement
or completion of clinical studies may also ultimately lead to the denial of regulatory approval of our product candidates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may encounter substantial delays in our
clinical studies, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Before obtaining marketing
approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical studies to demonstrate
the safety and efficacy of the product candidates in humans. Clinical testing is expensive, time consuming and uncertain as to outcome.
We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of one or more
clinical studies can occur at any stage of testing, and our future clinical studies may not be successful. Events that may prevent successful
or timely completion of clinical development include but are not limited to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">delays in having patients complete participation in a study or return for post-treatment follow-up;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
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</table><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any inability to successfully
complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenue. We may
also be required to conduct additional safety, efficacy and comparability studies before we will be allowed to start clinical studies
with our repurposed drugs. Clinical study delays could also shorten any periods during which our product candidates have patent protection
and may allow our competitors to bring product candidates to market before we do, which could impair our ability to obtain orphan exclusivity
and successfully commercialize our product candidates and may harm our business and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our product candidates may cause undesirable
side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved
label or result in significant negative consequences following marketing approval, if any.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The use of dronabinol has
been associated with seizures, paranoia, rapid heart rate and unusual thoughts and behaviors. Undesirable side effects caused by our product
candidates could cause us or regulatory authorities to interrupt, delay or halt clinical studies and could result in a more restrictive
marketing label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. Potential side effects
of our cannabinoid-based treatments may include: asthenia, palpitations, tachycardia, vasodilation/facial flush, abdominal pain, nausea,
vomiting, amnesia, anxiety/nervousness, ataxia, confusion, depersonalization, dizziness, euphoria, hallucinations, paranoid reaction,
somnolence and abnormal thinking. Results of our studies may identify unacceptable severity and prevalence of these or other side effects.
In such an event, our studies could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us
to cease further development of or deny or withdraw approval of our product candidates for any or all targeted indications.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Drug-related side effects
could affect patient recruitment, the ability of enrolled patients to complete the study or result in potential product candidate liability
claims.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, if one or more
of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such product
candidates, a number of potentially significant negative consequences could result, including but not limited to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any of these events could
prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm
our business, results of operations and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Even if we obtain regulatory approval for
a product candidate, our product candidates will remain subject to regulatory scrutiny.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If our product candidates
are approved, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion,
sampling, record-keeping, conduct of post-marketing studies and submission of safety, efficacy and other post-market information, including
both federal and state requirements in the United States. In addition, manufacturers and manufacturers&#8217; facilities are required
to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to current Good
Manufacturing Practices, or cGMP, regulations and Quality System Regulation, or QSR. As such, we and our contract manufacturers will be
subject to continual review and inspections to assess compliance with cGMP, QSR and adherence to commitments made in any NDA. Accordingly,
we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing,
production and quality control.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any regulatory approvals that
we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product candidate
may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase&#160;4
clinical trials and surveillance to monitor the safety and efficacy of the product candidate. We will also be required to report certain
adverse reactions and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion for
our product candidates. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory
restrictions and must be consistent with the information in the product candidate&#8217;s approved label. As such, we may not promote
our product candidates for indications or uses for which they do not have FDA approval. The holder of an approved NDA must also submit
new or supplemental applications and obtain FDA approval for certain changes to the approved product candidate, product candidate labeling
or manufacturing process. We could also be asked to conduct post-marketing clinical studies to verify the safety and efficacy of our product
candidates in general or in specific patient subsets. If original marketing approval were obtained via the accelerated approval pathway,
we could be required to conduct a successful post-marketing clinical study to confirm clinical benefit for our product candidates. An
unsuccessful post-marketing study or failure to complete such a study could result in the withdrawal of marketing approval. Furthermore,
any new legislation addressing drug safety issues could result in delays in product candidate development or commercialization or increased
costs to assure compliance. Foreign regulatory authorities impose similar requirements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If a regulatory agency discovers
previously unknown problems with a product candidate, such as adverse events of unanticipated severity or frequency, or problems with
the facility where the product candidate is manufactured, or disagrees with the promotion, marketing or labeling of a product candidate,
such regulatory agency may impose restrictions on that product candidate or us, including requiring withdrawal of the product candidate
from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among
other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">impose civil or criminal penalties;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">suspend or withdraw regulatory approval;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">suspend any of our ongoing clinical studies;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">refuse to approve pending applications or supplements to approved applications submitted by us;</span></td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">seize or detain product candidates, or require a product candidate recall.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any government investigation
of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity.
Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate
revenue from our product candidates. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company
and our operating results will be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are subject to numerous complex regulations
and failure to comply with these regulations, or the cost of compliance with these regulations, may harm our business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The research, testing, development,
manufacturing, quality control, approval, labeling, packaging, storage, recordkeeping, promotion, advertising, marketing, distribution,
possession and use of our product candidates, among other things, are subject to regulation by numerous governmental authorities in the
United States and elsewhere. The FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act of 1938, or the FDC Act, and implementing
regulations. Noncompliance with any applicable regulatory requirements can result in refusal to approve product candidates for marketing,
warning letters, product candidate recalls or seizure of product candidates, total or partial suspension of production, prohibitions or
limitations on the commercial sale of product candidates or refusal to allow the entering into of federal and state supply contracts,
fines, civil penalties and/or criminal prosecution. Additionally, the FDA and comparable governmental authorities have the authority to
withdraw product candidate approvals that have been previously granted. Moreover, the regulatory requirements relating to our product
candidates may change from time to time and it is impossible to predict what the impact of any such changes may be.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are developing product
candidates that are controlled substances as defined in the Controlled Substances Act of 1970, or CSA, which establishes, among other
things, certain registration, production quotas, security, recordkeeping, reporting, import, export and other requirements administered
by the Drug Enforcement Administration, or the DEA. The active ingredient in our product candidates is CBD, which, when derived from cannabis,
is a Schedule V controlled substance, meaning that any drug containing it cannot be marketed before it receives regulatory approval from
the FDA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The manufacture, shipment,
storage, sale and use, among other things, of controlled substances that are pharmaceutical product candidates are subject to a high degree
of regulation. The DEA also conducts periodic inspections of registered establishments that handle controlled substances. Facilities that
conduct research, manufacture, distribute, import or export controlled substances must be registered to perform these activities and have
the security, control and inventory mechanisms required by the DEA to prevent drug loss and diversion. Failure to maintain compliance,
particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect
on our business, results of operations, financial condition and prospects. The DEA may seek civil penalties, refuse to renew necessary
registrations, or initiate proceedings to suspend or revoke those registrations. In certain circumstances, violations could lead to criminal
proceedings.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Individual states also have
controlled substances laws. Though state controlled substances laws often mirror federal law, because the states are separate jurisdictions,
they may separately schedule our product candidates as well. While some states automatically schedule a drug when the DEA does so, other
states schedule drugs through rulemaking or a legislative action. State scheduling may delay commercial sale of any product candidate
for which we obtain federal regulatory approval and adverse scheduling could have a material adverse effect on the commercial attractiveness
of such product candidate. We or our partners must also obtain separate state registrations, permits or licenses in order to be able to
obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory
requirements could lead to enforcement and sanctions from the states in addition to those from the DEA or otherwise arising under federal
law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If the market opportunities for our product
candidates are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our projections of both the
number of people who have our target diseases, as well as the subset of people with these diseases who have the potential to benefit from
treatment with our product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources,
including the scientific literature, surveys of clinics, patient foundations or market research and may prove to be incorrect. Further,
new studies may change the estimated incidence or prevalence of these diseases. The number of patients may turn out to be lower than expected.
The effort to identify patients with diseases we seek to treat is in early stages, and we cannot accurately predict the number of patients
for whom treatment might be possible. Additionally, the potentially addressable patient population for each of our product candidates
may be limited or may not be amenable to treatment with our product candidates, and new patients may become increasingly difficult to
identify or gain access to, which would adversely affect our results of operations and our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We face intense competition and rapid technological
change and the possibility that our competitors may discover, develop or commercialize therapies that are similar, more advanced or more
effective than ours, which may adversely affect our financial condition and our ability to successfully commercialize our product candidates.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The biotechnology and pharmaceutical
industries are highly competitive. There are many pharmaceutical companies, biotechnology companies, public and private universities and
research organizations actively engaged in the research and development of products that may be similar to our product candidates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">More established companies
may have a competitive advantage over us due to their greater size, cash flows and institutional experience. Compared to us, many of our
competitors may have significantly greater financial, technical and human resources. As a result of these factors, our competitors may
have an advantage in marketing their approved products and may obtain regulatory approval of their product candidates before we are able
to, which may limit our ability to develop or commercialize our product candidates. Our competitors may also develop drugs that are safer,
more effective, more widely used and less expensive than ours, and may also be more successful than us in manufacturing and marketing
their products. These advantages could materially impact our ability to develop and commercialize our product candidates successfully.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our product candidates may
also compete with medical and recreational marijuana, in markets where the recreational and/or medical use of marijuana is legal. There
is support in the United&#160;States for further legalization of marijuana. In markets where recreational and/or medical marijuana is
not legal, our product candidates may compete with marijuana purchased in the illegal drug market. We cannot assess the extent to which
patients may utilize marijuana obtained illegally for the treatment of the indications for which we are developing our product candidates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Even if we successfully develop
our product candidates, and obtain marketing approval for them, other treatments or therapeutics may be preferred and we may not be successful
in commercializing our product candidates or in bringing them to market.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Many of our competitors have
substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing
and manufacturing organizations. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in
even more resources being concentrated in our competitors. As a result, these companies may obtain regulatory approval more rapidly than
we are able to and may be more effective in selling and marketing their products as well. Smaller or early-stage companies may also prove
to be significant competitors, particularly through collaborative arrangements with large, established companies. Competition may increase
further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in
these industries. Our competitors may succeed in developing, acquiring or licensing on an exclusive basis, products that are more effective
or less costly than any product candidate that we may develop, or achieve earlier patent protection, regulatory approval, product commercialization
and market penetration than we do. Additionally, technologies developed by our competitors may render our potential product candidates
uneconomical or obsolete, and we may not be successful in marketing our product candidates against competitors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The commercial success of any current or
future product candidate will depend upon the degree of market acceptance by physicians, patients, third-party payors and others in the
medical community.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Even with the requisite approvals
from the FDA and comparable foreign regulatory authorities, the commercial success of our product candidates will depend in part on the
medical community, patients and third-party payors accepting our product candidates as medically useful, cost-effective and safe. Any
product that we bring to the market may not gain market acceptance by physicians, patients, third-party payors and others in the medical
community. The degree of market acceptance of any of our product candidates, if approved for commercial sale, will depend on a number
of factors, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 48px; text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the prevalence and severity of any side effects, including any limitations or warnings contained in a product&#8217;s approved labeling;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">relative convenience and ease of administration;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the cost of treatment, particularly in relation to competing treatments;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the strength of marketing and distribution support and timing of market introduction of competitive products;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">publicity concerning our products or competing products and treatments; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">sufficient third-party insurance coverage and reimbursement.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Even if a potential product
displays a favorable efficacy and safety profile in preclinical and clinical studies, market acceptance of the product will not be fully
known until after it is launched. Our efforts to educate the medical community and third-party payors on the benefits of the product candidates
may require significant resources and may never be successful. If our product candidates are approved but fail to achieve an adequate
level of acceptance by physicians, patients, third-party payors and others in the medical community, we will not be able to generate sufficient
revenue to become or remain profitable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The insurance coverage and reimbursement
status of newly-approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for new or current products
could limit our ability to market those products and decrease our ability to generate revenue.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The pricing, coverage and
reimbursement of our product candidates, if approved, must be adequate to support our commercial infrastructure. Our per-patient prices
must be sufficient to recover our development and manufacturing costs and potentially achieve profitability. Accordingly, the availability
and adequacy of coverage and reimbursement by governmental and private payors are essential for most patients to be able to afford expensive
treatments such as ours, assuming approval. Sales of our product candidates will depend substantially, both domestically and abroad, on
the extent to which the costs of our product candidates will be paid for by health maintenance, managed care, pharmacy benefit and similar
healthcare management organizations, or reimbursed by government authorities, private health insurers and other third-party payors. If
coverage and reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize
our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish
or maintain pricing sufficient to realize a return on our investment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is significant uncertainty
related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about coverage
and reimbursement for new drugs are typically made by the Centers for Medicare&#160;&amp; Medicaid Services, or CMS, an agency within
the U.S. Department of Health and Human Services, as CMS decides whether and to what extent a new drug will be covered and reimbursed
under Medicare. Private payors tend to follow the coverage reimbursement policies established by CMS to a substantial degree. It is difficult
to predict what CMS will decide with respect to reimbursement for products such as ours.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Outside the United States,
international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the
increasing emphasis on cost-containment initiatives in Europe, Canada and other countries has and will continue to put pressure on the
pricing and usage of our product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms
as part of national health systems. In general, the prices of medicines under such systems are substantially lower than in the United
States. Other countries allow companies to fix their own prices for medicinal products, but monitor and control company profits. Additional
foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates.
Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and
may be insufficient to generate commercially reasonable revenue and profits.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Moreover, increasing efforts
by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations
to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate
payment for our product candidates. We expect to experience pricing pressures in connection with the sale of any of our product candidates
due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes.
The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has
become very intense. As a result, increasingly high barriers are being erected to the entry of new products.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Healthcare legislative reform measures may
have a material adverse effect on our business and results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the United States, there
have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in 2010, the Patient Protection
and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the Affordable Care Act, was
passed. The Affordable Care Act is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare
spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and the health insurance industry,
impose new taxes and fees on the healthcare industry and impose additional health policy reforms. This law revises the definition of &#8220;average
manufacturer price&#8221; for reporting purposes, which could increase the amount of Medicaid drug rebates to states once the provision
is effective. Further, the law imposes a significant annual fee on companies that manufacture or import branded prescription drug products.
Substantial new provisions affecting compliance have also been enacted, which may require us to modify our business practices with healthcare
practitioners. While the U.S. Supreme Court upheld the constitutionality of most elements of the Affordable Care Act in 2012, other legal
challenges are still pending final adjudication in several jurisdictions. In addition, Congress has also proposed a number of legislative
initiatives, including possible repeal of the Affordable Care Act. At this time, it remains unclear whether there will be any changes
made to the Affordable Care Act, whether to certain provisions or its entirety. We can provide no assurance that the Affordable Care Act,
as currently enacted or as amended in the future, will not adversely affect our business and financial results, and we cannot predict
how future federal or state legislative or administrative changes relating to healthcare reform will affect our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, other legislative
changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. In 2011, the Budget Control Act
of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked
with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required
goals, thereby triggering the legislation&#8217;s automatic reduction to several government programs. This includes aggregate reductions
of Medicare payments to providers up to 2%&#160;per fiscal year. In 2013, the 2% Medicare payment reductions went into effect. We expect
that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that
federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates
or additional pricing pressures.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Risks Related to our Business and Operations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We hold&#160;no patents&#160;on our products,
and our business employs proprietary technology (know-how) and information may be difficult to protect and/or infringe on the intellectual
property rights of third parties.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Raphael has no patents and
therefore, as a result of the Share Exchange, we did not acquire any patents. As such, we currently rely on trade secrets, proprietary
know-how, and technology methods that we seek to protect, in part, by confidentiality agreements. We cannot assure you that these agreements
will not be breached, that we will have adequate remedies for any breach, or that our trade secrets and proprietary know-how will not
otherwise become known or be independently discovered by others. We currently do not hold patents from the United States Patent and Trademark
Office, or USPTO.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We cannot assure you that
the patents of others will not have an adverse effect on our ability to conduct our business, that any of our trade secrets and applications
will be protected, that we will develop additional proprietary technology (know-how) or methods that is defensible against theft or will
provide us with competitive advantages or will not be challenged by third parties.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We manage our business through our three
executive officers and key consultants and are highly dependent upon our Chief Technology Officer. </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Key service providers are
serving as our Chief Executive Officer, Chief Financial Officer and Chief Technology Officer and other scientific services consultants.
Due to the lean nature of our operations and our current operations which mainly consist of outsourcing services, we are highly dependent
upon our Chief Technology Officer. If our Chief Technology Officer, and to a lesser extent, any key consultants, resigns, this could adversely
affect our ability to execute our business plan and harm our operating results. We do not currently carry &#8220;key person&#8221; insurance
on the lives of members of management.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We will need to expand our organization
and we may experience difficulties in recruiting needed additional employees and consultants, which could disrupt our operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As our development and commercialization
plans and strategies develop and because we are so leanly staffed, we will need additional managerial, operational, sales, marketing,
financial, legal and other resources. The competition for qualified personnel in the pharmaceutical field is intense. Due to this intense
competition, we may be unable to attract and retain qualified personnel necessary for the development of our business or to recruit suitable
replacement personnel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our management may need to
divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing
these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our
infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees.
Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the
development of additional product candidates. If our management is unable to effectively manage our growth, our expenses may increase
more than expected, our ability to generate and/or grow revenue could be reduced and we may not be able to implement our business strategy.
Our future financial performance and our ability to commercialize product candidates and compete effectively will depend, in part, on
our ability to effectively manage any future growth.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may not be successful in our efforts
to identify, license or discover additional product candidates.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although a substantial amount
of our effort will focus on the continued clinical testing, potential approval and commercialization of our existing product candidates,
the success of our business also depends in part upon our ability to identify, license or discover additional product candidates. Our
research programs or licensing efforts may fail to yield additional product candidates for clinical development for a number of reasons,
including but not limited to the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5in; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">our research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates;</span></td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">we may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates;</span></td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify"><span style="font-size: 10pt">our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval;</span></td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If any of these events occur,
we may be forced to abandon our development efforts for a program or programs, or we may not be able to identify, license or discover
additional product candidates, which would have a material adverse effect on our business and could potentially cause us to cease operations.
Research programs to identify new product candidates require substantial technical, financial and human resources. We may focus our efforts
and resources on potential programs or product candidates that ultimately prove to be unsuccessful.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may be subject, directly or indirectly,
to federal and state healthcare fraud and abuse laws, false claims laws and health information privacy and security laws. If we are unable
to comply, or have not fully complied, with such laws, we could face substantial penalties.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we obtain FDA approval for
any of our product candidates and begin commercializing those products in the United States, our operations may be directly or indirectly
through our customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback
Statute, the federal False Claims Act and physician sunshine laws and regulations. These laws may impact, among other things, our proposed
sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and
the states in which we conduct our business. The laws that may affect our ability to operate include:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because of the breadth of these
laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could
be subject to challenge under one or more of such laws. In addition, recent health care reform legislation has strengthened these laws.
For example, the Affordable Care Act, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare
fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. Moreover,
the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of
the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the False Claims Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If our operations are found
to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties,
including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare
and Medicaid, imprisonment and the curtailment or restructuring of our operations, any of which could adversely affect our ability to
operate our business and our results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>International expansion of our business
exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the
United States or Israel.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other than our headquarters
and other operations which are located in Israel (as further described below), we currently have limited international operations, but
our business strategy incorporates potentially significant international expansion, particularly in anticipation of approval of our product
candidates. We plan to maintain sales representatives and conduct physician and patient association outreach activities, as well as clinical
trials, outside of the United States and Israel. Doing business internationally involves a number of risks, including but not limited
to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">certain expenses including, among others, expenses for travel, translation and insurance; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act, or FCPA, its books and records provisions or its anti-bribery provisions.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any of these factors could
significantly harm our future international expansion and operations and, consequently, our results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we fail to comply with environmental,
health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse
effect on the success of our business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our research and development
activities and our third-party manufacturers&#8217; and suppliers&#8217; activities involve the controlled storage, use and disposal of
hazardous materials, including the components of our product candidates and other hazardous compounds. We and our manufacturers and suppliers
are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. In some
cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers&#8217; facilities
pending their use and disposal. We cannot eliminate the risk of contamination, which could cause an interruption of our commercialization
efforts, research and development efforts, business operations and environmental damage resulting in costly clean-up and liabilities under
applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. Although
we believe that the safety procedures utilized by our third-party manufacturers for handling and disposing of these materials generally
comply with the standards prescribed by these laws and regulations, we cannot guarantee that this is the case or eliminate the risk of
accidental contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability
could exceed our resources and state or federal or other applicable authorities may curtail our use of certain materials and/or interrupt
our business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more
stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. We do not currently carry biological
or hazardous waste insurance coverage.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The use of any of our product candidates
could result in product liability or similar claims that could be expensive, damage our reputation and harm our business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business exposes us to
an inherent risk of potential product liability or similar claims. The pharmaceutical industry has historically been litigious, and we
face financial exposure to product liability or similar claims if the use of any of our products were to cause or contribute to injury
or death. There is also the possibility that defects in the design or manufacture of any of our products might necessitate a product recall.
Although we plan to maintain product liability insurance, the coverage limits of these policies may not be adequate to cover future claims.
In the future, we may be unable to maintain product liability insurance on acceptable terms or at reasonable costs and such insurance
may not provide us with adequate coverage against potential liabilities. A product liability claim, regardless of merit or ultimate outcome,
or any product recall could result in substantial costs to us, damage to our reputation, customer dissatisfaction and frustration and
a substantial diversion of management attention. A successful claim brought against us in excess of, or outside of, our insurance coverage
could have a material adverse effect on our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Risks Related to Our Reliance on Third Parties</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We rely on third parties to conduct our
preclinical and, in the future, clinical studies and perform other tasks for us. If these third parties do not successfully carry out
their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval
for or commercialize our product candidates and our business could be substantially harmed.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have relied upon and plan
to continue to rely upon third-party CROs to monitor and manage data for our ongoing preclinical and clinical programs. We rely on these
parties for execution of our preclinical and, in the future, clinical studies, and control only certain aspects of their activities. Nevertheless,
we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and
scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities. We and our CROs and other vendors
will be required to comply with current cGMP, GCP, QSR and Good Laboratory Practices, or GLP, which are regulations and guidelines enforced
by the FDA, the Competent Authorities of the Member States of the European Economic Area, and comparable foreign regulatory authorities
for any product candidates that move into clinical development. Regulatory authorities enforce these regulations through periodic inspections
of study sponsors, principal investigators, study sites and other contractors. If we or any of our CROs or vendors fail to comply with
applicable regulations, the clinical data generated in our clinical studies may be deemed unreliable and the FDA, EMA or comparable foreign
regulatory authorities may require us to perform additional clinical studies before approving our marketing applications. We cannot assure
you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical studies comply
with GCP regulations. In addition, our clinical studies must be conducted with product candidates which are produced under cGMP regulations.
Our failure to comply with these regulations may require us to repeat clinical studies, which would delay the regulatory approval process.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If any of our relationships
with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable
terms. In addition, our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot
control whether or not they devote sufficient time and resources to our on-going clinical, nonclinical and preclinical programs. If CROs
do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the
quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory
requirements or for other reasons, our clinical studies may be extended, delayed or terminated and we may not be able to obtain regulatory
approval for or successfully commercialize our product candidates. CROs may also generate higher costs than anticipated. As a result,
our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability
to generate revenue could be delayed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Switching or adding additional
CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO
commences work. As a result, delays may occur, which could materially impact our ability to meet our desired clinical development timelines.
Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or
delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and
prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We will rely on third parties to grow and
provide us with our active pharmaceutical ingredient, or API, and formulations. Our business could be harmed if those third parties fail
to provide us with sufficient quantities of our needed supplies, or fail to do so at acceptable quality levels or prices.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not have the infrastructure
or capability internally to manufacture the API formulations, and we lack the resources and the capability to manufacture any of our product
candidates on a clinical or commercial scale. We plan to rely on third parties for such supplies. In addition, we are reliant on one third
party for the CBD that we intend to use in our preclinical studies, which, has caused us to rely on their cooperation to meet their contractual
obligations, but there can be no guarantee that we are able to meet such obligations. In addition, there may be a need to identify alternate
manufacturers to prevent a possible disruption of our clinical studies. Any significant delay or discontinuity in the supply of these
components could considerably delay completion of our preclinical studies, product candidate testing and potential regulatory approval
of our product candidates, which could harm our business and results of operations.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We and our collaborators and contract manufacturers
are subject to significant regulation with respect to manufacturing our product candidates. The manufacturing facilities on which we rely
may not continue to meet regulatory requirements and have limited capacity.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All entities involved in the
preparation of therapeutics for clinical studies or commercial sale, including our existing contract manufacturers for our product candidates,
are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or a product candidate
used in late-stage clinical studies must be manufactured in accordance with cGMP. These regulations govern manufacturing processes and
procedures (including record keeping) and the implementation and operation of quality systems to control and assure the quality of investigational
product candidates and products approved for sale. Poor control of production processes can lead to the introduction of contaminants or
to inadvertent changes in the properties or stability of our product candidates that may not be detectable in final product testing. We,
our collaborators or our contract manufacturers must supply all necessary documentation in support of an NDA, or Marketing Authorization
Application, or MAA, on a timely basis and must adhere to GLP and cGMP QSR regulations enforced by the FDA and other regulatory agencies
through their facilities inspection program. Some of our contract manufacturers have never produced a commercially approved pharmaceutical
product and therefore have not obtained the requisite regulatory authority approvals to do so. The facilities and quality systems of some
or all of our collaborators and third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations
as a condition of regulatory approval of our product candidates or any of our other potential product candidates. In addition, the regulatory
authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of our product candidates or our
other potential product candidates or the associated quality systems for compliance with the regulations applicable to the activities
being conducted. We do not control the manufacturing process of, and are completely dependent on, our contract manufacturing partners
for compliance with the regulatory requirements. If these facilities do not pass a pre-approval plant inspection, regulatory approval
of the product candidates may not be granted or may be substantially delayed until any violations are corrected to the satisfaction of
the regulatory authority, if ever.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The regulatory authorities
also may, at any time following approval of a product candidate for sale, if ever, audit the manufacturing facilities of our collaborators
and third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation
of our product candidate specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant
regulatory authority may require remedial measures that may be costly and/or time consuming for us or a third party to implement, and
that may include the temporary or permanent suspension of a clinical study or commercial sales, or the temporary or permanent closure
of a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we, our collaborators, or
any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or other applicable regulatory authority can impose
regulatory sanctions including, among other things, refusal to approve a pending application for a new drug product, withdrawal of an
approval or suspension of production. As a result, our business, financial condition and results of operations may be materially harmed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, if supply from
one approved manufacturer is interrupted, an alternative manufacturer would need to be qualified through an NDA or MAA amendment, or equivalent
foreign regulatory filing, which could result in further delay. The regulatory agencies may also require additional studies if a new manufacturer
is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in
our desired clinical and commercial timelines.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These factors could cause us
to incur higher costs and, if we commence clinical development, could cause the delay or termination of clinical studies, regulatory submissions,
required approvals or commercialization of our product candidates. Furthermore, if our suppliers fail to meet contractual requirements
and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical studies
may be delayed or we could lose potential revenue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our reliance on third parties requires us
to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated
or disclosed.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because we rely on third parties
to develop and manufacture our product candidates, we must, at times, share trade secrets with them. We seek to protect our proprietary
technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research
agreements, consulting agreements or other similar agreements with our collaborators, advisors, employees and consultants prior to beginning
research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our
confidential information, such as trade secrets. Despite the contractual provisions employed when working with third parties, the need
to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors,
are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our
proprietary position is based, in part, on our know-how and trade secrets, a competitor&#8217;s discovery of our trade secrets or other
unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Risks Related to Ownership of Our Securities</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our executive officer, directors and certain
stockholders who are beneficial owners of 5% or more of our outstanding Common Stock possess the majority of our voting power, and through
this ownership, have the ability to control our Company and our corporate actions.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following the Share Exchange,
our current executive officer, directors and certain stockholders who are beneficial owners of 5% or more of our outstanding Common Stock
hold approximately 53% of the issued and outstanding voting power of the Company&#8217;s outstanding shares. These persons have a controlling
influence in determining the outcome of any corporate transaction or other matters submitted to our stockholders for approval, including
mergers, consolidations and the sale of all or substantially all of our assets, election of directors, and other significant corporate
actions. As such, our directors and executive officer may have the power, acting alone or together, to prevent or cause a change in control;
therefore, without their consent we could be prevented from entering into transactions that could be beneficial to us. The interests of
our executive officer may give rise to a conflict of interest with the Company and the Company&#8217;s shareholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we have a number
of stockholders who are beneficial owners of more than 5% of our outstanding Common Stock, as of June 28, 2022, including our Chief Executive
Officer who beneficially owns approximately 26% of our issued and outstanding shares, and as such, also may have the ability to prevent
us from entering into transactions that could be beneficial to us and/or other shareholders. In addition, we have three additional non-affiliated
stockholders who are beneficial owners of more than 5% of our outstanding Common Stock. Although none of these non-affiliated stockholders
currently have a controlling influence in determining the outcome of any corporate transaction or other matters submitted to our stockholders
for approval, including mergers, consolidations and the sale of all or substantially all of our assets, election of directors, and other
significant corporate actions, obtaining their vote on certain matters may be necessary to effect certain actions that our management
and directors otherwise deem to be in the best interests of the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For additional details concerning
beneficial ownership of our securities, please refer to the section below entitled &#8220;Beneficial Ownership of the Company&#8217;s
Common Stock&#8221; and with respect to voting power, please refer to the section below entitled &#8220;Description of Securities.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Investors may have difficulty in reselling
their shares due to the lack of market or state Blue Sky laws.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Common Stock is&#160;not
currently traded on any national securities exchange and is not quoted on any over-the-counter market. No market may ever develop for
our Common Stock, or if developed, may not be sustained in the future. The holders of our shares of Common Stock and persons who desire
to purchase them in any trading market that might develop in the future should be aware that there might be significant state law restrictions
upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the shares available for trading
on the over-the-counter markets, investors should consider any secondary market for our Common Stock to be a limited one.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may seek coverage and publication
of information regarding our Company in an accepted publication, which permits a &#8220;manual exemption.&#8221; This manual exemption
permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing
for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized
manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer&#8217;s balance sheet, and (3)
a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We
may not be able to secure a listing containing all of this information. Furthermore, the manual exemption is a non-issuer exemption restricted
to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are
those published in Standard and Poor&#8217;s, Moody&#8217;s Investor Service, Fitch&#8217;s Investment Service, and Best&#8217;s Insurance
Reports, and many states expressly recognize these manuals. A smaller number of states declare that they &#8220;recognize securities manuals&#8221;
but do not specify the recognized manuals. Accordingly, our Common Stock should be considered totally illiquid, which inhibits investors&#8217;
ability to resell their shares</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our Common Stock may never be listed on
a major stock exchange.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While we may seek the listing
of our Common Stock on a national or other securities exchange at some time in the future, we currently do not satisfy the initial listing
standards and cannot ensure that we will be able to satisfy such listing standards or that our Common Stock will be accepted for listing
on any such exchange.&#160;Should we fail to satisfy the initial listing standards of such exchanges, or our Common Stock is otherwise
rejected for listing, the trading price of our Common Stock could suffer, the trading market for our Common Stock may be less liquid,
and our Common Stock price may be subject to increased volatility.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>As a former shell company, resales of shares
of our restricted Common Stock in reliance on Rule 144 of the Securities Act are subject to the requirements of Rule 144(i).</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We previously were a &#8220;shell
company&#8221; and, as such, sales of our securities pursuant to Rule 144 under the Securities Act of 1933, as amended, cannot be made
unless, among other things, at the time of a proposed sale, we are subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, and have filed all reports and other materials required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 as amended, as applicable, during the preceding 12 months, other than Form 8-K reports. Because,
as a former shell company, the reporting requirements of Rule 144(i) will apply regardless of holding period, restrictive legends on certificates
for shares of our Common Stock cannot be removed except in connection with an actual sale that is subject to an effective registration
statement under, or an applicable exemption from the registration requirements of, the Securities Act of 1933, as amended. Because our
unregistered securities cannot be sold pursuant to Rule 144 unless we continue to meet such requirements, any unregistered securities
we issue will have limited liquidity unless we continue to comply with such requirements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The securities issued in connection with
the Share Exchange are restricted securities and may not be transferred in the absence of registration or the availability of a resale
exemption.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The shares of Common Stock
being issued in connection with the Share Exchange are being issued in reliance on an exemption from the registration requirements under
Section 4(a)(2) of the Securities Act. Consequently, these securities will be subject to restrictions on transfer under the Securities
Act and may not be transferred in the absence of registration or the availability of a resale exemption. In particular, in the absence
of registration, such securities cannot be resold to the public until certain requirements under Rule 144 promulgated under the Securities
Act have been satisfied, including certain holding period requirements. As a result, a purchaser who receives any such securities issued
in connection with the Share Exchange may be unable to sell such securities at the time or at the price or upon such other terms and conditions
as the purchaser desires, and the terms of such sale may be less favorable to the purchaser than might be obtainable in the absence of
such limitations and restrictions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We do not plan to declare or pay any dividends
to our stockholders in the near future.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have not declared any dividends
in the past, and we do not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends
will be made at the discretion of the board of directors and will depend upon, among other things, the results of operations, cash flows
and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is
no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such
dividend.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The requirements of being a reporting company
may strain our resources and distract management.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a reporting company, we
are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002 (the &#8220;Sarbanes-Oxley Act&#8221;).
These requirements are extensive. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business
and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls
over financial reporting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may incur significant costs
associated with our public company reporting requirements and costs associated with applicable corporate governance requirements.&#160;We
expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some
activities more time consuming and costly.&#160;This may divert management&#8217;s attention from other business concerns, which could
have a material adverse effect on our business, financial condition and results of operations.&#160;We also expect that these applicable
rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may
be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.&#160;As
a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive
officers. We are currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount
of additional costs we may incur or the timing of such costs.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If in the future there is a trading market
for our Common Stock, &#8220;penny stock&#8221; rules may make buying or selling our Common Stock difficult.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The SEC has adopted regulations
that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain
exceptions. These rules require that any broker-dealer that recommends our Common Stock to persons other than prior customers and accredited
investors, must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser&#8217;s
written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny
stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage
broker-dealers from effecting transactions in our Common Stock, which could severely limit the market price and liquidity of our Common
Stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The sales practice requirements of the Financial
Industry Regulatory Authority, or FINRA, may also limit a stockholder&#8217;s ability to buy and sell our stock.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to the &#8220;penny
stock&#8221; rules described above, FINRA has adopted Rule 2111 that requires a broker-dealer to have reasonable grounds for believing
that an investment is suitable for a customer before recommending the investment. Prior to recommending speculative low-priced securities
to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer&#8217;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 the Company&#8217;s Common Stock, which may limit your ability
to buy and sell the Company&#8217;s stock and have an adverse effect on the market for our shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We have not yet determined whether our existing
internal controls over financial reporting are in compliance with Section 404 of the Sarbanes-Oxley Act.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are not currently required
to comply with the rules of the SEC implementing Section 404 of the Sarbanes-Oxley Act (&#8220;Section 404&#8221;) and therefore are not
required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Compliance
with the SEC&#8217;s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial
and other information in our annual reports and provide an annual management report on the effectiveness of control over financial reporting.
Though we will be required to disclose material changes in internal control over financial reporting on an annual basis, we will not be
required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following
our first annual report required to be filed with the SEC. Additionally, as we do not qualify as an emerging growth company, we are required
to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal
control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal
resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control
over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning
as documented and implement a continuous reporting and improvement process for internal control over financial reporting. We have begun
the process of evaluating the adequacy of our accounting personnel staffing level and other matters related to our internal control over
financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at
all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses
once we are a public company, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability
of our financial statements. As a result, the market price of our Common Stock could be negatively affected, and we could become subject
to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require
additional financial and management resources.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Risks Related to our Operations in Israel</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our headquarters and other significant operations
are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our executive offices are located
in Tel Aviv-Jaffa, Israel. In addition, the majority of our officers and directors are residents of Israel. If these or any future facilities
in Israel were to be damaged, destroyed or otherwise unable to operate, whether due to war, acts of hostility, earthquakes, fire, floods,
hurricanes, storms, tornadoes, other natural disasters, employee malfeasance, terrorist acts, power outages or otherwise, or if performance
of our research and development is disrupted for any other reason, such an event could delay our clinical trials or, if our product candidates
are approved and we choose to manufacture all or any part of them internally, jeopardize our ability to manufacture our products as promptly
as our prospective customers will likely expect, or possibly at all. If we experience delays in achieving our development objectives,
or if we are unable to manufacture an approved product within a timeframe that meets our prospective customers&#8217; expectations, our
business, prospects, financial results and reputation could be harmed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Political, economic and military
conditions in Israel may directly affect our business. Since the establishment of the State of Israel in 1948, a number of armed conflicts
have taken place between Israel and groups in its neighboring countries, Hamas (an Islamist militia and political group that has historically
controlled the Gaza Strip) and Hezbollah (an Islamist militia and political group based in Lebanon). In addition, several countries, principally
in the Middle East, restrict doing business with Israel, and additional countries may impose restrictions on doing business with Israel
and Israeli companies whether as a result of hostilities in the region or otherwise. Any hostilities involving Israel, terrorist activities,
political instability or violence in the region or the interruption or curtailment of trade or transport between Israel and its trading
partners could adversely affect our operations and results of operations and the market price of our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our commercial insurance does
not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Although the Israeli
government is currently committed to covering the reinstatement value of direct damages that are caused by terrorist attacks or acts of
war, we cannot assure you that this government coverage will be maintained or, if maintained, will be sufficient to compensate us fully
for damages incurred. Any losses or damages incurred by us could have a material adverse effect on our business, financial condition and
results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our operations are subject to currency and
interest rate fluctuations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although our functional currency
is the U.S. dollar, and our financial records are maintained in U.S. dollars, we also incur expenses in Euros and New Israeli Shekels.
In the future, we expect that a substantial portion of our revenues will be generated in U.S. dollars, Euros and other foreign currencies,
although we currently incur a significant portion of our expenses in currencies other than U.S. dollars, mainly New Israeli Shekels. As
a result, we are affected by foreign currency exchange fluctuations through both translation risk and transaction risk, and our financial
results may be affected by fluctuations in the exchange rates of currencies in the countries in which our prospective product candidates
may be sold. We currently partially hedge our foreign currency exchange rate risk to decrease the risk of financial exposure from fluctuations
in the exchange rates of our principal operating currencies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>It may be difficult to enforce a judgment
of a U.S. court against us and our executive officers and directors and the Israeli experts named in this prospectus in Israel or the
United States, to assert U.S. securities laws claims in Israel or to serve process on our executive officers and directors and these experts.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We were incorporated in Israel.
Substantially all of our executive officers and directors reside outside of the United States, and all of our assets and most of the assets
of these persons are located outside of the United States. Therefore, a judgment obtained against us, or any of these persons, including
a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and
may not be enforced by an Israeli court. It also may be difficult for you to effect service of process on these persons in the United
States or to assert U.S. securities law claims in original actions instituted in Israel. Additionally, it may be difficult for an investor,
or any other person or entity, to initiate an action with respect to U.S. securities laws in Israel. Israeli courts may refuse to hear
a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum in which to bring
such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable
to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact by expert witnesses,
which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding
case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against
us in Israel, you may not be able to collect any damages awarded by either a U.S. or foreign court. See &#8220;Enforceability of Civil
Liabilities&#8221; for additional information on your ability to enforce a civil claim against us and our executive officers or directors
named in this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>General Risk Factors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Future changes in financial accounting standards
or practices may cause adverse unexpected financial reporting fluctuations and affect reported results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A change in accounting standards
or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before
the change is effective.&#160;New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and
may occur in the future.&#160;Changes to existing rules or the questioning of current practices may adversely affect our reported financial
results or the way we conduct business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Raising additional capital would cause dilution
to our existing shareholders, and may affect the rights of existing shareholders.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may seek additional capital
through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements.
To the extent that we raise additional capital through the issuance of equity or convertible debt securities, your ownership interest
will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Failure in our information technology systems,
including by cybersecurity attacks or other data security incidents, could significantly disrupt our operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our operations depend, in part,
on the continued performance of our information technology systems. Our information technology systems are potentially vulnerable to physical
or electronic break-ins, computer viruses and similar disruptions. Failure of our information technology systems could adversely affect
our business, profitability and financial condition. Although we have information technology security systems, a successful cybersecurity
attack or other data security incident could result in the misappropriation and/or loss of confidential or personal information, create
system interruptions, or deploy malicious software that attacks our systems. It is possible that a cybersecurity attack might not be noticed
for some period of time. The occurrence of a cybersecurity attack or incident could result in business interruptions from the disruption
of our information technology systems, or negative publicity resulting in reputational damage with our shareholders and other stakeholders
and/or increased costs to prevent, respond to or mitigate cybersecurity events. In addition, the unauthorized dissemination of sensitive
personal information or proprietary or confidential information could expose us or other third parties to regulatory fines or penalties,
litigation and potential liability, or otherwise harm our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may be subject to securities litigation,
which is expensive and could divert management attention.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the past, companies that
have experienced volatility in the market price of their shares have been subject to securities class action litigation. We may be the
target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management&#8217;s
attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant
liabilities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The requirements associated with being a
reporting company will require significant company resources and management attention.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are subject to the reporting
requirements of the Exchange Act. The Exchange Act requires that we file periodic reports with respect to our business and financial condition
and maintain effective disclosure controls and procedures and internal control over financial reporting. In addition, subsequent rules
implemented by the SEC may also impose various additional requirements on reporting companies. We estimate that these expenses will be
at least several tens of thousand dollars annually. Further, the need to establish the corporate infrastructure demanded of a reporting
company may divert management&#8217;s attention from implementing our development plans. We have made changes to our corporate governance
standards, disclosure controls and financial reporting and accounting systems to meet our reporting obligations. The measures we take,
however, may not be sufficient to satisfy our obligations as a public company, which could subject us to fines, sanctions and other regulatory
action and potentially civil litigation.</p><div>

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</div><div><a id="a_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company makes forward-looking
statements in this prospectus, including in the statements incorporated herein by reference. Forward-looking statements provide our current
expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives,
intentions, assumptions and other statements that are not historical facts. Words or phrases such as &#8220;anticipate,&#8221; &#8220;believe,&#8221;
&#8220;continue,&#8221; &#8220;estimate,&#8221; &#8220;expect,&#8221; &#8220;intend,&#8221; &#8220;may,&#8221; &#8220;ongoing,&#8221;
&#8220;plan,&#8221; &#8220;potential,&#8221; &#8220;predict,&#8221; &#8220;project,&#8221; &#8220;will&#8221; or similar words or phrases,
or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily
mean that a statement is not forward-looking. Examples of forward-looking statements in this prospectus include, but are not limited to,
statements regarding our disclosure concerning our operations, cash flows and financial position.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Forward-looking statements
appear in a number of places in this prospectus including, without limitation, in the sections entitled &#8220;Management&#8217;s Discussion
and Analysis of Financial Conditions and Results of Operations,&#8221; and &#8220;Business.&#8221; The risks and uncertainties include,
but are not limited to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">the regulatory pathways that we may elect to utilize in seeking U.S. Food and Drug Administration, or FDA, European Medicines Agency, or EMA, and other regulatory approvals, if any;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">obtaining (and the cost thereof) FDA and EMA approval of, or other regulatory action in Europe or the United States and elsewhere with respect to our product candidates;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">the potential cost of our rheumatoid arthritis product candidate, or RA and RA product candidate, respectively, for patients; </span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">our estimates regarding anticipated expenses, capital requirements and our needs for additional financing;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">completion and receiving favorable results of clinical trials for our product candidates;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">the filing by us, and the subsequent issuance of patents to us, by the U.S. Patent and Trademark Office and other governmental patent agencies; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These statements are only current
predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry&#8217;s actual
results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements.
We discuss many of these risks in this prospectus in greater detail under the section entitled &#8220;Risk Factors&#8221; and elsewhere
in this prospectus. You should not rely upon forward-looking statements as predictions of future events.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance,
or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as
a result of new information, future events or otherwise, after the date of this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>USE OF PROCEEDS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All of the shares of Common
Stock offered by the Selling Securityholders pursuant to this prospectus will be sold by the Selling Securityholders for their respective
accounts. We will not receive any of the proceeds from these sales. All proceeds from the sale of the Common Stock will be paid directly
to the Selling Securityholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->29<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_005"></a></div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b>MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF<br/>
FINANCIAL CONDITION AND RESULTS OF OPERATIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>The following discussion
and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements
and the related notes included elsewhere herein and in our consolidated financial statements.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>In addition to our consolidated
financial statements, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the forward-looking statements. See &#8220;Cautionary Statement Regarding
Forward-Looking Statements&#8221; and &#8220;Risk Factors&#8221; for a discussion of the uncertainties, risks and assumptions associated
with these statements.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Overview</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a pharmaceutical drug
research and development company focused on the discovery and clinical development of life-improving drug therapies based on cannabinoids,
including CBD oil. Unless indicated otherwise, we plan on using oil derived from CBD strains with low levels of THC. All references to
the use of CBD in our product candidates refer to CBD strains with less than 0.3% of THC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are currently in the pre-clinical
development stage for our lead product candidate, our RA product candidate for the treatment of RA. In addition, we are aiming to develop
our COVID-19 product candidate, which may be based on data or studies related to our RA product candidate. Our goal is to become a leader
in development of CBD oil-based pharmaceutical drug products for the treatment of indications in which we believe there is a high unmet
medical need in a range of disorders, including those related to inflammation in the body, including RA and COVID-19.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to achieve our goal,
we have and will continue to build an experienced team of senior executives and scientists, with experience in all facets of pharmaceutical
research and development, drug formulation, clinical trial execution and regulatory submissions. We intend to leverage the knowledge of
our team in order to complete the clinical trials needed to receive approvals of our product candidates from applicable regulatory authorities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Initially, we intend to obtain
approvals for our product candidates from the FDA and MOH. Upon obtaining FDA approvals, or in the event that we are not successful in
obtaining such approvals, we intend to apply for EMA and other countries&#8217; governmental regulatory agencies approvals for our product
candidates. If we are successful in obtaining FDA approvals for our product candidates, we intend to enter into royalty agreements with
GMP approved medical manufactures and distributors, having them using our medical formulas strains for the purpose of growing, cultivating,
manufacturing, and distributing Raphael Pharmaceutical medical indications in their designated territories.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Components of Operating Results</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Operating Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current operating expenses
consist of two components &#8211; research and development expenses, and general and administrative expenses. To date, we have not generated
any revenues. We do not expect to receive any revenue from our product candidate unless and until we obtain regulatory approval and commercialize
our product candidate or enter into agreements with third parties to commercialize them. There can be no assurance that we will receive
such regulatory approvals, and if our product candidate is approved, that we will be successful in commercializing them.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Research and Development Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Research and development activities
are our primary focus. Products in later stages of clinical development generally have higher development costs than those in earlier
stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research
and development expenses will increase as we prepare for, and commence, registrational clinical trials of our RA and COVID-19 product
candidates. A key activity in progressing our product candidates toward registrational trials is the development of large-scale manufacturing
processes that are tailored specifically to our product candidate. In order to confirm the suitability of a new manufacturing facility
and/or process, numerous experiments are needed. Moreover, the regulatory requirements in preparation for manufacturing a drug to be used
in a registrational trial or for commercial use involve validation activities and extensive updates to our regulatory files, all of which
are lengthy and costly activities. For these reasons, the development of manufacturing processes currently represents the largest portion
of our research and development expenses. Research and development expenses include, but are not limited to, the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; font-size: 10pt; text-align: justify">&#160;</td>
    <td style="width: 24px; font-size: 10pt; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>General and Administrative Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">General and administrative
expenses consist primarily of employee related expenses, including salaries, benefits, and equity-based compensation, for personnel in
executive, finance, accounting, business development and human resources functions. Other significant costs include facility costs not
otherwise included in research and development expenses, legal fees relating to patent and corporate matters, and fees for accounting
and consulting services.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We anticipate that our general
and administrative expenses will increase in the future to support continued research and development activities, potential commercialization
of our product candidates and increased costs of operating as a public company. These increases will likely include increased costs related
to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses. We also anticipate
increased expenses related to the reimbursements of third-party patent related expenses in connection with the ongoing interference proceeding
with respect to certain of our in-licensed intellectual property. Additionally, we anticipate increased costs associated with being a
public company, including expenses related to services associated with maintaining compliance with SEC requirements and insurance costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Comparison of the Year Ended December 31, 2021
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Results of Operations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding: 0pt; text-indent: 0pt">&#160;</td><td style="padding: 0pt; font-weight: bold; text-indent: 0pt">&#160;</td>
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Year&#160;Ended <br/> December&#160;31,</td><td style="padding: 0pt; font-weight: bold; text-indent: 0pt">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0pt; text-indent: 0pt">&#160;</td><td style="padding: 0pt; text-indent: 0pt">&#160;</td>
    <td style="padding: 0pt; text-align: left; text-indent: 0pt">&#160;</td><td style="padding: 0pt; text-align: right; text-indent: 0pt">&#160;</td><td style="padding: 0pt; text-align: left; text-indent: 0pt">&#160;</td><td style="padding: 0pt; text-indent: 0pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Research and Development Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our research and development
expenses totaled $776,000 for the year ended December 31, 2021, representing an increase of $315,000, or 68%, compared to $461,000 for
the year ended December 31, 2020. The increase was primarily attributable to the increase in our expenses to our consultants and service
providers, which resulted from the increase in research activity, mainly with Rambam Hospital.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>General and Administrative Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our general and administrative
expenses totaled $853,000 for the year ended December 31, 2021, representing an increase of $608,000, or 248%, compared to $245,000 for
the year ended December 31, 2020. The increase was primarily attributable to increase in our fees for our consultants and professional
services which was as a result of increase in our activity and being a public Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Operating Loss</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of the foregoing,
our operating loss totaled $1,629,000 for the year ended December 31, 2021, representing an increase of $923,000, or 130%, compared to
$706,000 for the year ended December 31, 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Financial income (expense), net</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We recognized financing income,
net of $4,000 for the year ended December 31, 2021, representing a decrease of $16,000, or 133%, compared to finance expenses of $12,000
for the year ended December 31, 2020. The decrease was primarily attributable to exchange rate differences between the U.S. dollar and
the New Israeli Shekel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Net and Comprehensive Loss</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of the foregoing,
our loss totaled $1,625,000 for the year ended December 31, 2021, representing an increase of $907,000, or 126%, compared to $718,000
for the year ended December 31, 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Comparison of the Three Months Ended March
31, 2022 to the Three Months Ended March 31, 2021</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Results of Operations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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  <tr style="vertical-align: bottom">
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 Months<br/> Ended<br/> March&#160;31,</td><td style="padding-left: 0pt; font-weight: bold; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; font-weight: bold; text-indent: 0pt">&#160;</td>
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 Months<br/> Ended <br/> March&#160;31,</td><td style="padding-left: 0pt; font-weight: bold; text-indent: 0pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: 0pt; padding-left: 0pt">&#160;</td><td style="padding-left: 0pt; text-indent: 0pt">&#160;</td>
    <td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: right; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-indent: 0pt">&#160;</td>
    <td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: right; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td></tr>
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    <td style="text-indent: 0pt; padding-left: 0pt">&#160;</td><td style="padding-left: 0pt; text-indent: 0pt">&#160;</td>
    <td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: right; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-indent: 0pt">&#160;</td>
    <td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: right; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: right; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-indent: 0pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: right; text-indent: 0pt">&#160;</td><td style="padding-left: 0pt; text-align: left; text-indent: 0pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Research and Development Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our research and development
expenses totaled $86,000 for the three months ended March 31, 2022, representing a decrease of $83,000, or 49%, compared to $169,000 for
the three months ended March 31, 2021. The decrease was primarily attributable to the decrease in pre-clinical trial expenses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>General and Administrative Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our general and administrative
expenses totaled $89,000 for the three months ended March 31, 2022, representing a increase of $6,000, or 7%, compared to $83,000 for
the three months ended March 31, 2021. The increase was primarily due to lower professional services expenses in 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Operating Loss</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our operating loss totaled
$175,000 for the three months ended March 31, 2022, representing a decrease of $77,000, or 30%, compared to $252,000 for the three months
ended March 31, 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Financial expense</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We recognized financial expense
of $10,000 for the three months ended March 31, 2022, representing an increase of $7,000, or 233%, compared to $3,000 for the three months
ended March 31, 2021. The increase was primarily due to an increase in exchange rate differences.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Net Loss</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of the foregoing,
our loss totaled $185,000 for the three months ended March 31, 2022, representing a decrease of $70,000, or 27%, compared to $255,000
for the three months ended March 31, 2021.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Critical Accounting Estimates </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our consolidated financial
statements are prepared in accordance with US GAAP. There are no critical accounting estimates for the years ended December 31, 2021 and
2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Liquidity and Capital Resources</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has funded its
operations to date primarily through equity financing and the issuance of a loan. Additional funding will be required to complete the
Company&#8217;s research and development and clinical trials, to attain regulatory approvals, to begin the commercialization efforts of
the Company&#8217;s product and to achieve a level of sales adequate to support the Company&#8217;s cost structure. As of December 31,
2021, we had $0.15 million in cash and cash equivalents, and have invested most of our available cash funds in ongoing cash accounts.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Overview</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The table below presents our
cash flows for the periods indicated:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">(82,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">(129,000</td><td style="width: 1%; text-align: left">)</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">45,000</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">(85,000</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in operating
activities was $1,419,000 for the year ended December 31, 2021, compared with net cash used in operating activities of $779,000 for the
year ended December 31, 2020. The $640,000 increase in the net cash used in operating activities during 2021, compared to 2020, was primarily
the result of $907,000 increase in net loss which was offset by an increase of $234,000 in other account payables and accrued expenses
which derived mainly from the increase in Company&#8217;s activity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in operating
activities was $82,000 for the three months period ended March 31, 2022, compared with net cash used in operating activities of $129,000
for the same period in 2021. The $47,000 decrease in the net cash used in operating activities during 2022, compared to 2021, was primarily
the result of $70,000 decrease in net loss.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in investing
activities for the year ended December 31, 2021 and for the year ended December 31, 2020 was zero.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in investing
activities for the three months period ended March 31, 2022 and for the same period in 2021 was zero.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash provided by financing
activities for the year ended December 31, 2021 was $1,477,000 compared to $824,000 for the year ended December 31, 2020. The increase
of $653,000 in net cash provided by financing activities during 2021 compared to 2020 was mainly due to increase of $823,000 in issuance
of shares of Common Stock which was offset by a decrease of $183,000 in receipt of a loan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash provided by financing
activities for the three months period ended March 31, 2022 was $10,000 compared to $44,000 for the same period in 2021. The decrease
in net cash provided by financing activities during 2022 compared to 2021 was mainly due to increase in proceeds from issuance of Common
Stock at the amount of $10,000 which was offset by a receipt of a loan in 2021 at the amount of $44,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Current Outlook</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have financed our operations
to date primarily through proceeds from founder&#8217;s capital and issuance of shares and warrants. We have incurred losses and generated
negative cash flows from operations since inception. To date we have not generated revenue, and we do not expect to generate significant
revenues from the sale of our products in the near future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not believe that our
current cash on hand will be sufficient to fund our projected operating requirements. This raises substantial doubt about our ability
to continue as a going concern. At this time, there is no guarantee that we will be able to obtain an adequate level of financial resources
required for the short and long-term support of our operations or that we will be able to obtain additional financing as needed, or meet
the conditions of such financing, or that the costs of such financing may not be prohibitive. These conditions raise substantial doubt
about our ability to continue as a going concern for a period within one year from the date of the financial statements included elsewhere
in this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December 31, 2021, our
cash and cash equivalents were $0.15 million. We believe that our existing cash and cash equivalents will be sufficient to fund our projected
cash requirements through June 2022. Therefore, we will require significant additional financing in the near future to fund our operations.
We currently anticipate that we will require approximately $0.6 million for research and development activities over the course of the
next 12 months. We also anticipate that we will require approximately $1.4 million for capital expenditures over such 12-month period,
which consists primarily of expenditures for pre-clinical trials, mice model trials and clinical trials and general Company operating
costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->34<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, our operating
plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than
planned. Our future capital requirements will depend on many factors, including:&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to the foregoing,
based on our current assessment, we do not expect any material impact on our long-term liquidity due to the COVID-19 pandemic. However,
we will continue to assess the effect of the pandemic to our operations. The extent to which the COVID-19 pandemic will impact our business
and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the duration
of the COVID-19 pandemic, any restrictions on the ability of hospitals and trial sites to conduct trials that are not designed to address
the COVID-19 pandemic and the perceived effectiveness of actions taken in Israel, the United States and Europe and other countries to
contain and treat the disease. While the potential economic impact brought by COVID-19 may be difficult to assess or predict, a widespread
pandemic could result in significant disruption of global financial markets, reducing our ability to access capital in the future. In
addition, a recession or long-term market correction resulting from the spread of COVID-19 could materially affect our business and the
value of our Common Stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Until we can generate significant
revenues, if ever, we expect to satisfy our future cash needs through our existing cash, cash equivalents and short-term deposits, loans,
or debt or equity financings. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If
funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization
efforts with respect to, one or more applications of our products. This may raise substantial doubts about our ability to continue as
a going concern.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Off-Balance Sheet Arrangements </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Rambam Research Agreement</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 17, 2019, we entered
into a sponsored research agreement, or the Research Agreement, with Rambam MT, pursuant to which the Company agreed to fund a research
project, to be performed by Rambam MD, with a research plan aimed at identifying the effects of different cannabis strains on the function
of immune cells. On October 28, 2020, the Company and Rambam MT agreed to expand the research plan to study the anti-inflammatory activities
of cannabis extracts in an RA mouse model. On February 15, 2021, the Company and Rambam MT agreed to further expand the research plan
to study the effect of cannabis extracts on the immunopathology of the COVID-19 disease. The Sponsored Researched Agreement is for an
initial term of 48 months.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Research Agreement,
we agreed to pay Rambam $1.4 million in four equal payments, due on the first day of August on each successive year from 2019 through
2022. Furthermore, in accordance with the terms of the Research Agreement, we and Rambam MT will have joint ownership of any IP created
as a result of research programs covered by such agreement. In connection with the Research Agreement, Rambam MT agreed not to work, study
or develop any technologies with other entities that compete with our work with Rambam MT for our COVID-19 product candidate or RA product
candidate for a term of three and seven years, respectively, from the end of the parties&#8217; collaboration with respect to the COVID-19
product candidate and seven years from the end of the term of the Research Agreement with respect to the RA product candidate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to commercial sales
of any product candidate using the intellectual property created as a part of the research covered by such agreement, Raphael Israel is
required to pay Rambam MT a royalty in an amount equal to 6% of all net sales, subject to certain deductions, such as taxes paid by any
purchaser, transportation and shipping costs, and other customary deductions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 28, 2022, the Company
has made three of the four equal payments due pursuant to the Research Agreement, for a total amount of $1,050,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Way of Life Cannabis Agreement</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2020, Raphael Israel
entered into an engagement agreement with Wolc, pursuant to which, subject to its completing the Share Exchange with Easy Energy, Raphael
Israel will be provided with up to 15 liters of CBD oil, from a strain of cannabis during a term of 18 months, to be provided in two to
three deliveries of between one to seven liters of CBD oil. In accordance with Raphael Israel&#8217;s agreement with Wolc, Raphael Israel
has agreed to issue to certain persons affiliated with Wolc 3% of Raphael&#8217;s issued and outstanding share capital as of the date
of the Share Exchange, to be provided in three equal issuances; provided, however, that such persons may elect to receive a cash payment
of $100,000 instead of any one issuance of Raphael&#8217;s shares. In addition to the issuance of shares, Raphael Israel has also agreed
to pay Wolc a royalty fee equal to 15% of the net royalties generated from sales of Raphael Israel&#8217;s pharmaceutical drug products
that are developed at Rambam hospital in Israel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except for the above, we have
not engaged in any off-balance sheet arrangements, such as the use of unconsolidated subsidiaries, structured finance, special purpose
entities or variable interest entities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not believe that our
off-balance sheet arrangements and commitments have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that
is material to investors.</p><div>

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</div><div><a id="a_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>BUSINESS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Overview</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a pharmaceutical drug
research and development company focused on the discovery and clinical development of life-improving drug therapies based on cannabinoids,
including cannabidiol, or CBD, oil. Unless indicated otherwise, we plan on using oil derived from CBD strains with low levels of Tetrahydrocannabinol,
or THC. All references to the use of CBD in our product candidates refer to CBD strains with less than 0.3% of THC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are currently in the pre-clinical
development stage for our lead product candidate, our RA product candidate for the treatment of RA. In addition, we are aiming to develop
a pharmaceutical drug product for the treatment of hyperinflammatory syndrome inflammation related to COVID-19, or our COVID-19 product
candidate, which may be based on data or studies related to our RA product candidate. We successfully completed a preclinical study for
the RA product candidate at Rambam Hospital as well as a mice model trial.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;On February 9, 2022,
we filed an application for a clinical trial with the Medical Cannabis Unit of the Ministry of Health of Israel, or MOH. On February 16,
2022 we submitted an application with the Helsinki Committee at Rambam Hospital for a clinical trial in COVID-19 patients. The Company
plans to submit such applications for our RA product during 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our goal is to become a leader
in development of CBD oil-based pharmaceutical drug products for the treatment of indications in which we believe there is a high unmet
medical need in a range of disorders, including those related to inflammation in the body, including RA and COVID-19.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to achieve our goal,
we have and will continue to build an experienced team of senior executives and scientists, with experience in all facets of pharmaceutical
research and development, drug formulation, clinical trial execution and regulatory submissions. We intend to leverage the knowledge of
our team in order to complete the clinical trials needed to receive approvals of our product candidates from applicable regulatory authorities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Initially, we intend to obtain
FDA approvals for our product candidates. Upon obtaining FDA approvals, or in the event that we are not successful in obtaining such approvals,
we intend to apply for EMA and other countries&#8217; governmental regulatory agencies approvals for our product candidates. If we are
successful in obtaining FDA approvals for our product candidates, we intend to enter into royalty agreements with GMP approved medical
manufactures and distributors, having them using our medical formulas for the purpose of growing, cultivating, manufacturing, and distributing
Raphael Pharmaceutical medical indications in their designated territories.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our discovery platform currently
focuses the use of CBD oil, one of the cannabinoids in cannabis plants, as the active pharmaceutical ingredient, or API, for our RA product
candidate and COVID-19 product candidate. Research results published in 2018 (&#8220;Translational Investigation of the Therapeutic Potential
of Cannabidiol (CBD): Toward a New Age&#8221;) has shown that there may be benefits to treading medical conditions, or their effects,
with cannabinoids, and more specifically, with CBD, which may help reduce chronic pain by impacting endocannabinoid receptor activity,
reducing inflammation and interacting with neurotransmitters. This research has also shown that CBD may have neuroprotective properties,
and could have the ability to (i) reduce anxiety and depression, (ii) alleviate cancer-related symptoms, (iii) reduce acne and (iv) benefit
heart health.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Over the last few years, pharmaceutical
drug products that include parts of the cannabis plant have begun to receive regulatory approvals for use in patients suffering from certain
disorders, as highlighted below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Nabiximols, better known under the tradename Sativex, is a botanical mouth spray consisting of natural THC and CBD extracts, that received approval in the United Kingdom in 2010 for the alleviation of multiple sclerosis, or MS, symptoms like spasticity, pain and overactive bladder.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Dronabinol, better known under the name Marinol, contains mainly THC and is a partial agonist of the cannabinoid receptor type 1, or CB1, in the nervous system and a partial agonist of the cannabinoid receptor type 2, or CB2, in the periphery that activates appetite, mood, cognition, memory and perception. Dronabinol received FDA-approval for use in United States in 1985 for treatment of anorexia in acquired immunodeficiency syndrome, or AIDS, patients and for the prevention of chemotherapy-induced nausea and vomiting, or CINV. A Lack of randomized controlled trials, or RCTs, makes a recommendation for usage of dronabinol as a third-line treatment for CINV difficult. Dronabinol in the form of an oral tablet is known under the trade name Namisol. It has high bioavailability and a long shelf life and is indicated for MS, chronic pain and behavioral disturbances in dementia patients.</span></td></tr>
  </table><div>
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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Nabilone, better known under the tradename Cesamet, contains primarily THC, is approved for use as an anti-emetic and adjunctive analgesic for neuropathic pain, CINV and treatment for anorexia in AIDS patients in Canada, Mexico, the UK and the United States. Its main usage today is as adjunct medicine for chronic pain management.</span></td></tr>
  </table><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In light of the past regulatory
approvals for other pharmaceutical drug products and, more specifically, the potential beneficial effects of CBD and other parts of the
cannabis plant, we believe that a drug discovery platform based on CBD may offer new and differentiated treatment options for patients.
Prior regulatory approvals of other companies&#8217; pharmaceutical drug products do not serve as an indication as to the ability or likelihood
that we receive regulatory approval to commercialize any of our product candidates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">After two successful years
of pre-clinical research and studies at the laboratories of Rambam Hospital, in January 2021, we commenced a pre-clinical trial in mice
for our RA product candidate that we expect will take four to five months. Following the completion of this pre-clinical trial, we intend
on submitting an Investigational New Drug, or IND, application to the FDA and MOH. See &#8220;&#8211; Research and Clinical Development
Strategy &#8211; Clinical Development Plan&#8221; for additional information on the ongoing pre-clinical trial and our planned clinical
trial for our RA product candidate. In addition, with respect to our COVID-19 product candidate, our clinical research partners have been
focused on the effect of cannabinoids and cannabis extracts on immune cells which induce acute inflammation. This study will begin in
the pre-clinical level in immune cell models and, subject to positive results that exhibit downregulation of pro-inflammatory cytokines
by cannabis extract, the study was completed successfully. Following the completion of the pre-clinical study, a mice model was conducted
to analyze for acute inflammation, which resembles the immunopathology of COVID-19. The mice model was successfully completed and we have
registered for a clinical trial in patients with the MOH.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a pharmaceutical research
and clinical development company we do not own or operate, and currently do not intend on creating an in-house team to manufacture and
commercialize our pharmaceutical drug products, if any, that receive regulatory approval allowing for commercialization. We currently
rely, and expect to continue to rely, on third parties for the manufacturing of our product candidates for preclinical and clinical testing,
as well as for commercial manufacturing of any pharmaceutical drug products for which we may receive regulatory approval. Subject to the
receipt of such regulatory approvals, we intend on cooperating with manufacturers and other third parties to manufacture and commercialize
approved pharmaceutical drug products.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Product Pipeline</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Currently, we have begun development
for our RA and COVID-19 product candidates, which are in the pre-clinical stage.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Assuming that we successfully
complete the clinical development of our RA and COVID-19 product candidates, we intend to then turn our attention to the clinical development
of cannabinoid-based drug products for the treatment of certain oncology indications. Unlike our RA and COVID-19 product candidate, the
use of our cannabinoid based drug products for the treatment of certain oncology indications will require specific dosing and potentially,
a different regulatory pathway than our existing product candidates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We intend to apply for MOH
approval, as well as the FDA and EMA approvals right afterwards, subject to the completion of the applicable clinical trials, for our
RA product candidate as well as our COVID-19 product candidate using the FDA&#8217;s regulatory pathway for drug products.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Indications and Market</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Rheumatoid Arthritis </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">RA is an autoimmune disease
of unknown cause characterized by inflammation in multiple joints, including synovial inflammation with hyperplasia. Inflammation is also
associated with reduced hemoglobin (anemia) and reduced albumin and changes in levels of cholesterol and triglycerides. In addition to
the inflammation associated with RA, studies, including a 2018 publication entitled, &#8220;Cartilage and bone damage in rheumatoid arthritis,&#8221;
patients suffering from RA generally also suffer from chronic pain, fatigue, progressive joint damage, disability, hyperplasia, production
of autoantibodies such as rheumatoid factor and anti&#8211;citrullinated protein antibody, cartilage damage and bone erosions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Research has shown that in
about 30% of RA patients, current conventional synthetic and biologic disease modifying anti-rheumatic drugs and targeting molecules may
fail or induce only partial responses, both of which we believe are insufficient for patients suffering from RA. Using disease modified
anti-rheumatic drugs, or DMARD, based treatments, as shown in a 2017 study from Sohita Dhillon, patients tend to report at follow-up meetings
that pain relief is unsatisfactory and although there is an initial improvements in the average pain score, a plateau may be reached beyond
which DMARDs are not able to resolve RA pain. As a result, we believe that RA patients need ongoing therapy as RA relapses are frequent.
During RA flareups, patients experience acute and chronic pain, fatigue, sleep disturbances, and morning stiffness which significantly
reduces their quality of life. Furthermore, damage is accumulated by long-term disease which also interferes with pain, fatigue and quality
of life.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All types of pain (acute or
chronic, widespread or local and nociceptive) have been reported in RA. Patients with RA may develop fibromyalgia, or FM, especially with
long-term disease. Concomitant FM is a key factor for discordance between PRO and clinical outcomes in assessment of RA patients including
in RCTs. Peripheral sensitization, induced by local inflammation or damage, and pain augmentation by the central nervous system, or CNS,
both drives the pain problems in RA patients. Anxiety or depression, impaired sleep and fatigue all contribute to pain sensitization in
RA patients. As noted in the study, &#8220;Tackling Pain Associated with Rheumatoid Arthritis: Proton-Sensing Receptors,&#8221; some RA
patients have allodynia and peripheral neuropathies that contribute to refractory chronic pain.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that clinical studies
on the use of cannabinoids in rheumatic conditions, and particularly RA, are logically advocated as possible positive effectors of the
inflammatory pathway of RA, as well as symptomatic pain relievers that may have the potential to also improve fatigue, sleep disorder
and tolerability of DMARDs. Through our Sponsored Research Agreement (as further detailed below), we believe that we have arrived at an
understanding as to how cannabinoids influence inflammation. Applying immune cells models in our pre-clinical research, we identified
specific strains of cannabis which reduce the capacity of the immune cells to communicate during inflammation, thus decreasing their capacity
to participate in chronic inflammation. For a deeper understanding of the mechanism in which cannabinoids effect inflammation, we developed
a unique, real time-Polymerase chain reaction, or RT-PCR, method to identify 10 different receptors to cannabinoids, both in human and
mice models. We believe that this technology will allow us to identify which cannabinoids receptors are participating in the downregulation
of inflammation, which we believe will help us develop our RA product candidate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2015 alone, research conducted
by the NIH National Library of Medicine showed that RA affected about 24.5 million people as of 2015, which reflected between 0.5% and
1% of adults in the&#160;developed world,&#160;with an additional 5 to 50 per 100,000 people developing the condition each year. It is
believed that onset is most frequent during middle age and women are affected 2.5 times as frequently as men. Further research indicates
that RA resulted in 38,000 deaths in 2013, up from 28,000 deaths in 1990.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Hyperinflammatory Syndrome Related to COVID-19</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since the first emergence
of COVID-19 in December 2019 in Wuhan, China, COVID-19 has spread across more than 200 countries across the world and over 112 million
cases of the virus have been reported. Most patients develop only mild symptoms of COVID-19; however, some develop severe symptoms including
dyspnea, hypoxia and lung involvement which requires hospitalization. Based on research, we believe that most of the severe COVID-19 symptoms
are related to hyperinflammation caused by failure of resolution of the immunological response to the infection similar as observed in
cytokine release syndrome. Treatments with anti-inflammatory or anti-viral drugs are still experimental or have not reduced mortality.
Moreover, they are administered only to inpatients in a severe disease state. As a result of the foregoing, the necessity of finding new
anti-inflammatory therapies that have the potential to prevent deterioration of the symptoms is heightened.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Research and Clinical Development Strategy</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Research and clinical development
of our pharmaceutical drug product candidates is our core business. We are currently focused on developing innovative cannabinoid-based
medical indications that we aim to push through Phase 2A and Phase 2B approval from both the FDA and EMA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The research efforts that
have been conducted to date by the team at Rambam Med-Tech Ltd., or Rambam MT, are aimed at revealing the mechanism which structures the
activity of cannabinoids in human cells and organs, while applying a variety of disease models. We are using our PCR method to identify
different receptors to cannabinoids and which we believe will allow us to identify which cannabinoids receptors are participating in the
downregulation of inflammation. We believe that this strategy will allow us to identify the cannabinoids components of a chosen strain
in order to accurately administer cannabinoids targeted to the treatment of patients.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Research Agreement with Rambam MT</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 17, 2019, we entered
into a sponsored research agreement, or the Research Agreement, with Rambam MT, pursuant to which the Company agreed to fund a research
project, to be performed by Rambam MD, with a research plan aimed at identifying the effects of different cannabis strains on the function
of immune cells. On October 28, 2020, the Company and Rambam MT agreed to expand the research plan to study the anti-inflammatory activities
of cannabis extracts in an RA mouse model. On February 15, 2021, the Company and Rambam MT agreed to further expand the research plan
to study the effect of cannabis extracts on the immunopathology of the COVID-19 disease. The Sponsored Researched Agreement is for an
initial term of 48 months.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Research Agreement,
we agreed to pay Rambam $1.4 million in four equal payments, due on the first day of August on each successive year from 2019 through
2022. Furthermore, in accordance with the terms of the Research Agreement, we and Rambam MT will have joint ownership of any IP created
as a result of research programs covered by such agreement. In connection with the Research Agreement, Rambam MT agreed not to work, study
or develop any technologies with other entities that compete with our work with Rambam MT for our COVID-19 product candidate or RA product
candidate for a term of three and seven years, respectively, from the end of the parties&#8217; collaboration with respect to the COVID-19
product candidate and seven years from the end of the term of the Research Agreement with respect to the RA product candidate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to commercial sales
of any product candidate using the IP created as a part of the research covered by such agreement, we are required to pay Rambam MT a
royalty in an amount equal to 6% of all net sales, subject to certain deductions, such as taxes paid by any purchaser, transportation
and shipping costs, and other customary deductions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 28, 2022, the Company
has made three of the four equal payments due pursuant to the Research Agreement, for a total amount of $1,050,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We and Rambam MT are currently
focused on characterizing the activity of cannabinoids in RA and in hyperinflammatory syndrome related to COVID-19. RA is a long-term
autoimmune disorder, and as such, the research conducted by Rambam MT has focused on identifying the effect of cannabinoids on inflammatory
processes related to RA, while, with respect to our COVID-19 product candidate, their research has been focused on the effect of cannabinoids
and cannabis extracts on immune cells which induce acute inflammation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Pre-Clinical Studies for RA Product Candidate</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>In Vitro Study</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Research Agreement,
the team at Rambam MT established a study in order to determine which cannabis strains extracts may affect inflammation. The lab applied&#160;an
<i>in vitro</i> system, allowing them to screen a variety of cannabis derived oil extracts and their influence on cytokine secretion,
which is a type of response to injury and infection in the body.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The researchers employed human
THP1 cells, which can be induced to differentiate macrophages (specialized cells involved in the detection, phagocytosis and destruction
of bacteria and other harmful organisms) and to secrete cytokines (which is aimed as serving as a bridge for cross-communication with
other innate immune cells). Using this system, our partners from Rambam MT have established a variety of cannabinoids and studied their
influence on pro-inflammatory and anti-inflammatory cytokines.&#160;Most interestingly the study has identified a non-psychoactive cannabis
strain, which we refer to as &#8220;CAN1.&#8221; Our study showed that CAN1 reduced TNF&#945; and IL-6 secretion but increased the secretion
of the anti-inflammatory cytokine IL-10, while also reducing the secretion of the pro-inflammatory chemokine IL-8, as highlighted in Figure
1 below. Based on the results from this pre-clinical study, we believe that CAN1 strain, may be a potential anti-inflammatory agent with
the ability to influence both activation and migration of cells during inflammation.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Figure 1.</b> CAN1 downregulates pro-inflammatory
cytokines (TNF&#945;, IL-8, IL-6) and upregulates the anti-inflammatory counterpart IL-10.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The results in Figure 1 above
reflect the results from our in vitro study of THP1 cells (0.25*10&#x5e;6/ml) incubated with phorbol 12-myristate 13-acetate (PMA) (50 ng/ml)
to induce THP1 cells to differentiate to macrophages. for 48 hours. Then, cells were washed twice with phosphate buffer saline (PBS) and
treated with Can1 (1 &#181;g/ml) in medium free serum for 24 hours. Then, cells were washed twice with PBS and incubated with LPS (Lipopolysaccharides)
to induce cytokines secretion (1 &#181;g/ml) overnight. Supernatants were collected and frozen. Levels of TNF&#945;, IL-8, IL-6 and
IL-10 were determined by the enzyme-linked immunosorbent assay (ELISA).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Pre-Clinical Study in Mice</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2021, we commenced
a pre-clinical study in mice. Mice in our pre-clinical study are being treated with cannabis strains that we previously identified in
our in vitro study and other prior research as potential candidates in the cell models. Following the treatment, we expect to examine
the ability of the treatment to modulate the immune function, specifically in the case of chronic inflammation, in order to optimize treatment
for RA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This pre-clinical study is
expected to be focused on the following results.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Aim 1: Evaluating the immune modulatory properties of different cannabis strains related to the immunopathology (i.e., the immune responses) in RA;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Aim 2: Demonstrating the immunomodulatory properties of specific cannabis extracts on a mouse model for RA;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Aim 3: Elucidating the mechanisms of action, or MOA, of cannabinoids that are involved in the regulation of inflammation in RA; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Aim 4: Establishing a phase 1 and 2 clinical trial experiment in compliance with FDA and EMA rules and regulations to study the effect of cannabis-based medical indication on RA.</span></td></tr>
  </table><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, this pre-clinical
study is expected to enable us to examine how we manufacture the API, the dosage design, analytical and bioanalytical method development
and validation, metabolism and pharmacokinetics, toxicology, both safety and genetic toxicology and possibly safety pharmacology; and
good manufacturing practice, or GMP, manufacture and documentation of drug product for use in clinical trials.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Aim 1. Evaluating the immune modulation
properties of different cannabis strains</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Rheumatic diseases, including
RA, are characterized by chronic inflammation that affects the connective tissue or supporting structures of the body, most commonly the
joints, but also tendons, ligaments, bones, and muscles, while certain rheumatic diseases can also have an adverse effect on certain organs.
RA, the latter of which means &#8220;joint inflammation,&#8221; encompasses more than 100 different disorders, including, for example,
join inflammation disorders, including RA, psoriatic arthritis, or PsA, systemic lupus erythematosus, or SLE, or lupus, gout and ankylosing
spondylitis, or AS. Therefore, a major goal for therapies of rheumatic diseases is the application of agents with immune modulation properties
with the ability to suppress effector autoimmune cells and to increase the activity of regulatory immune cells.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It is our belief, based on
the research conducted by our partners, and that or our industry peers, that cannabinoids have immunomodulatory properties, although the
exact effects are not fully comprehended. Together with the team at the Medical Cannabis Research and Innovation Center, we intend on
working to identify and characterize the types of cannabis strains as well as specific cannabinoids with immune modulatory function that
lie in the usage of cannabis in the treatment of rheumatic diseases. We aim to do this by evaluating the immune regulatory properties
of different cannabis strains on a variety of subsets of immune cells including lymphocytes and myeloid cells, which we plan to have purified
from the rodent model of rheumatic disease and from healthy humans or humans diagnosed with RA. For each isolated immune cell type, we
expect to evaluate the impact of cannabis on a variety of functions, such as cytokine and chemokine secretion, proliferation and migration.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Aim 2. Demonstrating the immune modulatory
properties of specific cannabis extract on mouse models for RA.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cannabis is not an isolated
substance; it contains a plethora of biologically active substances. The most common substances are THC and CBD. Today more than 140 cannabinoids
are known to be expressed in the plant. In addition to cannabinoids, the plants contain flavonoids and terpenes. This greatly complicates
our ability to understand the effects of cannabis on the physiology because the different substances may have different (and even contradictory)
effects. Therefore, the use of different cannabis varieties with diverse ingredients may produce distinct and unexpected results.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the current study, we expect
to examine whether cannabis is a potential treatment for RA in the in vivo mouse model of RA. We expect to test particular inflammation
markers, such as the cytokines tumor necrosis factor alpha, interferon gamma, monocyte chemoattractant protein-1, or MCP-1/CCL2 and Interleukin-6
during the onset of RA disease and investigate the effects of the different cannabis strains on particular inflammatory disease markers.
We then intend on comparing the effects of cannabis strains with high CBD-concentrations to those with high THC-concentrations in order
to be able to better understand the main effects of the major ingredients of each of CBD and THC. Furthermore, we intend on conducting
a pharmacokinetic analysis of the cannabinoid profile in the mouse blood. To this end, we expect to expose mice to a chronic controlled
administration of known doses of cannabis extracts from different strains. Following the exposure, we intend on measuring the effect of
chronic exposure over time and doses on RA markers. We believe that this information, together with additional data that we collect from
our clinical studies, will enable us to complete the clinical development of a cannabis-based treatment for patients with RA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Aim 3. Elucidating the MOA of cannabinoids
that are involved in the regulation of inflammation in RA.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon activation, it is the
cannabinoid receptors, or CBrs, in the endocannabinoid system, or ECS, which initiate numerous regulatory functions in a mammal. CBrs
have been found in a variety of species including human, monkey, pig, dog, rat and mouse. The discovery of membrane receptors found in
the brain, central nervous system as well as peripheral tissues and organs that bind cannabimimetic compounds was a critical turning point
that paved the way towards the pharmacological understanding of cannabis-derived compounds.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The most studied CBrs are
CB1 and CB2; both belong to the G protein-coupled receptors (these cell surface receptors act like an inbox for messages in the form of
light energy, peptides, lipids, sugars, and proteins), or GPCR, family. GPCRs constitute a large protein family of receptors that detect
molecules outside the cell and activate internal signal transduction pathways and cellular responses. GPCRs, are called seven-transmembrane
receptors because they pass through the cell membrane seven times. Heterotrimeric G proteins are activated by GPCRs and are made up of
three subunits, &#945;, &#946; and &#947;. G proteins are divided into four main classes: G&#945;s, G&#945;i, G&#945;q and G&#945;12.
These proteins are activated depending on the ability of the G protein &#945;-subunit, or G&#945;, to cycle between an inactive guanosine
diphosphate, or GDP, bound conformation and an active guanosine triphosphate, or GTP, bound conformation that can modulate the activity
of downstream effector-proteins. Additional receptors have been shown to bind cannabinoids: G protein-coupled receptor 55, or GPR55, several
transient receptor potential, or TRP, channels (TRPV1, TRPV2, TRPA1, TRPM8), and glycine receptors.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_002.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Figure 2. </b>CB1 downstream signaling network.
Adapted from Chakravarti et al., 2014</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since most of the biological
properties related to phytocannabinoids, a type of natural cannabinoid, rely on their interactions with receptors of the endocannabinoid
system, it is crucial to define which receptors are expressed and activated in the target cells. As a result, we have developed a system
with the capacity to identify ten cannabinoid receptors simultaneously and measure their expression levels using quantitative real-time
PCR. We have applied this method in examining cells of the immune system, and more specifically, in monocytes, before and after differentiation
to macrophages, or after stimulation to secrete cytokines. Using this methodology, we were able to identify a differential expression
pattern of the receptors under different conditions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To obtain a deep understanding
on the mechanism of action of the cannabis strains, we will apply our research system and establish a unique study to research the response
of 10 different receptors to Cannabis in RA patients, which aims to identify the specific cannabinoids receptors on the cells of RA patients.
The data from this study is expected to subsequently be used to set up a system for analyzing and matching the specific cannabis treatment
to the specific cannabinoids receptors that are expressed in the patient&#8217;s cells. We believe that if cannabinoid treatments correspond
to the receptors in the patient&#8217;s cells, the treatment may be more accurate for treating that specific patient&#8217;s RA symptoms.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Aim 4. Establish a Phase 1 &amp; 2B clinical
trial according to FDA rules and regulations to study the effect of cannabis-based medical indications on RA.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our goal for the treatment
of RA is to achieve disease remission or low disease activity, or LDA. LDA is measured with several assessment metrics that are intended
to measure the effect of the treatment on a number of physical phenomena that are connected to RA. These metrics include, but are not
limited to: (i) Disease Activity Score based on assessment of 28 joints, or DAS28, patient&#8217;s assessment, (ii) erythrocyte sedimentation
rate (a common hematology test, and is a non-specific measure of inflammation) or C-reactive protein, or CRP, test, which is a blood test
that measures the CRP in a person&#8217;s blood, (iii) SDAI and CDAI (Simple and Complex Disease Activity Indices) as compared to DAS28,
(iv) patient&#8217;s and physician&#8217;s assessment, including global assessment scores, or PtGA and PhGA, respectively (v) pain visual
analogue scale and (vi) health assessment questionnaire disability index, or HAQ-DI.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Clinical Development Plan for RA Product Candidate</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We intend to utilize the knowledge
and results that we obtain from our pre-clinical study to establish, initially a Phase 1 clinical trial, which we expect will take approximately
3 months, followed by a Phase 2 clinical trial to study the effect of cannabis-based medical intervention on RA, which we expect will
take approximately 24 months, following which, we hope to receive FDA approval to allow for the commercialization of our RA product candidate.
Specifically, we intend to study the changes in RA patients&#8217; status after cannabis compounds were added to their stable conventional
treatment. We currently plan that our partners at Rambam MT will carry out these trials at the Rambam Health Care Campus in Haifa, Israel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our hypothesis is that in
patients with RA, the regular addition of cannabinoids in a defined dosage to basic treatment of RA might add to the patients&#8217; quality
of life. We intend to measure quality of life by scores for fatigue using the fatigue severity scale, pain using the visual analogue scale,
the Pittsburgh Sleep Quality Index, PtGA, PhGA, HAQ-DI and the 6-Item Short Form Health Survey. We also propose that cannabinoids may
influence the disease status. This may be measured by DAS28, SDAI, CDAI, CRP, ESR, albumin and Hb levels and also by levels of key cytokines
and chemokines. As part of these clinical studies, we currently plan to assess changes in RA patients&#8217; status after cannabis compounds
were added to their stable conventional treatment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Pre-Clinical Studies for Treatment of Hyperinflammatory
Syndrome Related to COVID-19</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are studying the potential&#160;of
cannabis extracts to downregulate the hyperinflammation and the immunopathology in COVID-19 patients. Our partners at Rambam MT have been
conducting research on the use of cannabis to treat disorders with widespread inflammatory responses, such as RA and COVID-19. We hope
that by decoding the cannabinoid mechanism of action during inflammatory storms, we can treat inflammation associated with COVID-19 where
conventional drugs and other therapies have failed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">At the outbreak of the COVID-19
pandemic, members of the Rambam MT team directed their efforts and experience to join the world-wide battle against the COVID-19 pandemic.
Their research found that cannabinoids contribute to the sophisticated fabric network of intercellular communications. Based on this research,
we believe, that if we understand how cannabinoid components are used in intercellular communication, we can help influence this communication
in the event of a disease, to disrupt it or empower the communication to convey desired messages.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to properly understand
cannabis&#8217; effects on COVID-19, the Rambam MT team compiled its Biobank database. In generating the Biobank database, the Rambam
MT team found what they believed to be a safe way to separate the white blood cells, including the immune cells, from verified patients.
We believe that this is crucial as blood samples are the most accessible resource for continuous sampling (allowing for the understanding
of biological processes during the disease) and to develop vaccines and drugs for treatment of the condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In February 2021, we entered
into an agreement with Rambam MT for investigation of CBD oil extracts as a potential treatment for COVID-19 related inflammation. In
accordance therewith, the Rambam MT team is investigating the effect of cannabis extracts oil on the inflammation response of immune cells
derived from COVID-19 patients as well as a deep study on the capacity of cannabis extract oil to reduce acute inflammation and lung inflammation
in mouse models which resembles the immunopathology of COVID-19.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This study will begin in the
pre-clinical level in immune cell models and, subject to positive results that exhibit downregulation of pro-inflammatory cytokines by
cannabis extract, the study is expected to continue to a mouse model to analyze for acute inflammation, which resembles the immunopathology
of COVID-19. We believe that our strategy to investigate the response of ex-vivo immune cells to cannabis extract together with the analysis
of the <i>in-vivo</i> model for acute and lung inflammations, will allow us to identify the medical cannabis extracts, if any, that have
the potential to treat patients with COVID-19 related hyperinflammatory syndrome.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Competition and Competitive Position</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The pharmaceutical industry
is characterized by rapidly advancing technologies and intense competition. While we believe that our knowledge, experience and scientific
resources provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical,
specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research
institutions. Any product candidates for which we complete clinical development successfully and for which we receive marketing approval
may compete with existing therapies and new therapies that may become available in the future.<b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Many of our competitors have
far greater marketing and research capabilities than us. We also face potential competition from academic institutions, government agencies
and private and public research institutions, among others, which may in the future develop products to treat those diseases that we currently
or, in the future, seek to treat. All of these companies and institutions may have product candidates in development that are or may become
superior to our RA product candidate or any other product candidate that we may seek to develop. Our commercial opportunity would be reduced
significantly if our competitors develop and commercialize products that are safer, more effective, more convenient, have fewer side effects
or are less expensive than our product candidates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, although our
product candidates may, if approved, be considered advantageous to existing therapies, such as the use of corticosteroids and DMARDs for
the treatment of RA, our target market may continue to use existing therapies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">However, we do believe, specifically
with respect to our competitors not using cannabis in their pharmaceutical drug products that our use of, and experience with, cannabinoids
provides us with a potential competitive advance. Our research has shown that the use of cannabinoids for the treatment of RA is justified
based on its positive effect on pain, fatigue, sleep problems and its potential safety profile. Growing evidence on the anti-inflammatory
effect of cannabinoids provide more strong ground for their use in the treatment of RA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although the use of any part
of the cannabis plant in pharmaceutical drug products was once non-existent or minimal, in addition to approved pharmaceutical drug products
that use parts of the cannabis plant (see &#8220;Overview&#8221; for additional information), we are aware that there is at least one
plan for a multicenter randomized control trial on the use of medical cannabidiol in Danish patients with RA and Ankylosing Spondylitis
(inflammatory joint and spine disease), as previously published in an issue of BMJ Open in 2019. As the medical benefits of cannabis become
more well-known, we believe that we may face more competition from both new startup pharmaceutical and biotechnology companies and from
well-funded and experienced organizations and it is therefore imperative that we face as few delays as possible in our pre and clinical
development plan or we may otherwise face more competition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table highlights
the estimated cost that RA patients incur on an annual basis based on a 2017 report from the Canadian Agency for Drugs and Technologies
in Health.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="border-bottom: Black 1.5pt solid; padding-top: 3pt; text-align: left; width: 14%; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Drug Product</b></span></td>
    <td style="padding-bottom: 1.5pt; text-align: center; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
    <td style="padding-top: 3pt; border-bottom: Black 1.5pt solid; text-align: center; width: 14%; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Strength</b></span></td>
    <td style="padding-bottom: 1.5pt; text-align: center; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
    <td style="padding-top: 3pt; border-bottom: Black 1.5pt solid; text-align: center; width: 14%; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Dose Form</b></span></td>
    <td style="padding-bottom: 1.5pt; text-align: center; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
    <td style="padding-top: 3pt; border-bottom: Black 1.5pt solid; text-align: center; width: 10%; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Price ($)</b></span></td>
    <td style="padding-bottom: 1.5pt; text-align: center; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
    <td style="padding-top: 3pt; border-bottom: Black 1.5pt solid; text-align: center; width: 23%; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Recommended Dose</b></span></td>
    <td style="padding-bottom: 1.5pt; text-align: center; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
    <td style="padding-top: 3pt; border-bottom: Black 1.5pt solid; text-align: center; width: 20%; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Annual Drug Cost ($)</b></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sarilumab (Kevzara)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">150 mg/1.14 mL 200 mg/1.14 mL</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pre-filled syringe</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">700.0000</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">200 mg SC every two weeks</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">18,200</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Abatacept SC (Orencia)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">125 mg/mL</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pre-filled syringe</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">366.1000</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">125 mg weekly</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">19,037</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Abatacept IV (Orencia)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">250 mg/15 mL</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Vial</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">490.0500</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Patients &lt; 60 kg: 500 mg Patients 60 to 100 kg: 750 mg Patients &gt; 100 kg: 1,000 mg 500 to 1,000 mg at weeks 0, 2, and 4 then every 4 weeks</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Year 1: 20,582 Thereafter: 19,112</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Adalimumab SC (Humira)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">40 mg/0.8 mL</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pre-filled syringe or pen</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">769.9700</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">40 mg every other week</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">20,019</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Anakinra (Kineret)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">100 mg</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pre-filled syringe</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">48.0571</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">100 mg daily</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">17,493</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certolizumab pegol (Cimzia)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">200 mg/mL</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pre-filled syringe</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">664.5100</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">400 mg at weeks 0, 2 and 4 then 200 mg every 2 weeks</span></td>
    <td>&#160;</td>
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  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
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    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">25 mg</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Vial</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">202.9300</span></td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">21,105</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt">&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">405.9850</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt">&#160;</td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">21,111</span></td></tr>
  <tr style="vertical-align: top; ">
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    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">50 mg/mL</span></td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">305.0000<sup>d</sup></span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">50 mg weekly</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15,860</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
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    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">50 mg/0.5 mL</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pre-filled syringe or auto-injector</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,555.17</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">50 mg monthly</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">18,662</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Golimumab IV (Simponi)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">50 mg/4 mL</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Vial</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">849.5000<sup>b</sup></span></td>
    <td>&#160;</td>
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    <td>&#160;</td>
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  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Infliximab (Remicade)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">100 mg</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Vial</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">987.5600</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3 mg/kg at weeks 0, 2, and 6, then every 8 weeks thereafter</span></p>
                                                                        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
                                                                        <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Depending on clinical response, dose can be increased to 10 mg/kg and/or up to every four weeks</span></p></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Year 1: 23,701 Thereafter: 19,257 10 mg/kg every 4 weeks: $102,706 annually</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Infliximab (Inflectra)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">100 mg</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Vial</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">525.0000</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt">&#160;</td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Year 1: 12,600<sup>b</sup> Thereafter: 10,238<sup>b</sup> 10 mg/kg every 4 weeks: $54,600 annually<sup>15</sup></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Rituximab (Rituxan)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">100 mg/10 mL 500 mg/50 mL</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Vial</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">466.3200 2,331.61</span></td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">18,653 assumes 2 courses Per course: 9,326</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Tocilizumab SC (Actemra)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">162 mg/0.9 mL</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pre-filled syringe</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">355.0000</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Patients &lt; 100 kg: 162 mg SC every two weeks, increasing to weekly based on clinical response. Patients &#8805; 100 kg: 162 mg SC weekly</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Every two weeks: 9,230 Weekly: 18,460</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Tocilizumab IV (Actemra)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">80 mg/4 mL 200 mg/10mL 400 mg/20 mL</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Vial</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">180.8100 452.0300 904.0600</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4 mg/kg every 4 weeks followed by an increase to 8 mg/kg based on clinical response</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4 mg/kg: 10,577 8 mg/kg: 17,629</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Tofacitinib (Xeljanz)</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5 mg</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Tablet</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.5585</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5 mg p.o. twice daily</span></td>
    <td>&#160;</td>
    <td style="padding-top: 3pt; padding-right: 3pt; padding-left: 3pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">17,151</span></td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">IV = intravenous; p.o. = orally;
SC = subcutaneous.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although there can be no guarantee,
we believe that our RA product candidate, if approved for commercialization by regulators, will be available to patients at a lower price
than that of other available treatments.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">With respect to our development
of a product candidate to treat inflammation associated with COVID-19, we will face competition from major pharmaceutical companies that
have developed or that will develop vaccines, along with other companies and organizations that have or will develop therapies or pharmaceutical
drug products aimed at treating the underlying symptoms of COVID-19.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Cultivation of our API</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2020, we entered
into an engagement agreement with Way of Life Cannabis Ltd., or Wolc, pursuant to which, subject to its completing the Share Exchange,
Raphael Israel is scheduled to be provided with up to 15 liters of CBD oil, from a strain of cannabis of our selection, during a term
of 18 months, to be provided in two to three deliveries of between one to seven liters of CBD oil. In accordance with the agreement with
Wolc, we have agreed to issue to certain persons affiliated with Wolc 3% of our issued and outstanding share capital as of the date of
the Share Exchange, to be provided in three equal issuances; provided, however, that such persons may elect to receive a cash payment
of $100,000 instead of any one issuance of our shares. In addition to the issuance of shares, we have also agreed to pay Wolc a royalty
fee equal to 15% of net income royalties generated from sales of our pharmaceutical drug products that are developed at Rambam hospital
in Israel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">At this time, we only require
a limited amount of our API for our studies and trials and, to date, we have received oil extracted from high CBD strains, from Wolc in
the amounts that we require in order to conduct our pre-clinical trials. Pursuant to our agreement with Wolc, pending FDA approval of
any of our product candidates, Wolc is expected to transfer seeds used for the FDA-approved product candidate to growers in California,
Colorado and Oklahoma. Wolc is a fully licensed Israeli cannabis company focused on growing, cultivating and manufacturing cannabis medical
oil, located in Aviel, Israel. As an owner and operator of green houses for growing organic cannabis plants and a GMP manufacturing facility
located in Netanya, Israel, we intend to utilize, pursuant to an agreement between the parties, Wolc for the growing and cultivation of
the CBD oil needed for our product candidates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that our current
agreement with Wolc will provide us with sufficient amounts of CBD oil in order to complete our clinical development and for initial sales
of our pharmaceutical drug products. In the future, as our demand for pharmaceutical products grows, if ever, we may need to find additional
partners that may provide us with sufficient amounts of CBD oil and/or amend or terminate our engagement with Wolc.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Manufacturing</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not own or operate,
and currently have no plans to establish, any manufacturing facilities for final manufacture. We currently rely, and expect to continue
to rely, on third parties for the manufacture of our product candidates for preclinical and clinical testing, as well as for commercial
manufacturing of any pharmaceutical drug products for which we receive regulatory approval.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Commercialization Plan</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to the receipt of
regulatory approval to commercialize our pharmaceutical product candidates, our goal is to distribute our approved formulas to good manufacturing
practice, or GMP, approved medical cannabis manufacturers and global medical cannabis distributors. Depending on the expertise of the
distributors, we expect the licensing agreements to provide us with royalty-based payments for the sale of each of our approved pharmaceutical
drug products. In Israel, pursuant to our agreement with Wolc, the parties are expected to negotiate an exclusive distribution agreement
in Israel, pursuant to which Wolc will be the exclusive supplier of any approved pharmaceutical drug products of the Company in Israel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although we expect government
regulation of pharmaceutical products derived from cannabis to develop over the next few years, we may be limited in the manner in which
we commercialize our product candidates. We fully intend on being fully complaint with local and state-wide government regulations and
therefore we expect to enter into licensing agreements with vendors only if such vendor may legally distribute our product candidate within
the region for which they have obtained a license from us to sell our pharmaceutical product.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Intellectual Property</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not currently have any
patents, and currently rely on our know-how and trade secrets. However, subject to the completion of our pre-clinical trial for our RA
product candidate, and prior to the completion of our clinical development plan, we intend on seeking patent protection in the United
States and/or internationally for such product candidate and, potentially for other product candidates that we may seek to develop. Our
policy is to pursue, maintain and defend patent rights developed internally and to protect the technology, inventions and improvements
that are commercially important to the development of our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Governmental Regulation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Government authorities in
the United States, at the federal, state and local levels, and in other countries and jurisdictions, including the EU, extensively regulate,
among other things, the research, development, testing, manufacture, sales, pricing, reimbursement, quality control, approval, packaging,
storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, post-approval monitoring and reporting, and import
and export of biopharmaceutical products. The processes for obtaining marketing approvals in the United States and in foreign countries
and jurisdictions, along with compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure
of substantial time and financial resources.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a research and development
company collaborating with our partners at Rambam MT to research and develop our COVID-19 and RA product candidates. We do not grow or
cultivate cannabis and we have no physical connection to the raw cannabis materials, which is shipped directly to Rambam MT. Pre-clinical
research, animal models and clinical trials are sponsored by us through our agreement with Rambam MT. Such research and trials are being
done by Rambam MT&#8217;s medical team, researchers, doctors and professors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not own or operate,
and currently have no plans to establish, any manufacturing facilities for final manufacturing of our products. We do not distribute,
and we have no plans to distribute, our products. Once we receive regulatory approval for our products, we intend to license to our future
candidate partners the rights to commercialize our medical formulas. Our future candidate partners will be responsible for the manufacturing,
distributing, promoting, and marketing of medical indications. We intend to engage with candidate partners that are GMP approved professionals,
well established and experienced medical manufacturers and distributors in the U.S. and other countries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our future candidate partners
will be entirely responsible and liable for regulatory compliance, including but not limited to cannabis growing and cultivation, GMP
manufacturing, distribution, advertising and promotional regulations, marketing, labeling, post-market approval reporting and record keeping.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We intend to hire and train
quality assurance professional that will inspect periodically the facilities of our future candidate partners as well as the methods of
production, marketing and distribution under applicable governmental regulatory guidelines.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>U.S. Cannabis Market</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The emergence of the legal
cannabis sector in the United States, both for medical and adult use, has been rapid as more states adopt regulations for its production
and sale. A majority of Americans now live in a state where cannabis is legal in some form and almost a quarter of the population lives
in states in which both medical and recreational use is permitted as a matter of, and in accordance with, applicable state and local laws.&#160;According
to Fortune Business Insights, the global legal marijuana market is anticipated to reach a value of US$97.35 billion by the end of 2026
from US$10.60 billion in 2018. The market is predicted to rise at a compounded annual growth rate of 32.6% during the period 2019 to 2026.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The use of cannabis and cannabis
derivatives to treat or alleviate the symptoms of a wide variety of chronic conditions, while not recognized by the FDA, has been accepted
by a majority of citizens with a growing acceptance by the medical community. A review of the research, published in 2015 in the Journal
of the American Medical Association, found solid evidence that cannabis can treat pain and muscle spasms.&#160;The pain component is particularly
important, because other studies have suggested that cannabis can replace pain patients&#8217; use of highly addictive, potentially deadly
opiates.&#160;Although hemp, defined as cannabis and derivatives of cannabis with not more than 0.3% THC, has been descheduled from the
Controlled Substances Act, the FDA has regulatory oversight over foods, drugs, cosmetics containing cannabis under the Food, Drug and
Cosmetics Act of 1938. All references to the use of CBD in our product candidates refer to CBD strains with less than 0.3% of THC. It
is possible that as the federal and state agencies legalize certain products, the FDA may issue rules and regulations, including good
manufacturing practices related to the growth, cultivation, harvesting and processing of such products, even if they are not marketed
as drugs. It is possible that the FDA would require that facilities where medical-use cannabis is grown to register with the FDA and comply
with certain federally prescribed regulations, certifications, testing, or other requirements. The potential impact on the cannabis industry
is uncertain and could include the imposition of new costs, requirements, and prohibitions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although we are not currently
engaged and do not expect to be engaged in the production or distribution of medical marijuana products, the FDA has jurisdiction over
our flower, oil, vape and edible products, among others. The FDA is currently taking action in the form of Warning Letters, but may also
take more extreme enforcement such as recalls, disgorgement or penalties.&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Polls conducted throughout
the United States consistently show overwhelming support for the legalization of medical cannabis, together with strong majority support
for the full legalization of recreational adult-use cannabis. According to a Pew Research Center survey, as of November 11, 2019, &#8220;Around
nine-in-ten Americans favor legalization for recreational or medical purposes&#8221; and &#8220;Only 8% say it should not be legal.&#8221;&#160;These
are large increases in public support over the past 40 years in favor of legal cannabis use.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this prospectus,
cannabis is legal in some form in a total of 36 states, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands. On the
recreational side, there are currently 15 states, plus the District of Columbia and four U.S. territories, in which the recreational sale
of cannabis has been approved. These states include Oregon, Washington, Nevada, California, Colorado, Massachusetts, Michigan, Vermont,
Alaska, Illinois, Maine, New Jersey, Arizona, South Dakota and Montana. With respect to medical marijuana, as more research centers study
the effects of cannabis-based products in treating or addressing therapeutic needs, and assuming that research findings demonstrate that
such products are effective in doing so, management believes that the size of the U.S. medical cannabis market will also continue to grow
as more States expand their medical marijuana programs and new states legalize medical marijuana.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Notwithstanding that 36 states
and the District of Columbia have now legalized adult-use and/or medical cannabis, cannabis remains illegal under U.S. federal law with
cannabis listed as a Schedule I drug under the Controlled Substance Act, or CSA.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Government Regulation and Product Approval
</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a preclinical to early
clinical stage pharmaceutical company that intends to engage third parties to test, register and license the rights to commercialize our
products in the United States and other jurisdictions. Such third parties may be subject to extensive regulation by various regulatory
authorities. The primary regulatory agency in the United States is the FDA and in Europe it is the EMA. Along with these two, there are
other federal, state, and local regulatory agencies. In the United States, the Federal Food, Drug, and Cosmetic Act, or the FDCA, and
its implementing regulations set forth, among other things, requirements for the research, testing, development, manufacture, quality
control, safety, effectiveness, approval, labeling, storage, record keeping, reporting, distribution, import, export, advertising and
promotion of our products. Although the discussion below focuses on regulation in the United States, we anticipate seeking approval for,
and marketing of, our products in other countries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Generally, our activities
outside the United States will be subject to regulation that is similar in nature and scope as that imposed in the United States, although
there can be important differences. Approval in the United States, Canada, or Europe does not assure approval by other regulatory agencies,
although often test results from one country may be used in applications for regulatory approval in another country. Additionally, some
significant aspects of regulation in Europe are addressed in a centralized way through the EMA but country specific regulation remains
essential in many respects. A major difference in Europe, when compared to Canada and the United States, is with the approval process.
In Europe, there are different procedures that can be used to gain marketing authorization in the European Union. The first procedure
is referred to as the centralized procedure and requires that a single application be submitted to the EMA and, if approved, allows marketing
in all countries of the European Union. The centralized procedure is mandatory for certain types of medicines and optional for others.
The second procedure is referred to as national authorization and has two options; the first is referred to as the mutual recognition
procedure and requires that approval is gained from one member state, after which a request is made to the other member states to mutually
recognize the approval, whilst the second is referred to as the decentralized procedure which requires a member state to act as the reference
member state through a simultaneous application made to other member states.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The process of obtaining regulatory
marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require
the expenditure of substantial time and financial resources and may not be successful. See &#8220;Risk Factors&#8221; for additional information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>U.S. Government Regulation </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FDA is the main regulatory
body that controls pharmaceuticals in the United States, and its regulatory authority is based in the FDCA. Pharmaceutical products are
also subject to other federal, state and local statutes. A failure to comply explicitly with any requirements during the product development,
approval, or post approval periods, may lead to administrative or judicial sanctions. These sanctions could include the imposition by
the FDA or an Institutional Review Board of a hold on clinical trials, refusal to approve pending marketing applications or supplements,
withdrawal of approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution,
injunctions, fines, civil penalties or criminal prosecution.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The steps required before
a new drug may be marketed in the United States generally include:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
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    <td style="vertical-align: top; text-align: justify"><span style="font-size: 10pt">performance of adequate and well-controlled clinical trials in accordance with federal regulations and with GCP regulations to establish the safety and efficacy of the investigational product candidate for each target indication; </span></td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
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    <td style="vertical-align: top; text-align: justify"><span style="font-size: 10pt">satisfactory completion of an FDA Advisory Committee review, if applicable; </span></td></tr>
  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
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  <tr>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td></tr>
  <tr>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Clinical Trials and the FDA Approval Process</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An IND is a request for authorization
from the FDA to administer an investigational product candidate to humans. This authorization is required before interstate shipping and
administration of any new drug product to humans in the United States that is not the subject of an approved NDA. A 30-day waiting period
after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has neither commented
on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin. Clinical trials involve the administration
of the investigational product candidate to healthy volunteers or patients with the disease under study, under the supervision of qualified
investigators following GCPs, an international standard intended to protect the rights and health of patients with the disease under study
and define the roles of clinical trial sponsors, administrators and monitors. Clinical trials are conducted under protocols that detail
the parameters to be used in monitoring safety, and the efficacy criteria to be evaluated. Each protocol involving testing on patients
in the United States and subsequent protocol amendments must be submitted to the FDA as part of the IND. Rambam MT has not yet submitted
an IND in the United States for any clinical programs.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The clinical investigation
of an investigational product candidate is generally divided into three phases. Although the phases are usually conducted sequentially,
they may overlap or some may be combined. The three phases of clinical investigation are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="vertical-align: top; width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  </table><div>
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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 48px; text-align: justify">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">Phase IIa. Phase IIa will include a randomized, double-blind, placebo-controlled, multiple ascending dose study in Israel to determine the maximum CBD extract administered sublingually to assess the safety, tolerability, pharmacokinetics, pharmacodynamics and efficacy for at least 4 weeks in RA patients in the presence of concurrent active therapies, such as non-steroidal anti-inflammatory drugs, or NSAIDs, and steroids. We expect that Phase IIa will take approximately 6 months. </span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&amp;cir;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Phase IIb. Phase IIb will include IND submission for randomized, multi center double blinded, placebo-controlled dose response finding, or DRF, study for at least 12 weeks with either CBD extract or placebo administered sublingually in the presence of concurrent active therapies such as NSAIDs and steroids. This study will include 300-400 patients (80-100 patients per cohort) to study safety and efficacy of the product in active RA patients. We expect that Phase IIb will take approximately 18 months.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="vertical-align: top; width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="vertical-align: top; text-align: justify"><span style="font-size: 10pt">Phase III. Phase III clinical trials are controlled clinical trials conducted in an expanded subject population at geographically dispersed clinical trial sites. They are performed after preliminary evidence suggesting effectiveness of the investigational product candidate has been obtained, are intended to further evaluate dosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the product candidate, and to provide an adequate basis for drug approval. Phase III clinical trials usually involve several hundred to several thousand participants. In most cases, the FDA requires two adequate and well controlled Phase III clinical trials to demonstrate the efficacy of the drug. </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The decision to terminate
development of an investigational product candidate may be made by either a health authority body, such as the FDA or IRB/ethics committees,
or by a company for various reasons. The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time, or
impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents
an unacceptable risk to the clinical trial patients. In some cases, clinical trials are overseen by an independent group of qualified
experts organized by the trial sponsor or the clinical monitoring board. This group provides authorization for whether or not a trial
may move forward at designated check points. These decisions are based on the limited access to data from the ongoing trial. The suspension
or termination of development can occur during any phase of clinical trials if it is determined that the participants or patients are
being exposed to an unacceptable health risk. In addition, there are requirements for the registration of ongoing clinical trials of Product
Candidates on public registries and the disclosure of certain information pertaining to the trials as well as clinical trial results after
completion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>New Drug Applications </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to obtain approval
to market a drug in the United States, a marketing application must be submitted to the FDA that provides data establishing the safety
and effectiveness of the product candidate for the proposed indication. The application includes all relevant data available from pertinent
preclinical studies and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed
information relating to the product&#8217;s chemistry, manufacturing, controls and proposed labeling, among other things. Data can come
from company sponsored clinical trials intended to test the safety and effectiveness of a product, or from a number of alternative sources,
including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity
to establish the safety and effectiveness of the investigational product candidate to the satisfaction of the FDA. In most cases, the
NDA must be accompanied by a substantial user fee; there may be some instances in which the user fee is waived. The FDA will initially
review the NDA for completeness before it accepts the NDA for filing. The FDA has 60 days from its receipt of an NDA to determine whether
the application will be accepted for filing based on the agency&#8217;s threshold determination that it is sufficiently complete to permit
substantive review. After the NDA submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain
performance goals in the review of NDAs. Most such applications for standard review Product Candidates are reviewed within ten to twelve
months. The FDA can extend this review by three months to consider certain late submitted information or information intended to clarify
information already provided in the submission. The FDA reviews the NDA to determine, among other things, whether the proposed product
is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMP. The FDA may refer applications
for novel Product Candidates that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes
clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what
conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when
making decisions.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Before approving an NDA, the
FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the
manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product
within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure
compliance with GCP. After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete
response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional
testing or information in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the
FDA&#8217;s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. Notwithstanding the submission of any requested
additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An approval letter authorizes
commercial marketing of the drug with specific prescribing information for specific indications. Product approval may require substantial
post-approval testing and surveillance to monitor the drug&#8217;s safety or efficacy. Once granted, product approvals may be withdrawn
if compliance with regulatory standards is not maintained or problems are identified following initial marketing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Disclosure of Clinical Trial Information </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sponsors of clinical trials
of certain FDA regulated products, including prescription drugs, are required to register and disclose certain clinical trial information
(though not specifically required for Phase I trials) on a public website maintained by the U.S. National Institutes of Health, or &#8220;NIH&#8221;.
Information related to the product, patient population, phase of investigation, study sites and investigator, and other aspects of the
clinical trial is made public as part of the registration. Sponsors are also obligated to disclose the results of these trials after completion.
Disclosure of the results of these trials can be delayed until the product or new indication being studied has been approved. Competitors
may use this publicly available information to gain knowledge regarding the design and progress of our development programs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Advertising and Promotion </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The FDA and other federal
regulatory agencies closely regulate the marketing and promotion of drugs through, among other things, standards and regulations for direct-to-consumer
advertising, communications regarding unapproved uses, industry-sponsored scientific and educational activities, and promotional activities
involving the Internet. A product cannot be commercially promoted before it is approved. After approval, product promotion can include
only those claims relating to safety and effectiveness that are consistent with the labeling (package insert) approved by the FDA. Healthcare
providers are permitted to prescribe drugs for &#8220;off-label&#8221; uses &#8212; that is, uses not approved by the FDA and, therefore,
not described in the drug&#8217;s labeling &#8212; because the FDA does not regulate the practice of medicine. However, FDA regulations
impose stringent restrictions on manufacturers&#8217; communications regarding off-label uses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Post-Approval Regulations </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">After regulatory approval
of a drug is obtained, a company is required to comply with a number of post-approval requirements. For example, as a condition of approval
of an NDA, the FDA may require post-marketing testing, including Phase IV clinical trials, and surveillance to further assess and monitor
the product&#8217;s safety and effectiveness after commercialization. In addition, as a holder of an approved NDA, a company would be
required to report adverse reactions and production problems to the FDA, to provide updated safety and efficacy information, and to comply
with requirements concerning advertising and promotional labeling for any of its products. Also, quality control and manufacturing procedures
must continue to conform to cGMP after approval to assure and preserve the long-term stability of the drug or biological product. The
FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural and substantive
record keeping requirements. In addition, changes to the manufacturing process are strictly regulated, and, depending on the significance
of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any
deviations from cGMP and impose reporting and documentation requirements upon a company and any third-party manufacturers that a company
may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control
to maintain compliance with cGMP and other aspects of regulatory compliance.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Controlled Substances </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The CSA and its implementing
regulations establish a &#8220;closed system&#8221; of regulations for controlled substances. The CSA imposes registration, security,
recordkeeping and reporting, storage, manufacturing, distribution, importation and other requirements under the oversight of the DEA,
which is the federal agency responsible for regulating controlled substances, and requires those individuals or entities that manufacture,
import, export, distribute, research, or dispense controlled substances to comply with the regulatory requirements in order to prevent
the diversion of controlled substances to illicit channels of commerce.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Facilities that research,
manufacture, distribute, import or export any controlled substance must register annually with the DEA. The DEA registration is specific
to the particular location, activity(ies) and controlled substance schedule(s). For example, separate registrations are required for importation
and manufacturing activities, and each registration authorizes which schedules of controlled substances the registrant may handle. However,
certain coincident activities are permitted without obtaining a separate DEA registration, such as distribution of controlled substances
by the manufacturer that produces them.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The DEA categorizes controlled
substances into one of five schedules &#8212; Schedule I, II, III, IV, or V&#8212; with varying qualifications for listing in each schedule.
Schedule I substances by definition have a high potential for abuse, have no currently &#8220;accepted medical use&#8221; in treatment
in the United States and lack accepted safety for use under medical supervision. They may be used only in federally approved research
programs and may not be marketed or sold for dispensing to patients in the United States. Pharmaceutical products having a currently accepted
medical use that are otherwise approved for marketing may be listed as Schedule II, III, IV or V substances, with Schedule II substances
presenting the highest potential for abuse and physical or psychological dependence, and Schedule V substances presenting the lowest relative
potential for abuse and dependence. The regulatory requirements are more restrictive for Schedule II substances than Schedule III substances.
For example, all Schedule II drug prescriptions must be signed by a physician, physically presented to a pharmacist in most situations,
and cannot be refilled. Once FDA has approved a medical use for Schedule I drugs, the DEA must reschedule the drug. For example, after
FDA approval for Epidiolex&#174;, a purified CBD oil, for the treatment of two rare forms of epilepsy, DEA placed it in Schedule V. Further,
on April&#160;6, 2020, GW Pharma announced that Epidiolex&#174; was descheduled by the DEA and is no longer considered a controlled substance.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The DEA inspects all manufacturing
facilities to review security, record keeping, reporting and handling prior to issuing a controlled substance registration. The specific
security requirements vary by the type of business activity and the schedule and quantity of controlled substances handled. The most stringent
requirements apply to manufacturers of Schedule I and Schedule II substances. Required security measures commonly include background checks
on employees and physical control of controlled substances through storage in approved vaults, safes and cages, and through use of alarm
systems and surveillance cameras. Manufacturing facilities must maintain records documenting the manufacture, receipt and distribution
of all controlled substances. Manufacturers must submit periodic reports to the DEA of the distribution of Schedule I and II controlled
substances, Schedule III narcotic substances, and other designated substances. In addition to an importer or exporter registration, importers
and exporters must obtain a permit for every import or export of a Schedule I and II substance or Schedule III, IV and V narcotic, and
submit import or export declarations for Schedule III, IV and V non-narcotics.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For drugs manufactured in
the United States, the DEA establishes annually an aggregate quota for the amount of substances within Schedules I and II that may be
manufactured or produced in the United States based on the DEA&#8217;s estimate of the quantity needed to meet legitimate medical, scientific,
research and industrial needs. The quotas apply equally to the manufacturing of the API and production of dosage forms.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The states also maintain separate
controlled substance laws and regulations, including licensing, recordkeeping, security, distribution, and dispensing requirements. State
Authorities, including Boards of Pharmacy, regulate use of controlled substances in each state. Failure to maintain compliance with applicable
requirements, particularly as manifested in the loss or diversion of controlled substances, can result in enforcement action that could
have a material adverse effect on our business, operations and financial condition. The DEA may seek civil penalties, refuse to renew
necessary registrations, or initiate proceedings to revoke those registrations. In certain circumstances, violations could lead to criminal
prosecution.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Cannabinoids as a Controlled Substance </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cannabinoids are subject to
the United Nations Single Convention on Narcotic Drugs (1961) adopted by numerous countries globally, which prohibits the production and
supply of specific drugs, except for scientific and research purposes. Under the current UN definition, Cannabis extracts and tinctures
are controlled substances. Individual countries (and sometimes jurisdictions within countries) are rapidly changing how they interpret
and apply the international rules. Currently there is a broad spectrum of legal statuses based on strength, source and intended use. We
are closely monitoring these changes. We expect that there may be different requirements in each region where we have clinical sites.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Several Cannabis-related drugs
were placed in lower schedules once they were approved as drugs. For example, the US DEA reduced Epidiolex&#174; (CBD) to Schedule V after
it was approved for treatment of two rare forms of childhood epilepsy. In April 2020, the DEA descheduled Epidiolex&#174; entirely.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The passage of the Farm Bill
in December 2018 legalized the cultivation of hemp in the United States and the production of hemp-derived non-THC cannabinoids, removing
these products from the CSA. Our products use oil extracted from CBD strains, containing &lt;0.3% THC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We plan to engage third parties
to conduct clinical trials for our product candidates outside the United States, subject to regulatory approval. As a result, such third
parties will also be subject to controlled substance laws and regulations from the various other regulatory agencies in other countries
where we develop, manufacture or commercialize our product candidates in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Marketing Exclusivity </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon NDA approval of a new
chemical entity, which for this purpose is defined as a drug that contains no active moiety that has been approved by the FDA in any other
NDA, that drug receives five years of marketing exclusivity during which the FDA cannot approve any abbreviated new drug application,
or ANDA, seeking approval of a generic version of that drug. Certain changes to the scope of an approval for a drug, such as the addition
of a new indication to the package insert, are associated with a three-year period of exclusivity during which the FDA cannot approve
an ANDA for a generic drug that includes the change. A Section&#160;505(b)(2) NDA may be eligible for three-year marketing exclusivity,
assuming the NDA includes reports of new clinical studies (other than bioequivalence studies) essential to the approval of the NDA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An ANDA may be submitted one
year before marketing exclusivity expires if a Paragraph IV certification is filed. In this case, the 30 months stay, if applicable, runs
from the end of the five-year marketing exclusivity period. If there is no listed patent in the FDA&#8217;s Approved Drug Products with
Therapeutic Equivalence Evaluations, commonly known as the Orange Book, there may not be a Paragraph IV certification, and, thus, no ANDA
may be filed before the expiration of the exclusivity period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, six months of
marketing exclusivity in the United States is available under Section&#160;505A of the FDCA if, in response to a written request from
the FDA, a sponsor submits and the agency accepts requested information relating to the use of the approved drug in the pediatric population.
This six-month pediatric exclusivity period is added to any existing patent or non-patent exclusivity period for which the drug product
is eligible.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Patent Term Extension </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The term of a patent that
covers an FDA approved drug may be eligible for patent-term extension, which provides patent-term restoration as compensation for the
patent term lost during the FDA regulatory review process. The United States Federal Drug Price Competition and Patent Term Restoration
Act of 1984 permits a patent-term extension of up to five years beyond the expiration of the patent. The length of the patent-term extension
is related to the length of time the drug is under regulatory review. Patent extension cannot extend the remaining term of a patent beyond
a total of 14 years from the date of product approval and only one patent applicable to an approved drug may be extended. Similar provisions
are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>European and Other International Government
Regulation</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to regulations
in the United States and Canada, our third-party licensees will be subject to a variety of regulations in other jurisdictions governing,
among other things, clinical trials and any commercial sales and distribution of our products. Whether or not we obtain FDA approval for
a product, such third-party licensees must obtain the requisite approvals from regulatory authorities in foreign countries prior to the
commencement of clinical trials or marketing of the product in those countries. Some countries outside of the United States have a similar
process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials.
In Europe, for example, a clinical trial application must be submitted to each country&#8217;s national health authority and an independent
ethics committee, much like the FDA and IRB, respectively. Once the clinical trial application is approved in accordance with a country&#8217;s
requirements, clinical trial development may proceed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The UK was previously in a
transition period until December 31, 2020, during which time it continued to abide by the EU regulatory processes; however, they may adopt
different or additional procedures.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To obtain regulatory approval
to commercialize a new drug under EU regulatory systems, it is required to submit a MAA. The MAA is similar to the NDA, with the exception
of, among other things, country-specific document requirements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For other countries outside
of the EU, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product
licensing, pricing and reimbursement vary from country to country. Internationally, clinical trials are generally required to be conducted
in accordance with GCP, applicable regulatory requirements of each jurisdiction and the medical ethics principles that have their origin
in the Declaration of Helsinki.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Compliance </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During all phases of development
(pre- and post-marketing), failure to comply with applicable regulatory requirements may result in administrative or judicial sanctions.
These sanctions could include the FDA&#8217;s imposition of a clinical hold on trials, refusal to approve pending applications, withdrawal
of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, product
detention or refusal to permit the import or export of products, injunctions, fines, civil penalties or criminal prosecution. Any agency
or judicial enforcement action could have a material adverse effect.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Other Special Regulatory Procedures </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Priority Review (United
States) and Accelerated Assessment (European Union) </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on results of the Phase
III clinical trial(s) submitted in an NDA, upon the request of an applicant, a priority review designation may be granted to a product
by the FDA, which sets the target date for FDA action on the application at six months from the FDA&#8217;s decision on priority review
application, or eight months from the NDA filing. Priority review is given where preliminary estimates indicate that a product, if approved,
has the potential to provide a safe and effective therapy where no satisfactory alternative therapy exists, or a significant improvement
compared to marketed products is possible. If criteria are not met for priority review, the standard FDA review period is ten months from
the FDA&#8217;s decision on priority review application, or 12 months from the NDA filing. The priority review designation does not change
the scientific/medical standard for approval or the quality of evidence necessary to support approval.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Centralized Procedure
in the European Union, the maximum timeframe for the evaluation of a MAA is 210 days (excluding &#8220;clock stops,&#8221; when additional
written or oral information is to be provided by the applicant in response to questions asked by the Committee for Medicinal Products
for Human Use, or &#8220;CHMP&#8221;). Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product
is expected to be of a major public health interest, which takes into consideration: the seriousness of the disease (e.g., disabling or
life-threatening diseases); the absence or insufficiency of an appropriate alternative therapeutic approach; and anticipation of high
therapeutic benefit. In this circumstance, EMA ensures that the opinion of the CHMP is given within 150 days.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Accelerated Approval </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the FDA&#8217;s accelerated
approval regulations, the FDA may approve a drug for a serious or life-threatening illness that provides meaningful therapeutic benefit
to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit. This approval
mechanism is provided for under 21CRF314 Subpart H and 21CRF601 Subpart E. In this case, clinical trials are conducted in which a surrogate
endpoint is used as the primary outcome for approval. A surrogate endpoint is reasonably likely to predict clinical benefit, or an effect
on a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality, that is reasonably likely to
predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence
of the condition and the availability or lack of alternative treatments. This surrogate endpoint substitutes for a direct measurement
of how a patient feels, functions, or survives and is considered reasonably likely to predict clinical benefit. Such surrogate endpoints
may be measured more easily or more rapidly than clinical endpoints. A drug candidate approved on this basis is subject to rigorous post-marketing
compliance requirements, including the completion of Phase IV or post-approval clinical trials to confirm the effect on the clinical endpoint.
When the Phase IV commitment is successfully completed, the biomarker is deemed to be a surrogate endpoint. Failure to conduct required
post-approval studies or confirm a clinical benefit during post-marketing studies, could lead the FDA to withdraw the drug from the market
on an expedited basis. All promotional materials for drug candidates approved under accelerated regulations are subject to prior review
by the FDA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Other Healthcare Laws and Compliance Requirements
</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the United States, our
activities are potentially subject to additional regulation by various federal, state and local authorities in addition to the FDA, including,
among others, the Centers for Medicare and Medicaid Services, other divisions of HHS, the DOJ, and individual United States Attorney offices
within the DOJ and state and local governments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Compliance with Environmental Laws</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other than our ongoing research
and development, our only operations consist of our pre-clinical trial being in conducted in Israel for RA, which may further our COVID-19
product candidate. At this time, compliance with environmental laws in Israel, where we conduct our operations, has not been a burden
and has not required from us the use of material resources or capital expenditures.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Employees</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 28, 2022, we do
not have any employees.&#160;Our officers are engaged through consulting agreements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Corporate Information</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Easy Energy was incorporated
under the laws of the State of Nevada in May 2017. On May 14, 2021, Raphael Israel and Easy Energy completed the Share Exchange, pursuant
to which we changed our name to Raphael Pharmaceutical Inc. Our registered address is 4 Lui Paster, Tel Aviv-Jaffa, Israel 6803605. Our
website address is https://www.raphaelpharmaceutical.com/. Information contained on, or that can be accessed through, our website is not
incorporated by reference into this prospectus, and you should not consider information on our website to be part of this prospectus.&#160;We
have included our website address in this prospectus solely as an inactive textual reference.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The SEC also maintains an
Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically
with the SEC. Our filings with the SEC are also available to the public through the SEC&#8217;s website at http://www.sec.gov.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_007"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-variant: small-caps"><b>SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
information regarding beneficial ownership of our Common Stock as of June 28, 2022 by:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Beneficial ownership is determined
in accordance with the rules of the SEC and includes voting or investment power with respect to Common Stock. Percentage of shares beneficially
owned is based on 13,945,540 shares of Common Stock outstanding on June 28, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except as indicated in footnotes
to this table, we believe that the shareholders named in this table have sole voting and investment power with respect to all shares shown
to be beneficially owned by them, based on information provided to us by such shareholders. Unless otherwise noted below, each beneficial
owner&#8217;s address is: 4 Lui Paster, Tel Aviv-Jaffa, Israel 6803605.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: left">Holders &#160;of more than 5% of our voting securities:</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">1,255,325</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Professor Joseph&#160;Press, M.D.</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Dr. Igal Louria Hayon</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Dr. Yehuda Eliya</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">All directors and executive officers as a group (5 persons)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,358,964</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_008"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>MANAGEMENT</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following sets forth information
regarding our executive officers and the members of our Board of Directors as of June 28, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All directors hold office
for one-year terms until the election and qualification of their successors. Officers are appointed by our Board of Directors and serve
at the discretion of our Board of Directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="width: 30%; border-bottom: black 1.5pt solid"><span style="font-size: 10pt"><b>Name</b></span></td>
    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 10%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-size: 10pt"><b>Age</b></span></td>
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    <td style="width: 58%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-size: 10pt"><b>Position(s)</b></span></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
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    <td style="text-align: center"><span style="font-size: 10pt">68</span></td>
    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top; ">
    <td style="padding-left: 9pt; text-align: justify; text-indent: -9pt"><span style="font-size: 10pt">Shlomo Pilo</span></td>
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    <td style="text-align: center"><span style="font-size: 10pt">68</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">Chief Executive Officer and Director</span></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td style="padding-left: 9pt; text-align: justify; text-indent: -9pt"><span style="font-size: 10pt">Guy Ofir</span></td>
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    <td style="text-align: center"><span style="font-size: 10pt">49</span></td>
    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top; ">
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    <td style="text-align: center"><span style="font-size: 10pt">49</span></td>
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  <tr style="vertical-align: top; background-color: #CCEEFF">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Professor Joseph&#160;Press
M.D.</i>, has been a director and our Chairman of the Board since the Share Exchange. Since 2008, Professor Press has been the Chief Executive
Officer of Schneider Children&#8217;s Medical Center of Israel. Before that, from 2002 to 2007, Professor Press was Chairman of Soroka
University Medical Center in Israel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Shlomo Pilo</i>, has been
our Chief Executive Officer and a member of our board of directors since the Share Exchange and previously served in such capacity with
Raphael Israel from July 2019. In addition, following the founding of Sheffa Enterprises Inc. in 2009, Mr. Pilo is also engaged in providing
food brokering services, representing seven food manufacturers in Europe and North America. Before founding Sheffa Enterprises Inc., Mr.
Pilo served as VP Sales &amp; Marketing of Alle Processing Corporation, the world&#8217;s largest Glatt Kosher food manufacturer.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Guy Ofir</i>, has been
our Chief Financial Officer and a member of our board of directors since September 27, 2021. Mr. Ofir is a qualified lawyer in Israel
and the owner of &#8220;Guy Ofir Adv&#8221; law firm since 2000, with a main practice in civil and business law. In 2007 he established
and registered a company named Easy Energy Inc. that developed a green energy patent. Mr. Ofir owns an investment company, which has invested
in land and construction in Romania since 2005.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Dr. Igal Louria-Hayon</i>,
has been our Chief Technology Officer and member of our board of directors since September 27, 2021. Dr. Louria-Hayon serves as a scientific
director of the Medical Cannabis Research and Innovation Center at Rambam Health Care Campus and Head of the Leukemia &amp; Immunotherapy
Research Laboratory in the Clinical Research Institute at Rambam. In addition, Dr. Louria-Hayon served as Senior Research Fellow in the
Technion&#8217;s Cannabinoid Research Laboratory.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Dr. Yehuda Eliya</i>, has
been a member of our board of directors since September 27, 2021. Dr. Eliya is a partner at one of the largest accounting firms in Israel
and the owner of a law firm. Dr. Eliya is the Vice President of the Chamber of Internal Auditors in Israel. In addition, Dr. Eliya is
a member of the presidency of ZAKA, a series of volunteer community emergency response teams in Israel, a parliamentary adviser to the
Republic of Abkhazia and serves as a director in several non-profit organizations in Israel.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Scientific Advisory Board</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Professor Alexandra Balbir-Gurman</i>,
Frontline Director&#160;of Clinical Trials (Rambam) and Director of the B. Shine Rheumatology Unit at Rambam Health Care Campus, a member
of the Executive Committee of the Israeli Society of Rheumatology, an active member of the Scleroderma Research Group (EUSTAR) and a member
of the EULAR Target US initiative.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Dr. Shachar Eduardo,</i>
Frontline Director&#160;of Clinical Trials (Rambam), is the Director of the Clinical Immunology Unit at Rambam Health Care Campus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Prof. Shai Israeli</i>,
Head of the Division of Pediatric Hematology-Oncology Center, Schneider Children&#8217;s&#8217; Medical Center of Israel (affiliated to
Tel Aviv University), is a member of the executive Board of the European Hematology Association (EHA).&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Family Relationships</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are no family relationships
among the directors and officers of the Company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_009"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EXECUTIVE COMPENSATION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently have no written
employment agreements with any of our officers and directors. We have entered into a written consulting agreements with our executive
officers, including our Chief Executive Officer who is also a member of our board of directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Summary Compensation Table</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The table below summarizes
all compensation awarded to, earned by, or paid to our named executive officers for the fiscal years ended December 31, 2021 and 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Summary Compensation Table</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Chief Executive Officer
provides services to the Company pursuant to a consulting agreement, entered into on June 1, 2020, by and between the Company and Sheffa
Enterprises, Inc., a New Jersey corporation, or Sheffa. Pursuant to the terms thereof, we pay Sheffa $10,000 per month, payable in quarterly
installments, for management services. The agreement is in effect until December 31, 2022; provided, however that the Company may terminate
the agreement prior to the termination date by providing 120 days&#8217; advance written notice and paying Sheffa a termination fee equal
to the lesser of (i) $1 million, or (ii) the monthly management fee paid or payable to Sheffa for the remaining term of the agreement.
Furthermore, as disclosed in the agreement, the Company agreed to indemnify Sheffa against and in respect of any losses arising out of
or due to the operation of the business by the Company, its affiliates, agents, servants and/or employees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Chief Financial Officer
provides services to our Company pursuant to an arrangement, which has not been reduced to a written agreement between the Company and
Guy Ofir &amp; Co. S.R.L, a Romanian corporation owned by our Chief Financial Officer. Pursuant to this arrangement, we paid our Chief
Financial Officer $75,000 for his services for the fiscal year ended December 31, 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Chief Technology Officer
provides services to our Company pursuant to a consulting agreement, as amended, by and between Dr. Igal Louria Hayoun and Raphael Israel.
Pursuant to the terms thereof, Dr. Hayoun provides consulting services the the Company to engage with an array of science consultants
and to coordinate collaborations with hospitals on medical cannabis research. Raphael Israel pay Dr. Hayoun $9,000 per month, and agreed
to pay him 15% of the Company&#8217;s net income from worldwide sales of any of Raphael Israel&#8217;s cannabis-based medical indications
treating COVID-19.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 28, 2022, there
were no outstanding equity awards to any of our executive officers or the members of our board of directors. The Company has no stock
option, retirement, pension, or profit sharing programs for the benefit of directors, officers or other employees, but our board of directors
may recommend adoption of one or more such programs in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;Certain Relationships
and Related Party Transactions, and Director Independence&#8221; below for additional information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_010"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS,
AND DIRECTOR INDEPENDENCE</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Share Exchange</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the Share
Exchange, certain of our shareholders and directors received shares of our Company as a result of shares that they held in Raphael Israel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Consulting Agreements</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have entered into a written
consulting agreements with our executive officers, including our Chief Executive Officer who is also on our board of directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Chief Executive Officer
provides services to our Company pursuant to a consulting agreement between Raphael Israel and Sheffa Enterprises, Inc., a New Jersey
corporation. Pursuant to the terms thereof, we pay our Chief Executive Officer $10,000 per month, payable in quarterly installments. The
agreement is in effect until December 31, 2022; provided, however that Raphael Israel may terminate the agreement prior to the termination
date by providing 120 days&#8217; advance written notice and paying our Chief Executive Officer a termination fee equal to the lesser
of $1 million of the monthly management fee paid or payable to the Chief Executive Officer for the remaining term of the agreement. Furthermore,
as disclosed in the agreement, Raphael Israel has undertaken to indemnify Sheffa Enterprises, Inc. against and in respect of any and losses
arising out of or due to the operation of the business by Raphael Israel, its affiliates, agents, servants and/or employees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Chief Technology Officer
provides services to our Company pursuant to a consulting agreement, as amended, by and between Dr. Igal Louria Hayoun and Raphael Israel.
Pursuant to the terms thereof Dr. Hayoun provides consulting services the the Company to engage with an array of science consultants and
to coordinate collaborations with hospitals on medical cannabis research. Raphael Israel pay Dr. Hayoun $9,000 per month and agreed to
pay him 15% of the Company&#8217;s net royalties income from worldwide sales of any of Raphael Israel&#8217;s cannabis-based medical indications
treating COVID-19.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Raphael Israel has entered
into a consulting agreement with Professor Joseph Press, who is also a member of our board of directors, pursuant to which Prof. Press
provides Raphael Israel with medical research services for $3,000 per month.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Indemnification Agreements</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have entered into indemnification
agreements with our directors pursuant to which we agreed to indemnify each director for any liability he or she may incur by reason of
the fact that he or she serves as our director, to the maximum extent permitted by law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Policies and Procedures for Related-Party
Transactions</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Company does not have
any formal written policies or procedures for related party transactions, however in practice, our board of directors&#8217; reviews and
approves all related party transactions and other matters pertaining to the integrity of management, including potential conflicts of
interest and adherence to standards of business conduct. We have two independent directors on our board of directors. See &#8220;&#8212;Director
Independence&#8221; for further information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Director Independence</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None of our securities are
listed or trade on any securities or currency exchange or other established public trading market. However, the members of our board of
directors have reviewed their relationship with the Company in conjunction with Nasdaq Listing Rule 5605(a)(2) that provides that an &#8220;independent
director&#8221; is &#8216;a person other than an executive officer or employee of the Company or any other individual having a relationship
which, in the opinion of the Company&#8217;s board of directors, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director.&#8217; Based upon information requested from and provided by each director concerning their background,
employment and affiliations, including family relationships, our board of directors has affirmatively determined that each of Prof. Press
and Dr. Eliya has no relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director and is independent within the meaning of the director independence standards of the Nasdaq rules and the SEC. Our members
of the board of directors have determined that Dr. Louria-Hayon, Mr. Ofir and Mr. Pilo do not qualify as independent directors pursuant
to the standards described above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Company does not have
a separately designated audit, nominating or compensation committee or committee performing similar functions; therefore, our full board
of directors currently serves in these capacities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_011"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>SELLING SECURITYHOLDERS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Up to 1,667,393 shares of
Common Stock may be offered for resale, from time to time, by the Selling Securityholders under this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following tables set forth,
with respect to each Selling Securityholder, the number of shares of Common Stock (i) known to us to be beneficially owned as of June
28, 2022, (ii) being offered hereby and (iii) beneficially owned after giving effect to the sale by such Selling Securityholder of all
of its Offered Securities. The immediately following table also sets forth the percentage of Common Stock beneficially owned by a Selling
Securityholder after giving effect to the sale by such Selling Securityholder of all Offered Securities, based on 13,945,540 shares of
Common Stock outstanding as of June 28, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
are not making any representation that any shares of Common Stock covered by this prospectus will be offered for sale. Because each Selling
Securityholder may dispose of all, none or some portion of their securities, no estimate can be given as to the number of securities that
will be beneficially owned by a Selling Securityholder upon termination of this offering. In addition, the Selling Securityholders may
have sold, transferred or otherwise disposed of their securities in transactions exempt from the registration requirements of the Securities
Act after the date on which the information in the table is presented.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may amend or supplement
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">30,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">30,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">18,115</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">*</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">The amounts and percentages of Common Stock beneficially owned are determined in accordance with the SEC&#8217;s rules, pursuant to which a person is deemed to be a &#8220;beneficial owner&#8221; of a security if that person has or shares voting or investment power or has the right to acquire such power within 60 days through exercise of any option, warrant or other right. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person&#8217;s ownership percentage, but not for purposes of computing any other person&#8217;s percentage. Under these rules, more than one person may be deemed beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Except as otherwise indicated in these footnotes, each of the beneficial owners has, to our knowledge, sole voting and investment power with respect to the indicated shares of Common Stock.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 64; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->61<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="a_012"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>PLAN OF DISTRIBUTION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are registering the resale
of Common Stock offered by this prospectus on behalf of the Selling Securityholders. The Selling Securityholders, which as used herein
includes donees, pledgees, transferees or other successors-in-interest selling Common Stock received after the date of this prospectus
from a Selling Securityholder as a gift, pledge, limited liability company or partnership distribution or other transfer, may, from time
to time, sell, transfer or otherwise dispose of any or all of their securities on any stock exchange, market or trading facility on which
such securities are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time
of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale or at negotiated prices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
may use any one or more of the following methods when disposing of their securities or interests therein:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-size: 10pt">in market transactions, including
transactions on a national securities exchange or quotations service or OTC market;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">in privately negotiated transactions; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">in a block trade in which a broker-dealer will attempt to sell a block of securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">through the settlement of short sales (including short sales &#8220;against the box&#8221;), in each case subject to compliance with the Securities Act and other applicable securities laws; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">through one or more underwriters in a public offering on a firm commitment or best-efforts basis; </span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">an exchange distribution in accordance with the rules of the applicable exchange, if any; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">purchases by a broker-dealer as principal and resale by the broker-dealer for its account; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">broker-dealers may agree with the Selling Securityholders to sell a specified number of such securities at a stipulated price per security; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">directly to one or more purchasers; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">in other ways not involving market makers or established trading markets; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">by pledge to secure debts and other obligations; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">through agents; or </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">in any combination of the above or by any other legally available means.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
may, from time to time, pledge or grant a security interest in some or all of the securities owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may offer and sell their securities, from time to time, under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending
the list of Selling Securityholders to include the pledgee, transferee or other successors in interest as Selling Securityholders under
this prospectus. The Selling Securityholders also may transfer their securities in other circumstances, in which case the transferees,
pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


</div><!-- Field: Page; Sequence: 65; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->62<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the sale
of our securities or interests therein, the Selling Securityholders may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of our securities in the course of hedging the positions they assume. The Selling
Securityholders may also sell their securities short and deliver these securities to close out their short positions, or loan or pledge
such securities to broker-dealers that in turn may sell these securities. The Selling Securityholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the
delivery to such broker-dealers or other financial institutions of securities offered by this prospectus, which securities such broker-dealers
or other financial institutions may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The aggregate proceeds to
the Selling Securityholders from the sale of the securities offered by them will be the purchase price of the security less discounts
or commissions, if any. Each of the Selling Securityholders reserves the right to accept and, together with their agents from time to
time, to reject, in whole or in part, any proposed purchase of their securities to be made directly or through agents. We will not receive
any of the proceeds from the resale of securities being offered by the Selling Securityholders named herein. However, we will receive
proceeds from the exercise of the Warrants if they are exercised by a holder thereof.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
also may resell all or a portion of their securities in open market transactions in reliance upon Rule 144 under the Securities Act, provided
that they meet the criteria and conform to the requirements of that rule.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Selling Securityholders
and any broker-dealers that act in connection with the sale of securities might be deemed to be &#8220;underwriters&#8221; within the
meaning of Section 2(a)(11) of the Securities Act, and any commissions received by such broker-dealers and any profit on the resale of
the securities sold by them while acting as principals might be deemed to be underwriting discounts or commissions under the Securities
Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To the extent required, the
securities to be sold, the names of the Selling Securityholders, the respective purchase prices and public offering prices, the names
of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth
in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this
prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


</div><!-- Field: Page; Sequence: 66; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->63<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_013"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>DESCRIPTION OF SECURITIES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>The following summary of
the terms of our Common Stock does not purport to be complete and is subject to and qualified in its entirety by reference to our articles
of incorporation and bylaws.</i>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Common Stock</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The holders of outstanding
shares of Common Stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends of such
times and in such amounts as the board from time to time may determine. Holders of Common Stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders. There is no cumulative voting of the election of directors then standing for
election. The Common Stock are not entitled to pre-emptive rights and are not subject to conversion or redemption. Upon liquidation, dissolution
or winding up of the Company, the assets legally available for distribution to stockholders are distributable ratably among the holders
of the Common Stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors. Each outstanding
common share is duly and validly issued, fully paid and non-assessable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Our Transfer Agent and Warrant Agent</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The transfer agent for our
shares of Common Stock is Pacific Stock Transfer Company, 6725 Via Austi Pkwy, Suite 300, Las Vegas, Nevada 89119.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Special meeting of stockholders</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Bylaws provide that special
meetings of our stockholders may be called only by a majority vote of our Board of Directors, or by our President, or by the holders of
a majority of the outstanding shares of capital stock of the Company, the holders of which are entitled to vote on matters that are to
be voted on at such meeting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Rule 144</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to Rule 144, a person
who has beneficially owned restricted shares of our Common Stock for at least six months would be entitled to sell their securities provided
that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding,
a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have
filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required
to file reports) preceding the sale.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Persons who have beneficially
owned restricted shares of our Common Stock for at least six months but who are our affiliates at the time of, or at any time during the
three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any
three-month period only a number of securities that does not exceed the greater of:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">1% of the total number of shares of Common Stock then outstanding; or</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the average weekly reported trading volume of the Common Stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Sales by our affiliates under
Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about
us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Restrictions on the Use of Rule 144 by Shell
Companies or Former Shell Companies</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Rule 144 is not available
for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers
that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the
following conditions are met:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company filed its Form
10 with SEC on July 29, 2021, as amended by Amendment No. 1 and Amendment No. 2 to Form 10 filed by the Company on September 2, 2021 and
September 23, 2021, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_014"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following is a discussion
of the material U.S. federal income tax considerations generally applicable to the acquisition, ownership and disposition of our Common
Stock. This discussion is limited to certain U.S. federal income tax considerations to beneficial owners of our securities who hold the
securities as a capital asset within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended (the &#8220;Code&#8221;).
This discussion does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances, including
the alternative minimum tax, the Medicare contribution tax on certain investment income and the different consequences that may apply
if you are subject to special rules that apply to certain types of investors, such as:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">financial institutions or financial services entities;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">broker-dealers;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">insurance companies;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">real estate investment trusts;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">persons that actually or constructively own five percent or more of our voting shares;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">persons that acquired our securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">dealers or traders subject to a mark to market method of accounting with respect to the securities;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">persons holding the securities as part of a &#8220;straddle,&#8221; hedge, constructive sale, conversion or other integrated or similar transaction;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">U.S. holders (as defined below) whose functional currency is not the U.S. dollar;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">persons subject to special tax accounting rules under Section 451(b) of the Code; partnerships or other pass through entities for U.S. federal income tax purposes; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">tax exempt entities.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you are a partnership for
U.S. federal income tax purposes, the U.S. federal income tax treatment of your partners will generally depend on the status of the partners
and your activities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This discussion is based on
the Code and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof,
changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein. This discussion does
not address any aspect of state, local or non-U.S. taxation, or any U.S. tax law other than the U.S. federal income tax (such as gift,
estate or Medicare contribution taxes) or except as discussed below, any tax reporting obligations of a holder of our securities. This
discussion also assumes that any distribution made (or deemed made on our securities and any consideration received (or deemed received)
by a holder from the sale or other disposition of our securities will be in U.S. dollars.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have not sought, and will
not seek, a ruling from the Internal Revenue Service (the &#8220;IRS&#8221;) as to any U.S. federal income tax consequence described herein.
The IRS may disagree with the discussion herein, and its determination may be upheld by a court. Moreover, there can be no assurance that
future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in
this discussion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>THIS DISCUSSION IS ONLY
A SUMMARY OF THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES. EACH PROSPECTIVE
INVESTOR IN OUR SECURITIES IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF
THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, AND NON-U.S.
TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS AND ANY APPLICABLE TAX TREATIES.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S. Holders</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This section applies to you
if you are a &#8220;U.S. holder.&#8221; A U.S. holder is a beneficial owner of our securities that is, for U.S. federal income tax purposes:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof or the District of Columbia;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) it has in effect a valid election to be treated as a U.S. person.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Taxation of Distributions.</i>&#8195;If
we pay cash distributions to U.S. holders of shares of our Common Stock, such distributions generally will be treated as a dividend for
U.S. federal income tax purposes to the extent the distribution is paid out of our current or accumulated earnings and profits, as determined
under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits will constitute a return
of capital that will be applied against and reduce (but not below zero) the U.S. holder&#8217;s adjusted tax basis in our Common Stock.
Any remaining excess will be treated as gain realized on the sale or other disposition of the Common Stock and will be treated as described
under &#8220;U.S. holders &#8212; Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Our Securities&#8221; below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dividends we pay to a U.S.
holder that is a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied.
With certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction
limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. holder generally will
constitute &#8220;qualified dividends&#8221; that will be subject to tax at the maximum tax rate accorded to long-term capital gains.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Gain or Loss on Sale, Taxable
Exchange or Other Taxable Disposition of Our Securities.</i>&#8195;Upon a sale or other taxable disposition of our securities which, in
general, would include a redemption of Common Stock or warrants, a U.S. holder generally will recognize capital gain or loss in an amount
equal to the difference between the amount realized and the U.S. holder&#8217;s adjusted tax basis in such securities. Any such capital
gain or loss generally will be long-term capital gain or loss if the U.S. holder&#8217;s holding period for the securities so disposed
of exceeds one year. Long-term capital gains recognized by non-corporate U.S. holders will be eligible to be taxed at reduced rates. The
deductibility of capital losses is subject to various limitations that are not described herein because a discussion of such limitations
depends on each U.S. holder&#8217;s particular facts and circumstances.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Generally, the amount of gain
or loss recognized by a U.S. holder is an amount equal to the difference between (i) the sum of the amount of cash and the fair market
value of any property received in such disposition and (ii) the U.S. holder&#8217;s adjusted tax basis in its securities so disposed of.
A U.S. holder&#8217;s adjusted tax basis in its Common Stock or warrants generally will equal the U.S. holder&#8217;s acquisition cost
less, in the case of a share of Common Stock, any prior distributions treated as a return of capital.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Information Reporting and
Backup Withholding. </i>In general, information reporting requirements may apply to dividends paid to a U.S. holder and to the proceeds
of the sale or other disposition of our securities, unless the U.S. holder is an exempt recipient. Backup withholding may apply to such
payments if the U.S. holder fails to provide a taxpayer identification number, a certification of exempt status or has been notified by
the IRS that it is subject to backup withholding (and such notification has not been withdrawn).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any amounts withheld under
the backup withholding rules will be allowed as a refund or a credit against a U.S. holder&#8217;s U.S. federal income tax liability provided
the required information is timely furnished to the IRS.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Non-U.S. Holders</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This section applies to you
if you are a &#8220;Non-U.S. holder.&#8221; A Non-U.S. holder is a beneficial owner of our securities who or that is, for U.S. federal
income tax purposes:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">a non-resident alien individual, other than certain former citizens and residents of the United States subject to U.S. tax as expatriates;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">a foreign corporation; or</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">an estate or trust that is not a U.S. holder;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">but does not include an individual who is present
in the United States for 183 days or more in the taxable year of disposition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you are such an individual,
you should consult your tax advisor regarding the U.S. federal income tax consequences of the sale or other disposition of a security.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Taxation of Distributions.
</i>In general, any distributions we make to a Non-U.S. holder of shares of our Common Stock, to the extent paid out of our current or
accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal
income tax purposes and, provided such dividends are not effectively connected with the Non-U.S. holder&#8217;s conduct of a trade or
business within the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless
such Non-U.S. holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification
of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E). Any distribution not constituting a dividend will
be treated first as reducing (but not below zero) the Non-U.S. holder&#8217;s adjusted tax basis in its shares of our Common Stock and,
to the extent such distribution exceeds the Non-U.S. holder&#8217;s adjusted tax basis, as gain realized from the sale or other disposition
of the Common Stock, which will be treated as described under &#8220;Non-U.S. holders &#8212; Gain on Sale, Taxable Exchange or Other
Taxable Disposition of Our Securities&#8221; below. In addition, if we determine that we are classified as a &#8220;United States real
property holding corporation&#8221; (see &#8220;Non-U.S. holders &#8212; Gain on Sale, Taxable Exchange or Other Taxable Disposition of
Our Securities&#8221; below), we will withhold 15% of any distribution that exceeds our current and accumulated earnings and profits.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The withholding tax does not
apply to dividends paid to a Non-U.S. holder who provides a Form W-8ECI, certifying that the dividends are effectively connected with
the Non-U.S. holder&#8217;s conduct of a trade or business within the United States. Instead, the effectively connected dividends will
be subject to regular U.S. federal income tax as if the Non-U.S. holder were a U.S. resident, subject to an applicable income tax treaty
providing otherwise. A Non-U.S. corporation receiving effectively connected dividends may also be subject to an additional &#8220;branch
profits tax&#8221; imposed at a rate of 30% (or a lower treaty rate).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Possible Constructive Distributions.
</i>Under certain circumstances, a Non-U.S. holder may be deemed to have received a constructive dividend (see &#8220;U.S. holders&#8221;
above). Any such constructive distribution deemed received will be treated, and therefore generally be subject to withholding, in the
same manner as an actual dividend received (and may be subject to information reporting), as discussed above under &#8220;Non-U.S. Holders
&#8212; Taxation of Distributions.&#8221; Because a constructive dividend received by a Non-U.S. holder would not give rise to any cash
from which any applicable withholding tax could be satisfied, if we or the withholding agent pays withholding taxes on the Non-U.S. holder&#8217;s
behalf with respect to amounts which are includible in the Non-U.S. holder&#8217;s income but which are not paid in cash, we or the withholding
agent may withhold any such withholding tax from any other payments owed to the Non-U.S. holder or other assets, including cash payments
of interest payable on the notes, shares of Common Stock or cash payable upon conversion, or proceeds from a sale subsequently paid or
credited to the Non-U.S. holder. If we deduct, or such withholding agent deducts, any such amount from interest payments on a Non-U.S.
holder&#8217;s notes under these circumstances, such Non-U.S. holder should consult its own tax advisor as to whether it can obtain a
refund for all or a portion of any tax withheld.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Gain on Sale, Taxable Exchange
or Other Taxable Disposition of Our Securities. </i>A Non-U.S. holder generally will not be subject to U.S. federal income or withholding
tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of our securities unless:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the gain is effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States (and, under certain income tax treaties, is attributable to a United States permanent establishment or fixed base maintained by the Non-U.S. holder); or</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">we are or have been a &#8220;U.S. real property holding corporation&#8221; for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the Non-U.S. holder held our securities, and, in the case where shares of our Common Stock are regularly traded on an established securities market, the Non-U.S. holder has owned, directly or constructively, more than 5% of our Common Stock at any time within the shorter of the five-year period preceding the disposition or such Non-U.S. holder&#8217;s holding period for the shares of our Common Stock. There can be no assurance that our Common Stock will be treated as regularly traded on an established securities market for this purpose.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless an applicable treaty
provides otherwise, gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income
tax rates as if the Non-U.S. holder were a U.S. resident. Any gains described in the first bullet point above of a Non-U.S. holder that
is a foreign corporation may also be subject to an additional &#8220;branch profits tax&#8221; at a 30% rate (or lower treaty rate).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the second bullet point
above applies to a Non-U.S. holder, gain recognized by such holder on the sale, exchange or other disposition of our securities will be
subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of our securities from such holder may be required
to withhold U.S. federal income tax at a rate of 15% of the amount realized upon such disposition. We will be classified as a U.S. real
property holding corporation if the fair market value of our &#8220;U.S. real property interests&#8221; equals or exceeds 50% of the sum
of the fair market value of our worldwide real property interests plus our other assets used or held for use in a trade or business, as
determined for U.S. federal income tax purposes.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Information Reporting and
Backup Withholding. </i>Information returns will be filed with the IRS in connection with payments of dividends and the proceeds from
a sale or other disposition of our securities. A Non-U.S. holder may have to comply with certification procedures to establish that it
is not a United States person in order to avoid information reporting and backup withholding requirements. The certification procedures
required to claim a reduced rate of withholding under a treaty will satisfy the certification requirements necessary to avoid the backup
withholding as well. The amount of any backup withholding from a payment to a Non-U.S. holder will be allowed as a credit against such
holder&#8217;s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely
furnished to the IRS.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>FATCA Withholding Taxes</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Provisions commonly referred
to as &#8220;FATCA&#8221; impose withholding of 30% on payments of dividends (including constructive dividends) on our securities, and
sales or other disposition proceeds from our securities to &#8220;foreign financial institutions&#8221; (which is broadly defined for
this purpose and in general includes investment vehicles) and certain other Non-U.S. entities unless various U.S. information reporting
and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have
been satisfied, or an exemption applies (typically certified as to by the delivery of a properly completed IRS Form W-8BEN-E). If FATCA
withholding is imposed, a beneficial owner of the payment that is not a foreign financial institution (or that is a foreign financial
institution entitled to a reduced rate of withholding tax with respect to such payment under an income tax treaty) generally may be entitled
to a refund or credit of any amounts withheld by filing a U.S. federal income tax return and providing certain other information to the
IRS (which may entail significant administrative burden). Foreign financial institutions located in jurisdictions that have an intergovernmental
agreement with the United States governing FATCA may be subject to different rules. Notwithstanding the foregoing, the IRS has issued
proposed regulations, upon which taxpayers may generally rely, that exclude gross proceeds from the sale or other disposition of our securities
from the application of the withholding tax imposed under FATCA. Prospective investors should consult their tax advisers regarding the
effects of FATCA on their investment in our securities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_015"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>LEGAL MATTERS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The validity of the securities
offered by this prospectus will be passed upon for us by Sullivan &amp; Worcester LLP.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_016"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EXPERTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The financial statements of
the Company as of and for the years ended December 31, 2021 and 2020 included in this prospectus have been so included in reliance on
the reports (which contains an explanatory paragraph relating to the Company&#8217;s ability to continue as a going concern as described
in Note 1B to the financial statements) of Brightman Almagor Zohar &amp; Co., a firm in the Deloitte global network, an independent registered
public accounting firm, given on the authority of said firm as experts in auditing and accounting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_017"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>WHERE YOU CAN FIND ADDITIONAL INFORMATION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are subject to the filing
requirements of the Exchange Act. Therefore, we file periodic reports, proxy statements and other information with the Securities and
Exchange Commission. The Securities and Exchange Commission maintains a website (www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We make our Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to such reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange Act available free of charge through a link on the Investors section of our website located
at www.raphaelpharmaceutical.com as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange
Commission. The information contained in or accessible through our website or contained on other websites is not a part of, and is not
incorporated into, this prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For further information about
us, please visit our main website located at www.raphaelpharmaceutical.com. Information contained on these websites is not a part of this
prospectus.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>You should rely only on
the information contained in this prospectus. We have not authorized anyone to provide you with different information. Therefore, if anyone
gives you different or additional information, you should not rely on it. The information contained in this prospectus is correct as of
its date. It may not continue to be correct after this date.</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><div><a id="a_018"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: center">&#160;</td></tr>
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    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td style="text-align: center"><span style="font-size: 10pt">F-21</span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;<img alt="" src="image_003.jpg"/></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><div><a id="f_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>To the Shareholders and Board of Directors of Raphael Pharmaceutical
Inc.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Opinion on the Financial Statements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
balance sheets of Raphael Pharmaceutical Inc. and its subsidiary (the &#8220;Company&#8221;) as of December 31, 2021 and 2020, the related
consolidated statements of comprehensive loss, changes in shareholders&#8217; deficit and cash flows for each of the two years in the
period ended December 31, 2021, and the related notes (collectively referred to as the &#8220;financial statements&#8221;). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020
and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with
accounting principles generally accepted in the United States of America.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Going Concern</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 1b to the financial statements, the Company&#8217;s
lack of revenues and accumulated operating losses raise substantial doubt about its ability to continue as a going concern. Management&#8217;s
plans in regard to these matters are also described in Note 1b. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Basis for Opinion</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These financial statements are the responsibility
of the Company&#8217;s management. Our responsibility is to express an opinion on the Company&#8217;s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company&#8217;s
internal control over financial reporting. Accordingly, we express no such opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


</div><!-- Field: Page; Sequence: 75; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->2<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;<img alt="" src="image_003.jpg"/></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Critical Audit Matter</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The critical audit matter communicated below is
a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the
audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion
on the critical audit matter or on the accounts or disclosures to which it relates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Changes in Ordinary Share Capital &#8211;
refer to note 7 to the consolidated financial statements</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Critical Audit Matter Description</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the year ended December 31, 2021, the Company
raised equity in the aggregate amount of $1,290 thousands, through equity transactions, by issuing shares and warrants.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We deemed our audit over the allocation, classification
and accuracy of equity transactions as challenging from a perspective of audit effort in comparison to our audit as a whole, because of
the amount of equity transactions and due to the magnitude of total amounts raised. As such, we believe this represents a critical audit
matter.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>How the Critical Audit Matter Was Addressed
in the Audit</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our audit procedures related to equity transactions
included the following, among others:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">/s/ <b>Brightman Almagor Zohar &amp; Co.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Certified Public Accountants</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>A Firm in the Deloitte Global Network</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Tel Aviv, Israel</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>March 30, 2022</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>We have served as the Company&#8217;s auditor since 2021.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><div><a id="f_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>CONSOLIDATED
BALANCE SHEETS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesCurrent" scale="3" unitRef="usd">294</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 0.25in">Stockholders&#8217; equity (deficit):</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -9pt; padding-left: 0.25in">Authorized: 21,020,560 shares;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CommonStockValue" scale="3" unitRef="usd">130</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Additional paid-in capital</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c1" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AdditionalPaidInCapital" scale="3" unitRef="usd">2,665</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AdditionalPaidInCapital" scale="3" unitRef="usd">905</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in">Accumulated deficit</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in">Total stockholders&#8217; equity (deficit)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c1" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:StockholdersEquity" scale="3" unitRef="usd">128</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:StockholdersEquity" scale="3" sign="-" unitRef="usd">43</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><div><a id="f_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>CONSOLIDATED
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 0.25in">Weighted average number of common shares used in computing basic and diluted net loss per share (*)</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">(*)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Number of shares has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the reverse recapitalization transaction and to reflect adjustment to the share par value (refer to Note 1a).</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><div><a id="f_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>CONSOLIDATED
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Effect of reverse recapitalization transaction (Notes 1a and 7b)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">(**)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Number of shares has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the reverse recapitalization transaction and to reflect adjustment to the share par value (refer to Note 1a).</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
the consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><div><a id="f_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>CONSOLIDATED
STATEMENTS OF CASH FLOWS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c4" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect" scale="3" unitRef="usd">58</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">The accompanying notes are an integral part of the consolidated financial
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


</div><!-- Field: Page; Sequence: 80; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

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  <tr style="vertical-align: top">
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course of business. Since its inception, the Company has devoted substantially all of its efforts to research and development, clinical
trials, and raising capital. The Company is still in its development and pre-clinical stage and has not yet generated revenues. The extent
of the Company&#8217;s future operating losses and the timing of becoming profitable are uncertain. As of December 31, 2021, the Company&#8217;s
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The Company has funded its operations to date primarily through equity financing and the issuance of a loan. &#160;Additional funding
will be required to complete the Company&#8217;s research and development and clinical trials, to attain regulatory approvals, to begin
the commercialization efforts of the Company&#8217;s product and to achieve a level of sales adequate to support the Company&#8217;s cost
structure.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


</div><!-- Field: Page; Sequence: 81; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 1:-</b></td><td style="text-align: justify"><b>GENERAL (Cont.)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

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cash flow from operating activity. This has led management to conclude that substantial doubt about the Company&#8217;s ability to continue
as a going concern exists in the event that additional funding does not occur. If such sufficient financing is not received timely, the
Company will not have sufficient cash flows and liquidity to finance its business operations as currently contemplated and would then
need to pursue a plan to license its assets, seek to be acquired by another entity, cease operations and/or seek bankruptcy protection.
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c4" continuedAt="_SignificantAccountingPoliciesTextBlock-c4_cont_1" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 2:-</b></td><td style="text-align: justify"><b>SIGNIFICANT ACCOUNTING POLICIES</b></td>
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</div><div>

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</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c4_cont_3" id="_SignificantAccountingPoliciesTextBlock-c4_cont_2"><ix:continuation continuedAt="_BasisOfAccountingPolicyPolicyTextBlock-c4_cont_2" id="_BasisOfAccountingPolicyPolicyTextBlock-c4_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The consolidated financial statements have been
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c4_cont_4" id="_SignificantAccountingPoliciesTextBlock-c4_cont_3"><ix:continuation id="_BasisOfAccountingPolicyPolicyTextBlock-c4_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The consolidated financial statements include
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c4_cont_5" id="_SignificantAccountingPoliciesTextBlock-c4_cont_4"><ix:nonNumeric contextRef="c4" continuedAt="_UseOfEstimates-c4_cont_1" escape="true" name="us-gaap:UseOfEstimates"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 67px">&#160;</td> <td style="width: 29px"><span style="font-size: 10pt">b.</span></td> <td><span style="font-size: 10pt">Use of estimate in preparation of financial statements:</span></td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>
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</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c4_cont_6" id="_SignificantAccountingPoliciesTextBlock-c4_cont_5"><ix:continuation id="_UseOfEstimates-c4_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of consolidated financial statements
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the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company&#8217;s management
believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made.
These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the dates of the financial statements, and the reported amounts of expenses during the reporting periods. Actual results
could differ from those estimates.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c4_cont_7" id="_SignificantAccountingPoliciesTextBlock-c4_cont_6"><ix:nonNumeric contextRef="c4" continuedAt="_ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock-c4_cont_1" escape="true" name="us-gaap:ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 67px">&#160;</td> <td style="width: 29px"><span style="font-size: 10pt">c.</span></td> <td><span style="font-size: 10pt">Financial statements in United States dollars:</span></td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>
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</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c4_cont_8" id="_SignificantAccountingPoliciesTextBlock-c4_cont_7"><ix:continuation id="_ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock-c4_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s functional currency is the
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


</div><!-- Field: Page; Sequence: 82; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 2:-</b></td><td style="text-align: justify"><b>SIGNIFICANT ACCOUNTING POLICIES (Cont.)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c4_cont_13" id="_SignificantAccountingPoliciesTextBlock-c4_cont_12"><ix:nonNumeric contextRef="c4" continuedAt="_ResearchAndDevelopmentExpensePolicy-c4_cont_1" escape="true" name="us-gaap:ResearchAndDevelopmentExpensePolicy"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 67px">&#160;</td> <td style="width: 29px"><span style="font-size: 10pt">f.</span></td> <td><span style="font-size: 10pt">Research and development expenses:</span></td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c4_cont_15" id="_SignificantAccountingPoliciesTextBlock-c4_cont_14"><ix:nonNumeric contextRef="c4" continuedAt="_IncomeTaxPolicyTextBlock-c4_cont_1" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 67px">&#160;</td> <td style="width: 29px"><span style="font-size: 10pt">g.</span></td> <td><span style="font-size: 10pt">Income taxes:</span></td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>
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account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances in respect
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</div><div>

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during the period. Loss available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred
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net loss. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include
the number of additional common shares that would have been outstanding if the dilutive potential common stock had been issued during
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 2:-</b></td><td style="text-align: justify"><b>SIGNIFICANT ACCOUNTING POLICIES (Cont.)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><div>

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</div><div>

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Leases (Topic 842) (&#8220;ASU 2016-02&#8221;). ASU 2016-02 requires lessees to recognize their leases contracts as assets and liabilities
in the financial statements. Furthermore, the ASU requires the Company to continue recognizing expenses but recognize expenses on their
statements of comprehensive loss in a manner similar to current lease accounting. The amendments in this ASU are effective January 1,
2019. In July 2018, the FASB issued ASU 2018-11, Leases - Targeted Improvements, to allow a company to elect an optional modified retrospective
transition method that applies the new lease requirements through a cumulative-effect adjustment in the period of adoption.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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new standard. As such, there was no impact on the Company&#8217;s financial statements as a result of adopting ASU 2016-02. See note 6a
for more details.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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ASU 2016-13 replaces the current incurred loss model guidance with a new method that reflects expected credit losses. Under this guidance,
an entity would recognize an allowance for credit losses equal to its estimate of expected credit losses on financial assets measured
at amortized cost. In November 2019, the FASB extended the effective date of ASU 2016-13 for smaller reporting companies. As a result,
ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2022, with early adoption
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</div><!-- Field: Page; Sequence: 84; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->11<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 2:-</b></td><td style="text-align: justify"><b>SIGNIFICANT ACCOUNTING POLICIES (Cont.)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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and Extinguishments (Subtopic 470-50), Compensation&#8212;Stock Compensation (Topic 718), and Derivatives and Hedging&#8212; Contracts
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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<td style="text-align: left; width: 67px"><b>NOTE 4:-</b></td><td style="text-align: justify"><b>OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES</b></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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<td style="width: 67px; text-align: left"><b>NOTE 5:-</b></td><td style="text-align: justify"><b>LOAN</b></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation id="_DebtDisclosureTextBlock-c4_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 31, 2020, the Company and Raphael signed
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Company raised were transferred to Raphael for its current activity. The funds transferred to Raphael by the Company were considered as
a loan which bears no interest and has no repayment date. Based on the agreement, the loan will become an equity interest once the Share
Exchange is complete. As of part of the Share Exchange, the loan was converted into stockholders&#8217; equity without any issuance of
shares and recorded as part of the Company&#8217;s additional paid in capital</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c4" continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_1" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 6:-</b></td><td style="text-align: justify"><b>CONTINGENT LIABILITIES AND COMMITMENTS</b></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_2" id="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_3" id="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Starting July 14, 2019, the Company began renting
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</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_4" id="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Effective July 14, 2019, the Company adopted the
new lease accounting standard. The Company elected to apply the practical expedients permitted under the transition guidance within the
new standard, and the Company also elected not to apply the recognition requirements in the lease standard to short-term leases (less
than 12 months) as of the adoption date. As such, there was no impact on the Company&#8217;s financial statements as a result of adopting
ASU 2016-02.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_5" id="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_4"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">Rambam research agreement</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_6" id="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s research and development efforts
relating to its COVID-19 and rheumatoid arthritis (&#8220;RA&#8221;) product candidates are being conducted by Rambam Med-Tech Ltd., or
Rambam MT, a part of the Rambam Health Care Campus in Israel, in accordance with a Sponsored Research Agreement (the &#8220;Research Agreement&#8221;),
that was entered into by the Company and Rambam MT in July 2019, to be in effect for a period of 48 months and which includes a non-compete
extension option for an additional 48 months of research and development. Pursuant to the Research Agreement, the Company agreed to pay
Rambam MT $<ix:nonFraction contextRef="c41" decimals="-5" format="ixt:num-dot-decimal" name="cik0000141539:MilestonePayment" scale="6" unitRef="usd">1.4</ix:nonFraction> million in four equal milestone payments, due on the first day of August on each successive year from 2019 through 2022.
Furthermore, in accordance with the terms of the Research Agreement, the Company and Rambam MT will have joint ownership of any IP created
as a result of research programs covered by such agreement. In addition, subject to commercial sales of any product candidate using the
IP created as a part of the research covered by the Research Agreement, the Company is required to pay Rambam MT a royalty in an amount
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</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_7" id="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2021 the Company paid $<ix:nonFraction contextRef="c4" decimals="-3" format="ixt:num-dot-decimal" name="cik0000141539:MilestonePayment" scale="3" unitRef="usd">1,050</ix:nonFraction>
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</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_8" id="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_7"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="width: 29px"><span style="font-size: 10pt">c.</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Way of Life Cannabis research agreement</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_9" id="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2020, Raphael Israel entered into an
engagement agreement with Wolc, pursuant to which, subject to its completing the Share Exchange with Easy Energy, Raphael Israel will
be provided with up to 15 liters of CBD oil, from a strain of cannabis during a term of 18 months, to be provided in two to three deliveries
of between one to seven liters of CBD oil. In accordance with Raphael Israel&#8217;s agreement with Wolc, Raphael Israel has agreed to
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to be provided in three equal issuances; provided, however, that such persons may elect to receive a cash payment of $<ix:nonFraction contextRef="c42" decimals="-3" format="ixt:num-dot-decimal" name="cik0000141539:CashPayment" scale="3" unitRef="usd">100</ix:nonFraction> instead of any
one issuance of Raphael&#8217;s shares. In addition to the issuance of shares, Raphael Israel has also agreed to pay Wolc a royalty fee
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hospital in Israel.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 6:-</b></td><td style="text-align: justify"><b>CONTINGENT LIABILITIES AND COMMITMENTS (Cont.)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_10" id="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_9"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">Consulting agreement with the Chief Executive Officer</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_11" id="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2019, the Company entered into an agreement
with Sheffa Enterprises Inc, a company wholly owned by the Company&#8217;s Chief Executive Officer (&#8220;CEO&#8221;). According to the
terms of the agreement, the CEO will provide consulting services to the Company until December 31, 2022 (&#8220;termination date&#8221;).
The fees for his services will be $<ix:nonFraction contextRef="c43" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CustodyFees" scale="3" unitRef="usd">10</ix:nonFraction> per month. Furthermore, the Company may terminate the agreement prior to the termination date by
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agreed, for the remaining term of the agreement.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_12" id="_CommitmentsAndContingenciesDisclosureTextBlock-c4_cont_11"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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services to the Company that include engaging with an array of science consultants and coordinating collaborations with hospitals on medical
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revenues.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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<td style="width: 67px; text-align: left"><b>NOTE 8:-</b></td><td style="text-align: justify"><b>RELATED PARTIES BALANCES AND TRANSACTIONS</b></td>
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</div><div>

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</div><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c4_cont_5" id="_RelatedPartyTransactionsDisclosureTextBlock-c4_cont_4"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><div>

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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>
</div><div>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

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</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 9:-</b></td><td style="text-align: justify"><b>TAXES ON INCOME (Cont.)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_3" id="_IncomeTaxDisclosureTextBlock-c4_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Income tax rates applicable to the Company in
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_4" id="_IncomeTaxDisclosureTextBlock-c4_cont_3"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_5" id="_IncomeTaxDisclosureTextBlock-c4_cont_4"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_6" id="_IncomeTaxDisclosureTextBlock-c4_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Presented hereunder are the income tax rates relevant to the Company&#8217;s
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_7" id="_IncomeTaxDisclosureTextBlock-c4_cont_6"><ix:nonNumeric contextRef="c4" escape="true" name="cik0000141539:ScheduleOfPresentedHereunderAreTheIncomeTaxRatesTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_8" id="_IncomeTaxDisclosureTextBlock-c4_cont_7"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 96px">&#160;</td> <td style="width: 24px"><span style="font-size: 10pt">2.</span></td> <td style="text-align: justify"><span style="font-size: 10pt">The Company&#8217;s Israeli subsidiary have estimated total available carryforward operating tax losses for Israeli income tax purposes of approximately $<ix:nonFraction contextRef="c1" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsOperatingLossCarryforwardsSubjectToExpiration" scale="3" unitRef="usd">1,843</ix:nonFraction>&#160;as of December 31, 2021.</span></td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 69.3pt">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_9" id="_IncomeTaxDisclosureTextBlock-c4_cont_8"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>
</div><div>

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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_11" id="_IncomeTaxDisclosureTextBlock-c4_cont_10"><ix:nonNumeric contextRef="c4" escape="true" name="us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_12" id="_IncomeTaxDisclosureTextBlock-c4_cont_11"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In assessing the realization of deferred tax assets,
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_13" id="_IncomeTaxDisclosureTextBlock-c4_cont_12"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The ultimate realization of the deferred tax assets
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losses are utilized. Based on consideration of these factors, the Company recorded a full valuation allowance as of December&#160;31,
2021 and 2020.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


</div><!-- Field: Page; Sequence: 89; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 9:-</b></td><td style="text-align: justify"><b>TAXES ON INCOME (Cont.)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_14" id="_IncomeTaxDisclosureTextBlock-c4_cont_13"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 67px">&#160;</td>
    <td style="width: 29px"><span style="font-size: 10pt">d.</span></td>
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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c4_cont_15" id="_IncomeTaxDisclosureTextBlock-c4_cont_14"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The main reconciling item between the statutory
tax rate of the Company and the effective tax rate is the recognition of valuation allowance in respect of deferred taxes relating to
accumulated net operating losses carried forward due to the uncertainty of the realization of such deferred taxes.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_IncomeTaxDisclosureTextBlock-c4_cont_15"><ix:nonNumeric contextRef="c4" escape="true" name="us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Net loss, as reported in the consolidated statements of comprehensive loss</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt">Taxes on income</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-40">-</div></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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<td style="width: 67px; text-align: left"><b>NOTE 10:-</b></td><td style="text-align: justify"><b>SELECTED STATEMENTS OF COMPREHENSIVE LOSS DATA</b></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><div><a id="f_007"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
the condensed consolidated interim financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


</div><!-- Field: Page; Sequence: 91; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->18<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_008"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 0.25in"><span style="font-size: 10pt">(*)</span></td> <td style="text-align: justify"><ix:footnote id="ix_0_footnote" xml:lang="en-US"><span style="font-size: 10pt">Number of shares has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the reverse recapitalization transaction and to reflect adjustment to the share par value (refer to Note 1a).</span></ix:footnote></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
the condensed consolidated interim financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_009"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS&#8217; EQUITY (UNAUDITED)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
the condensed consolidated interim financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_010"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><div><a id="f_011"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-indent: -56.7pt"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 1:-</b></td><td style="text-align: justify"><b>GENERAL</b></td>
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</div><div>

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have been prepared on a going-concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal
course of business. Since its inception, the Company has devoted substantially all of its efforts to research and development, clinical
trials, and raising capital. The Company is still in its development and clinical stage and has not yet generated revenues. The extent
of the Company&#8217;s future operating losses and the timing of becoming profitable are uncertain. As of March 31, 2022, the Company&#8217;s
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loan. &#160;Additional funding will be required to complete the Company&#8217;s research and development and clinical trials, to attain
regulatory approvals, to begin the commercialization efforts of the Company&#8217;s product and to achieve a level of sales adequate to
support the Company&#8217;s cost structure.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-indent: -56.7pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 1:-</b></td><td style="text-align: justify"><b>GENERAL (Cont.)</b></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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financing, including in a public offering, or obtain additional financing on a timely basis or on terms acceptable to the Company, or
at all.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.65pt; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

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in negative cash flow from operating activity. This has led management to conclude that substantial doubt about the Company&#8217;s ability
to continue as a going concern exists in the event that additional funding does not occur. If such sufficient financing is not received
timely, the Company will not have sufficient cash flows and liquidity to finance its business operations as currently contemplated and
would then need to pursue a plan to license its assets, seek to be acquired by another entity, cease operations and/or seek bankruptcy
protection. The Company&#8217;s financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.65pt; text-align: justify">&#160;</p><div>

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<td style="width: 67px; text-align: left"><b>NOTE 2:-</b></td><td style="text-align: justify"><b>SIGNIFICANT ACCOUNTING POLICIES</b></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation id="_SignificantAccountingPoliciesTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 67px; text-align: justify">These unaudited interim financial
statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31,
2021. The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2021, are applied
consistently in these interim financial statements.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.65pt; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_QuarterlyFinancialInformationTextBlock-c0_cont_1" escape="true" name="us-gaap:QuarterlyFinancialInformationTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 3:-</b></td><td style="text-align: justify"><b>UNAUDITED INTERIM FINANCIAL STATEMENTS</b></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation id="_QuarterlyFinancialInformationTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 67px; text-align: justify">The accompanying unaudited condensed
consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles (&#8220;GAAP&#8221;)
for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation
S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting
only of normal recurring adjustments except as otherwise discussed). For further information, reference is made to the consolidated financial
statements and footnotes thereto included in the Company&#8217;s Annual Report on Form 10-K for the year ended December 31, 2021. Operating
results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending
December&#160;31, 2022.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.65pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->23<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; border-bottom: black 1.5pt solid"><b>NOTES TO
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>U.S dollars in thousands (except for share
and per share data)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 142.9pt; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:StockholdersEquityNoteDisclosureTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 4:-</b></td><td style="text-align: justify"><b>SHAREHOLDERS&#8217; EQUITY</b></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.65pt; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

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</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.65pt; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_SubsequentEventsTextBlock-c0_cont_1" escape="true" name="us-gaap:SubsequentEventsTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 67px; text-align: left"><b>NOTE 5:-</b></td><td style="text-align: justify"><b>SUBSEQUENT EVENTS</b></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&#160;</p></ix:nonNumeric><div>

</div><div>

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</div><div>

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</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>PART II</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>INFORMATION NOT REQUIRED IN PROSPECTUS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Item 13. Other Expenses of Issuance and Distribution.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
the various expenses to be incurred in connection with the registration of the securities being registered hereby, all of which will be
borne by us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left">SEC registration fee</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">408.57</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Transfer agent&#8217;s fees and expenses</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">900</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Printing expenses</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">1,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Legal fees and expenses</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">6,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accounting fees and expenses</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">10,000</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>Miscellaneous</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Total expenses</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">18,308.57</td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Item 14. Indemnification of Directors and Officers.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Nevada Revised Statutes, or
the NRS, 78.138(7) provides that, subject to limited statutory exceptions and unless the articles of incorporation or an amendment thereto
(in each case filed on or after October 1, 2003) provide for greater individual liability, a director or officer is not individually liable
to a corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a
director or officer unless it is proven that: (i) the act or failure to act constituted a breach of his or her fiduciary duties as a director
or officer and (ii) the breach of those duties involved intentional misconduct, fraud or a knowing violation of law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">NRS 78.7502(1) provides that
a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation),
by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys&#8217; fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with the action, suit or proceeding if the person (i) is not liable pursuant to NRS 78.138 or (ii)
acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful. NRS 78.7502(2) provides
that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was
a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid
in settlement and attorneys&#8217; fees actually and reasonably incurred by the person in connection with the defense or settlement of
the action or suit if the person (a) is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of the corporation. To the extent that a director, officer, employee
or agent of a corporation has been successful on the merits or otherwise in defense of any such action, suit or proceeding, or in defense
of any claim, issue or matter therein, the corporation shall indemnify him or her against expenses, including attorneys&#8217; fees, actually
and reasonably incurred by him or her in connection with the defense. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person
is liable pursuant to NRS 78.138 or did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed
to the best interests of the corporation, or that, with respect to any criminal action or proceeding, he or she had reasonable cause to
believe that the conduct was unlawful. Indemnification may not be made for any claim, issue or matter as to which such a person has been
adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts
paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court
of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">NRS 78.751(1) provides that
any discretionary indemnification pursuant to NRS 78.7502 (unless ordered by a court or advanced pursuant to NRS 78.751(2)), may be made
by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee
or agent is proper in the circumstances. The determination must be made (i) by the stockholders; (ii) by the board of directors by majority
vote of a quorum consisting of directors who were not parties to the action, suit or proceeding; (iii) if a majority vote of a quorum
consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion;
or (iv) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion. NRS 78.751(2) provides that the corporation&#8217;s articles of incorporation or bylaws, or an agreement
made by the corporation, may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit
or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding,
upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court
of competent jurisdiction that the director or officer is not entitled to be indemnified by the corporation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the NRS, the indemnification
pursuant to NRS 78.7502 and advancement of expenses authorized in or ordered by a court pursuant to NRS 78.751:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A right to indemnification
or to advancement of expenses arising under a provision of the articles of incorporation or any bylaw is not eliminated or impaired by
an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative
or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect
at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our governing documents provide
that to the fullest extent permitted under the NRS (including, without limitation, to the fullest extent permitted under NRS 78.7502 and
78.751(3)) and other applicable law, that we shall indemnify our directors and officers in their respective capacities as such and in
any and all other capacities in which any of them serves at our request.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Item 15. Recent Sales of Unregistered Securities.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Set forth below are the sales
of all securities by the Company since May 2019, which were not registered under the Securities Act. The Company believes that each of
such issuances was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and/or Regulation
S under the Securities Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Between June 2019 and June
2022, we issued and sold an aggregate of 3,812,747 shares of Common Stock, which were not registered under the Securities Act, to investors
and service providers for aggregate proceeds of approximately $2,225,160 in gross proceeds.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 14, 2021, pursuant
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for their shares of Raphael Israel.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Item 16. Exhibits and Financial Statement Schedules</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EXHIBIT INDEX</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="width: 7%"><span style="font-size: 10pt">3.1</span></td>
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  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">3.2</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1415397/000121390021046451/ea146623ex3-2_raphael.htm"><span style="font-size: 10pt">Bylaws (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)</span></a></td></tr>
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    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
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    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt"><a href="ea162165ex5-1_raphaelpharma.htm">Opinion of Sullivan &amp; Worcester LLP</a></span></td></tr>
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    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">10.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1415397/000121390021046451/ea146623ex10-1_raphael.htm"><span style="font-size: 10pt">Share Exchange Agreement by and between Easy Energy, Inc. and Raphael Pharmaceutical Ltd. (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
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    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1415397/000121390021046451/ea146623ex10-2_raphael.htm"><span style="font-size: 10pt">Form of Indemnification Agreement (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)</span></a></td></tr>
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    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">10.3</span></td>
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  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">10.4</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1415397/000121390021046451/ea146623ex10-4_raphael.htm"><span style="font-size: 10pt">Services Agreement for Finance Services between Raphael Pharmaceutical Ltd. and Shimony Yosef Certified Public Accountant (Isr.) (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">10.5</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1415397/000121390021046451/ea146623ex10-5_raphael.htm"><span style="font-size: 10pt">Contractual Agreement between Raphael Pharmaceutical Ltd. and Way of Life Cannabis Ltd. (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">10.6</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1415397/000121390021046451/ea146623ex10-6_raphael.htm"><span style="font-size: 10pt">Sponsored Research Agreement with Rambam Med-Tech Ltd. (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">16.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1415397/000121390021046451/ea146623ex16-1_raphael.htm"><span style="font-size: 10pt">Letter from Weinstein International. C.P.A. to the SEC, dated July 2, 2021 (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">21.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1415397/000121390021046451/ea146623ex21-1_raphael.htm"><span style="font-size: 10pt">List of Subsidiaries (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">23.1*</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt"><a href="ea162165ex5-1_raphaelpharma.htm">Consent of Sullivan &amp; Worcester LLP (included in Exhibit 5.1)</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">23.2*</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt"><a href="ea162165ex23-2_raphaelpharma.htm">Consent of Brightman Almagor Zohar &amp; Co.</a>&#160;</span></td></tr>
  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>

<tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">101.INS</span></td>
    <td>&#160;</td>
    <td><span style="font-size: 10pt">Inline XBRL Instance Document.</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">101.SCH</span></td>
    <td>&#160;</td>
    <td><span style="font-size: 10pt">Inline XBRL Taxonomy Extension Schema Document.</span></td></tr>
  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">101.CAL</span></td>
    <td>&#160;</td>
    <td><span style="font-size: 10pt">Inline XBRL Taxonomy Extension Calculation Linkbase Document.</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">101.DEF</span></td>
    <td>&#160;</td>
    <td><span style="font-size: 10pt">Inline XBRL Taxonomy Extension Definition Linkbase Document.</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">101.LAB</span></td>
    <td>&#160;</td>
    <td><span style="font-size: 10pt">Inline XBRL Taxonomy Extension Label Linkbase Document.</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">101.PRE</span></td>
    <td>&#160;</td>
    <td><span style="font-size: 10pt">Inline XBRL Taxonomy Extension Presentation Linkbase Document.</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">104</span></td>
    <td>&#160;</td>
    <td><span style="font-size: 10pt">Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify">107</td>
    <td>&#160;</td>
    <td><a href="ea162165ex-fee_raphaelpharma.htm" style="-sec-extract: exhibit">Fee Table</a></td></tr>
  </table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">*</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">(b)</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Item 17. Undertakings</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">(a)</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">(b)</td><td style="text-align: justify">The undersigned registrant hereby undertakes:</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 72px">&#160;</td>
    <td style="width: 48px"><span style="font-size: 10pt">(i)</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><div><a id="a_019"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>SIGNATURES</b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements
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on Form S-1 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized,
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As filed with the Securities and Exchange Commission
on June 28, 2022
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Raphael Pharmaceutical Inc.
(Exact name of registrant as specified in its charter)
Nevada
2833
26-0204284
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
4 Lui Paster
Tel Aviv-Jaffa, Israel 6803605
Telephone: (972) 52-775-5072
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Shlomo Pilo
Chief Executive Officer
4 Lui Paster
Tel Aviv-Jaffa, Israel 6803605
Telephone: (972) 52-775-5072
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Oded Har-Even, Esq.
Sullivan & Worcester LLP
1633 Broadway
New York, New York 10019
Telephone: (212) 660-3000
Approximate date of commencement of proposed sale
to the public:
As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.
☒
If this Form is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.
☐
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
☐
If this Form is a post-effective amendment filed
pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company"
and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☐
If an emerging growth company, indicate by check
market if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
☐
The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that
specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities
Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant
to said Section 8(a), may determine.
The information in
this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting
an offer to buy these securities, in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION
DATED JUNE 28, 2022
Raphael Pharmaceutical Inc.
Resale of 1,667,393 Shares of Common Stock
This prospectus relates to
the resale by the selling security holders named in this prospectus or their permitted transferees (the "Selling Securityholders")
of up to 1,667,393 shares of our common stock, par value $0.01 per share ("Common Stock") issued in one or more private placements.
The shares of Common Stock
that may be sold by the Selling Securityholders are collectively referred to in this prospectus as the "Offered Securities."
We will not receive any of the proceeds from the sale by the Selling Securityholders of the Offered Securities. See "Use of Proceeds"
beginning on page 29  of this prospectus. We will bear all costs, expenses and fees in connection with the registration of the
Offered Securities, including with regard to compliance with state securities or "blue sky" laws. The Selling Securityholders
will bear all commissions and discounts, if any, attributable to their sale of the Offered Securities, except as otherwise expressly set
forth under "Plan of Distribution" beginning on page 62 of this prospectus.
This prospectus describes
the general manner in which the Offered Securities may be offered and sold. If necessary, the specific manner in which the Offered Securities
may be offered and sold will be described in one or more supplements to this prospectus. Any prospectus supplement may add, update or
change information contained in this prospectus. You should carefully read this prospectus, and any applicable prospectus supplement before
you invest in any of our securities.
The Selling Securityholders
may offer, sell or distribute Offered Securities publicly or through private transactions. If the Selling Securityholders use underwriters,
dealers or agents to sell Offered Securities, we will name them and describe their compensation in a prospectus supplement. The price
to the public of those securities and the net proceeds the Selling Securityholders expect to receive from that sale will also be set forth
in a prospectus supplement.
No public market currently
exists for our Common Stock. We have applied to have our Common Stock quoted on OTC Pink Market, and upon approval of such application,
we intend to have our Common Stock quoted on the OTCQB operated by OTC Markets Group, Inc. We cannot assure you that our Common Stock
will ever be quoted on the OTC Pink Market or OTCQB. Until such time that our Common Stock is quoted on the OTC Pink Market, OTCQB or
another existing market, if ever, the Common Stock to be sold by the Selling Securityholders from time to time will be at a fixed price
of $2.70 per share and thereafter at prevailing market prices or privately negotiated prices. Consequently, if you purchase Common Stock
in this offering you may not be able to sell your Common Stock in any organized marketplace and you may be limited to selling your Common
Stock privately. Accordingly, an investment in our Common Stock is an illiquid investment.
See "Risk Factors"
beginning on page 6
of this prospectus for a discussion of information that should be considered in connection with
the ownership of our securities.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
The date of the prospectus is                 ,
2022.
TABLE OF CONTENTS
PROSPECTUS SUMMARY
1
RISK FACTORS
6
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
28
USE OF PROCEEDS
29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
30
BUSINESS
37
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
57
MANAGEMENT
58
EXECUTIVE COMPENSATION
59
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTORS INDEPENDENCE
60
SELLING SECURITYHOLDERS
61
PLAN OF DISTRIBUTION
62
DESCRIPTION OF SECURITIES
64
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
66
LEGAL MATTERS
70
EXPERTS
70
WHERE YOU CAN FIND ADDITIONAL INFORMATION
70
INDEX TO FINANCIAL STATEMENTS
F-1
You should rely only on the
information contained in this prospectus or a supplement to this prospectus. We have not authorized anyone to provide you with different
information. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities, in any jurisdiction
where the offer or sale is not permitted. You should not assume that the information contained in this prospectus or any supplement to
this prospectus is accurate as of any date other than the date on the front cover of those documents.
i
PROSPECTUS SUMMARY
This summary highlights information contained
in other parts of this prospectus. Because it is a summary, it does not contain all of the information that you should consider in making
your investment decision. Before investing in our Common Stock, you should read the entire prospectus carefully, including our consolidated
financial statements and the related notes included in this prospectus and the information set forth under the headings "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
On May 14, 2021, Raphael Pharmaceutical Ltd.,
an Israeli company, and Easy Energy, Inc., a Nevada corporation, completed a share exchange agreement, or the share exchange, pursuant
to which the shareholders of Raphael Pharmaceutical Ltd. became the holders of 90% of the issued and outstanding share capital of Easy
Energy, Inc., while Easy Energy, Inc.'s shareholders hold, following the share exchange, 10% of Easy Energy, Inc. On May 19, 2021,
as agreed by the parties to the share exchange, Easy Energy, Inc. changed its name to Raphael Pharmaceutical Inc. Unless otherwise mentioned
or unless the context requires otherwise, when used in this prospectus, the terms "Raphael," "Company," "we,"
"us," and "our" refer to Raphael Pharmaceutical Inc. and its subsidiary, Raphael Pharmaceutical Ltd., or Raphael
Israel. References to Easy Energy are to Easy Energy, Inc. Unless otherwise mentioned or unless the context requires otherwise, the information
provided in this prospectus relates to Raphael Israel.
Our Company
History
The Company was incorporated
in the State of Nevada in May 2007 and was formerly known as Easy Energy, Inc. On May 14, 2021, Easy Energy and Raphael Israel completed
the Share Exchange, as a result of which, Raphael Israel's shareholders own 90% of our Company and Easy Energy's shareholders
hold the remaining 10%. Raphael Israel was incorporated in 2019 in the State of Israel and has focused to date on developing its lead
product candidate for the treatment of rheumatoid arthritis, or RA. Easy Energy did not have any ongoing business or operations before
the Share Exchange and following the Share Exchange we adopted Raphael Israel's business plan.
Overview
We are a pharmaceutical drug
research and development company focused on the discovery and clinical development of life-improving drug therapies based on cannabinoids,
including cannabidiol, or CBD, oil. Unless indicated otherwise, we plan on using oil derived from CBD strains with low levels of Tetrahydrocannabinol,
or THC. All references to the use of CBD in our product candidates refer to CBD strains with less than 0.3% of THC.
We are currently in the pre-clinical
development stage for our lead product candidate, our RA product candidate for the treatment of RA. In addition, we are aiming to develop
a pharmaceutical drug product for the treatment of hyperinflammatory syndrome inflammation related to COVID-19, or our COVID-19 product
candidate, which may be based on data or studies related to our RA product candidate. We successfully completed a preclinical study for
the RA product candidate at Rambam Hospital as well as a mice model trial.
On February 9, 2022, we filed
an application for a clinical trial with the Medical Cannabis Unit of the Ministry of Health of Israel, or MOH. On February 16, 2022 we
submitted an application with the Helsinki Committee at Rambam Hospital for a clinical trial in COVID-19 patients. We plan to submit such
applications for our RA product during 2022.
Our goal is to become a leader
in development of CBD oil-based pharmaceutical drug products for the treatment of indications in which we believe there is a high unmet
medical need in a range of disorders, including those related to inflammation in the body, including RA and COVID-19.
In order to achieve our goal,
we have and will continue to build an experienced team of senior executives and scientists, with experience in all facets of pharmaceutical
research and development, drug formulation, clinical trial execution and regulatory submissions. We intend to leverage the knowledge of
our team in order to complete the clinical trials needed to receive approvals of our product candidates from applicable regulatory authorities.
Initially, we intend to obtain
approvals for our product candidates from the U.S. Food and Drug Administration, or FDA, and the Medical Cannabis Unit of the Israeli
Ministry of Health, or MOH. Upon obtaining FDA approvals, or in the event that we are not successful in obtaining such approvals, we intend
to apply for European Medicines Agency, or EMA, and other countries' governmental regulatory agencies approvals for our product
candidates. If we are successful in obtaining FDA approvals for our product candidates, we intend to enter into royalty agreements with
good manufacturing practice, or GMP, approved medical manufactures and distributors, having them using our medical formulas for the purpose
of growing, cultivating, manufacturing, and distributing Raphael Pharmaceutical medical indications in their designated territories.
1
Our discovery platform currently
focuses the use of CBD oil, one of the cannabinoids in cannabis plants, as the active pharmaceutical ingredient, or API, for our RA product
candidate and COVID-19 product candidate. Research results published in 2018 ("Translational Investigation of the Therapeutic Potential
of Cannabidiol (CBD): Toward a New Age") has shown that there may be benefits to treading medical conditions, or their effects,
with cannabinoids, and more specifically, with CBD, which may help reduce chronic pain by impacting endocannabinoid receptor activity,
reducing inflammation and interacting with neurotransmitters. This research has also shown that CBD may have neuroprotective properties,
and could have the ability to (i) reduce anxiety and depression, (ii) alleviate cancer-related symptoms, (iii) reduce acne and (iv) benefit
heart health.
Over the last few years, pharmaceutical
drug products that include parts of the cannabis plant have begun to receive regulatory approvals for use in patients suffering from certain
disorders. In light of the past regulatory approvals for other pharmaceutical drug products and, more specifically, the potential beneficial
effects of CBD and other parts of the cannabis plant, we believe that a drug discovery platform based on CBD may offer new and differentiated
treatment options for patients.
After two successful years
of pre-clinical research and studies at the laboratories of Rambam Hospital, in January 2021, we commenced a pre-clinical trial in mice
for our RA product candidate that we expect will take four to five months. Following the completion of this pre-clinical trial, we intend
on submitting an Investigational New Drug, or IND, application to the FDA and MOH. See "– Research and Clinical Development
Strategy – Clinical Development Plan" for additional information on the ongoing pre-clinical trial and our planned clinical
trial for our RA product candidate. In addition, with respect to our COVID-19 product candidate, our clinical research partners have been
focused on the effect of cannabinoids and cannabis extracts on immune cells which induce acute inflammation. This study will begin in
the pre-clinical level in immune cell models and, subject to positive results that exhibit downregulation of pro-inflammatory cytokines
by cannabis extract, the study was completed successfully. Following the completion of the pre-clinical study, a mice model was conducted
to analyze for acute inflammation, which resembles the immunopathology of COVID-19. The mice model was successfully completed and we have
registered for a clinical trial in patients with the MOH.
As a pharmaceutical research
and clinical development company we do not own or operate, and currently do not intend on creating an in-house team to manufacture and
commercialize our pharmaceutical drug products, if any, that receive regulatory approval allowing for commercialization. We currently
rely, and expect to continue to rely, on third parties for the manufacturing of our product candidates for preclinical and clinical testing,
as well as for commercial manufacturing of any pharmaceutical drug products for which we may receive regulatory approval. Subject to the
receipt of such regulatory approvals, we intend on cooperating with manufacturers and other third parties to manufacture and commercialize
approved pharmaceutical drug products.
Product Pipeline
We have begun development
for our RA and COVID-19 product candidates, which are in the pre-clinical stage.
Assuming that we successfully
complete the clinical development of our RA and COVID-19 product candidates, we intend to then turn our attention to the clinical development
of cannabinoid-based drug products for the treatment of certain oncology indications. Unlike our RA and COVID-19 product candidate, the
use of our cannabinoid based drug products for the treatment of certain oncology indications will require specific dosing and potentially,
a different regulatory pathway than our existing product candidates.
We intend to apply for FDA
approval, subject to the completion of the applicable clinical trials, for our RA product candidate as well as our COVID-19 product candidate
using the FDA's regulatory pathway for drug products.
Research and Clinical Development Strategy
Research and clinical development
of our pharmaceutical drug product candidates is our core business. We are currently focused on developing innovative cannabinoid-based
medical indications that we aim to push through Phase 2A and Phase 2B approval from the MOH, FDA and EMA.
2
The research efforts that
have been conducted to date by the team at Rambam Med-Tech Ltd., or Rambam MT, are aimed at revealing the mechanism which structures the
activity of cannabinoids in human cells and organs, while applying a variety of disease models. We are using our PCR method to identify
different receptors to cannabinoids and which we believe will allow us to identify which cannabinoids receptors are participating in the
downregulation of inflammation. We believe that this strategy will allow us to identify the cannabinoids components of a chosen strain
in order to accurately administer cannabinoids targeted to the treatment of patients.
Competition and Competitive Position
We face potential competition
from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions
and governmental agencies and public and private research institutions. Any product candidates for which we complete clinical development
successfully and for which we receive marketing approval may compete with existing therapies and new therapies that may become available
in the future. However, we believe, specifically with respect to our competitors not using cannabis in their pharmaceutical drug products
that our use of, and experience with, cannabinoids provides us with a potential competitive advance. Our research has shown that the use
of cannabinoids for the treatment of RA is justified based on its positive effect on pain, fatigue, sleep problems and its potential safety
profile. Growing evidence on the anti-inflammatory effect of cannabinoids provide more strong ground for their use in the treatment of
RA. We believe that our RA product candidate, if approved for commercialization by regulators, will be available to patients at a lower
price than that of other available treatments.
Cultivation of our API
In October 2020, we entered
into an agreement with Way of Life Cannabis Ltd., or Wolc, pursuant to which Raphael Israel is scheduled to be provided with up to 15
liters of CBD oil, from a strain of cannabis of our selection, during a term of 18 months, to be provided in two to three deliveries of
between one to seven liters of CBD oil. We believe that our current agreement with Wolc will provide us with sufficient amounts of CBD
oil in order to complete our clinical development and for initial sales of our pharmaceutical drug products.
Manufacturing
We do not own or operate,
and currently have no plans to establish, any manufacturing facilities for final manufacture. We currently rely, and expect to continue
to rely, on third parties for the manufacture of our product candidates for preclinical and clinical testing, as well as for commercial
manufacturing of any pharmaceutical drug products for which we receive regulatory approval.
Commercialization Plan
Subject to the receipt of
regulatory approval to commercialize our pharmaceutical product candidates, our goal is to distribute our approved formulas to good manufacturing
practice, or GMP, approved medical cannabis manufacturers and global medical cannabis distributors. Depending on the expertise of the
distributors, we expect the licensing agreements to provide us with royalty-based payments for the sale of each of our approved pharmaceutical
drug products.
Summary Risk Factors
The risk factors described
below are a summary of the principal risk factors associated with an investment in us. These are not the only risks we face. You should
carefully consider these summary risk factors, together with the risk factors set forth in the section entitled "
Risk Factors
"
beginning on page 6.
●
We have a limited operating history and we have incurred significant operating losses since our inception, and anticipate that we will incur continued losses for the foreseeable future.
●
We have not generated revenue from any product candidate and may never be profitable.
●
We expect that we will need to raise substantial additional funding before we can expect to complete the development of our RA product candidate or any other product candidate. This additional financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product candidate development efforts or other operations.
●
The lack of an existing trading market could adversely impact our ability to raise working capital and adversely impact our ability to continue operations.
3
●
We are heavily dependent on the success of our product candidates, which are in various stages of pre-clinical development. We cannot give any assurance that any of our product candidates will proceed to clinical development or that they will receive regulatory approval, which is necessary before they can be commercialized.
●
The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.
●
Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies may not be predictive of future study results.
●
We hold no patents on our products, and our business employs proprietary technology (know-how) and information may be difficult to protect and/or infringe on the intellectual property rights of third parties.
●
We manage our business through a small number of employees and key consultants.
●
We will need to expand our organization and we may experience difficulties in recruiting needed additional employees and consultants, which could disrupt our operations.
●
We rely on third parties to conduct our preclinical and, in the future, clinical studies and perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.
●
We will rely on third parties to grow and provide us with our active pharmaceutical ingredient, or API, and formulations. Our business could be harmed if those third parties fail to provide us with sufficient quantities of our needed supplies, or fail to do so at acceptable quality levels or prices.
●
We rely on third parties to supply and manufacture our product candidates, and we expect to continue to rely on third parties to manufacture our products, if approved. The development of such product candidates and the commercialization of any products, if approved, could be stopped, delayed, or made less profitable if any such third party fails to provide with sufficient quantities of product candidates or products, or fails to do so at acceptable quality levels or prices, or fails to maintain or achieve satisfactory regulatory compliance.
●
We and our collaborators and contract manufacturers are subject to significant regulation with respect to manufacturing our product candidates. The manufacturing facilities on which we rely may not continue to meet regulatory requirements and have limited capacity.
●
Our executive officer, directors and certain stockholders who are beneficial owners of 5% or more of our outstanding Common Stock possess the majority of our voting power, and through this ownership, have the ability to control our Company and our corporate actions.
●
Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws.
●
Because we previously had our registration with the SEC revoked and because our business operations resulted from public by means of a "reverse merger," we may not be able to attract the attention of major brokerage firms.
●
As a former shell company, resales of shares of our restricted Common Stock in reliance on Rule 144 of the Securities Act are subject to the requirements of Rule 144(i).
●
Our headquarters and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel.
Corporate Information
The mailing address of our
principal executive office is 4 Lui Paster, Tel Aviv-Jaffa, Israel 6803605 and the telephone number is Telephone: (972) 52-775-5072. The
website address is www.raphaelpharmaceutical.com. The information found on the website is not part of, and is not incorporated into, this
prospectus.
4
THE OFFERING
Common Stock offered by the Selling Securityholders
We are registering 1,667,393 shares of Common Stock to be offered from time to time by the Selling Securityholders, issued in private placements which had multiple closings between April 2021 and May 2022.
Terms of the offering
The Selling Securityholders will determine when and how they will dispose of the Common Stock, registered under this prospectus for resale. For additional information concerning the offering, see "Plan of Distribution" beginning on page 62.
Risk factors
Before investing in our securities, you should carefully read and consider the information set forth in "Risk Factors" beginning on page 6 of this prospectus.
Use of proceeds
We will not receive any of the proceeds from the sale of Offered Securities by the Selling Securityholders.
Trading market and symbol
Our Common Stock is not listed for quotation on any exchange or market system and there is no established public trading market for our Common Stock. We have applied to have our Common Stock quoted on OTC Pink Market, and upon approval of such application, we intend to apply to list the Common Stock on OTCQB under the symbol "RAPH". We cannot assure you that our Common Stock will ever be quoted on the OTC Pink Market or OTCQB. Consequently, if you purchase Common Stock in this offering you may not be able to sell your Common Stock in any organized marketplace and you may be limited to selling your Common Stock privately. Accordingly, an investment in our Common Stock is an illiquid investment.
5
RISK FACTORS
An investment in our securities
carries a significant degree of risk. You should carefully consider the following risks, as well as the other information contained in
this prospectus, including our historical financial statements and related notes included elsewhere in this prospectus, before you decide
to purchase our securities. Any one of these risks and uncertainties has the potential to cause material adverse effects on our business,
prospects, financial condition and operating results which could cause actual results to differ materially from any forward-looking statements
expressed by us and a significant decrease in the value of our Common Stock. Refer to "Cautionary Statement Regarding Forward-Looking
Statements."
We may not be successful
in preventing the material adverse effects that any of the following risks and uncertainties may cause. These potential risks and uncertainties
may not be a complete list of the risks and uncertainties facing us. There may be additional risks and uncertainties that we are presently
unaware of, or presently consider immaterial, that may become material in the future and have a material adverse effect on us. You could
lose all or a significant portion of your investment due to any of these risks and uncertainties.
Risks Related to Our Financial Condition and
Capital Requirements
We have a limited operating history and
we have incurred significant operating losses since our inception, and anticipate that we will incur continued losses for the foreseeable
future.
We are an emerging pharmaceutical
research and clinical development company with a limited operating history in our industry. Before the Share Exchange, we did not have
any operations dating back to 2011. To date, we have focused almost exclusively on developing our RA product candidate. Raphael Israel
has funded its operations to date primarily through proceeds from investors and from its own resources. Other than the funding that Easy
Energy received, and which was lent to (invested in Raphael Israel after the closing of the Share Exchange), Easy Energy has had no sources
of funding since ceasing its operations in 2011. We have only a limited operating history in our current industry upon which you can evaluate
our business and prospects. In addition, we have limited experience and have not yet demonstrated an ability to successfully overcome
many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the pharmaceutical
industry. To date, we have not generated revenue from the sale of our product candidates (see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for additional information). We incurred losses in each year since its
inception and, while operational, we have never been profitable and have incurred losses since inception. We expect to continue to incur
losses until, and if, a product candidate that we are developing, such as our RA product candidate, receives approval from regulators
for commercialization. Our net loss attributable to holders of our ordinary shares for the years ended December 31, 2021 and the
three months period ended March 31, 2022 was approximately $1.62 million and $185,000, respectively. As of June 28, 2022, we had an accumulated
deficit of approximately $3.0 million. Substantially all of our operating losses resulted from costs incurred in connection with our development
program and from general and administrative costs associated with our operations.
We expect our research and
development expenses to increase in connection with our planned preclinical and clinical trials. In addition, even if we obtain marketing
approval for any current or future product candidate, we will likely incur significant business development expenses as we seek to commercialize
such products, as well as continued research and development expenses. Furthermore, we expect to incur additional costs associated with
operating as a reporting company, which we estimate will be at least tens of thousands of dollars annually. As a result, we expect to
continue to incur significant and increasing operating losses for the foreseeable future. Because of the numerous risks and uncertainties
associated with developing pharmaceutical products, we are unable to predict the extent of any future losses or when we will become profitable,
if at all.
We expect to continue to incur
significant losses until we are able to commercialize our product candidates, which we may not be successful in achieving. We anticipate
that our expenses will increase substantially if and as we:
●
continue the research and development of our RA product candidate or any other product candidate;
●
expand the scope of our current clinical studies for our RA product candidate or any other product candidate;
●
seek regulatory and marketing approvals for our product candidates that successfully complete clinical studies;
6
●
seek to maintain, protect, and expand our intellectual property portfolio;
●
seek to attract and retain skilled personnel; and
●
create additional infrastructure to support our operations as a reporting company and our product candidate development and planned future commercialization efforts.
We have not generated revenue from any product
candidate yet and may never be profitable.
Our ability to become profitable
depends upon our ability to generate revenue. We do not expect to generate significant revenue unless or until we obtain marketing approval
of, and commercialize, our RA product candidate or any other product candidate that we may seek to develop. Our ability to generate future
revenue from product candidate sales depends heavily on our success in many areas, including but not limited to:
●
obtaining favorable results from and progress the pre-clinical and clinical development of our product candidate(s);
●
developing and obtaining regulatory approval for registration studies protocols for our product candidate(s);
●
subject to successful completion of registration and clinical trials of our RA product candidate, applying for and obtaining marketing approval;
●
establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate (in amount and quality) products, and at acceptable costs, to support market demand for our product candidates, if marketing approval is received;
●
identifying, assessing, acquiring and/or developing new product candidate(s);
●
accurately identifying demand for our product candidate(s);
●
continued consumer interest in treatments to the symptoms of RA;
●
obtaining market acceptance of our product candidates, if approved for marketing, as viable treatment options;
●
negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; and
●
attracting, hiring and retaining qualified personnel.
We do not believe that our current cash
on hand will be sufficient to fund our projected operating requirements. This raises substantial doubt about our ability to continue as
a going concern. In addition, the report of our independent registered public accounting firm contains an explanatory paragraph regarding
substantial doubt about our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable
terms or at all.
We do not believe that our
current cash on hand will be sufficient to fund our projected operating requirements. This raises substantial doubt about our ability
to continue as a going concern. In addition, the report of our independent registered public accounting firm on our audited financial
statements for each of the two years ended December 31, 2021 and 2020 contains an explanatory paragraph regarding substantial doubt about
our ability to continue as a going concern. Our audited financial statements do not include any adjustments that might result from the
outcome of the uncertainty regarding our ability to continue as a going concern. This going concern opinion could materially limit our
ability to raise additional funds through the issuance of equity or debt securities or otherwise. Further reports on our financial statements
may include an explanatory paragraph with respect to our ability to continue as a going concern. If we cannot continue as a going concern,
our investors may lose their entire investment in our Common Stock. Until we can generate significant revenues, if ever, we expect to
satisfy our future cash needs through debt or equity financing. We cannot be certain that additional funding will be available to us on
acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development
plans for, or commercialization efforts with respect to our products.
7
We expect that we will need to raise substantial
additional funding before we can expect to complete the development of our RA product candidate or any other product candidate. This additional
financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay,
limit or terminate our product candidate development efforts or other operations.
As of December 31, 2022, our
cash and cash equivalent were approximately $0.15 million and we had a working capital of $0.13 million and an accumulated deficit of
$2.67 million]. Based upon our currently expected level of operating expenditures, we expect that our existing cash and cash equivalents
will only be sufficient to fund operations through June 2022. In addition, our operating plans may change as a result of many factors
that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future funding requirements will
depend on many factors, including but not limited to:
●
our clinical trial results;
●
the cost, timing and outcomes of seeking marketing approval of any product candidate for which we may seek marketing approval and the costs associated with our plans to have third parties commercialize any approved product candidate(s);
●
the cost of filing and prosecuting patent applications and the cost of defending patents, if any;
●
development of other early-stage development product candidates;
●
subject to receipt of marketing approval, revenue received from sales of approved products, if any, in the future;
●
any product liability or other lawsuits related to our products;
●
the expenses needed to attract and retain skilled personnel; and
●
the costs associated with being a reporting company.
Any additional fundraising
efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize
our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable
to us, if at all, during or after the COVID-19 pandemic. Moreover, the terms of any financing may adversely affect the holdings or the
rights of holders of our securities and the issuance of additional securities, whether equity or debt, by us, or the possibility of such
issuance, may cause the trading price of our shares to decline. The incurrence of indebtedness could result in increased fixed payment
obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional
debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could
adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative
partners or otherwise at an earlier stage than otherwise would be desirable, and we may be required to relinquish rights to some of our
technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our
business, operating results and prospects. Even if we believe that we have sufficient funds for our current or future operating plans,
we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.
If we are unable to obtain
funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development
programs or the development or commercialization, if any, of any product candidates or be unable to expand our operations or otherwise
capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
The lack of an existing trading market could
adversely impact our ability to raise working capital and adversely impact our ability to continue operations.
Our Common Stock is not
currently traded on any national securities exchange and is not quoted on any over-the-counter market (see "Risks Related to Ownership
of Our Securities – Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws"
for additional information). Because our Common Stock is considered illiquid, we may find it more difficult to raise capital. If
we are unable to raise sufficient capital in the future, we may not be able to have the resources to continue our normal operations.
8
Risks Related to Product Development, Regulatory
Approval and Commercialization
We are heavily dependent on the success
of our product candidates, which are in various stages of pre-clinical development. We cannot give any assurance that any of our product
candidates will proceed to clinical development or that they will receive regulatory approval, which is necessary before they can be commercialized.
Since its inception, Raphael
Israel has invested substantially all of its efforts and financial resources to design and develop its product candidates, including conducting
preclinical studies and providing general and administrative support for these operations. Our future success is dependent on our ability
to continue these operations, and more specifically, to successfully complete pre-clinical and clinical development of our product candidates,
which will require coordination from applicable regulatory agencies, obtain regulatory approval for, and then successfully commercialize
one or more product candidates for which we receive regulatory approval. We currently generate no revenue from, and we may never be able
to generate revenue.
Our RA product candidate and
the product candidate that we are seeking to develop for the treatment of inflammation associated with COVID-19 are both in pre-clinical
development and will require clinical development (and in some cases additional pre-clinical development), management of non-clinical,
clinical and manufacturing activities, regulatory approval, obtaining adequate manufacturing supply, building of a commercial organization
and significant marketing efforts before we generate any revenue from product candidate sales. It may be months or years before a pivotal
study is initiated, if at all. Any clinical trials in the United States will require the approval of an Investigational New Drug, or IND,
application by the FDA, and we cannot assure that we will obtain such approval in a timely manner, or at all. We are not permitted to
market or promote any of our product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities,
and we may never receive such regulatory approval for any of our product candidates.
We as a company have never
submitted marketing applications to the FDA or comparable foreign regulatory authorities. We cannot be certain that any of our product
candidates will be successful in clinical studies or receive regulatory approval or what regulatory pathway the regulatory authorities
shall designate for our product candidates. Further, our product candidates may not receive regulatory approval even if they are successful
in clinical studies. If we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations.
We generally plan to seek
regulatory approval to commercialize our product candidates in the United States, the European Union, Israel and other foreign countries.
To obtain regulatory approvals we must comply with the numerous and varying regulatory requirements of such countries regarding safety,
efficacy, chemistry, manufacturing and controls, clinical studies, commercial sales, pricing and distribution of our product candidates.
Even if we are successful in obtaining approval in one jurisdiction, we cannot ensure that we will obtain approval in any other jurisdictions.
If we are unable to obtain approval for our product candidates in multiple jurisdictions, our revenue and results of operations would
be negatively affected.
The regulatory approval processes of the
FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable. If we are ultimately unable to obtain
regulatory approval for our product candidates, our business will be substantially harmed.
The time required to obtain
approval by the FDA and comparable foreign authorities is unpredictable, typically takes many years following the commencement of clinical
studies and depends upon numerous factors. In addition, approval policies, regulations or the type and amount of clinical data necessary
to gain approval may change during the course of a product candidate's clinical development and may vary among jurisdictions, which
may cause delays in the approval or the decision not to approve an application. We have not obtained regulatory approval for any product
candidate, and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future
will ever obtain regulatory approval.
Applications for our product
candidates could fail to receive regulatory approval for many reasons, including but not limited to the following:
●
the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical studies;
9
●
we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a product candidate's safety-benefit ratio for its proposed indication is acceptable;
●
the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical studies;
●
the data collected from clinical studies of our product candidates may not be sufficient to support the submission of a new drug application, or NDA, in the United States or elsewhere;
●
the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and
●
the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
This lengthy approval process,
as well as the unpredictability of the results of clinical studies, may result in our failing to obtain regulatory approval to market
any of our product candidates, which would significantly harm our business, results of operations and prospects.
Clinical drug development involves a lengthy
and expensive process with an uncertain outcome, and results of earlier studies may not be predictive of future study results.
Clinical testing is expensive
and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical study
process. The results of pre-clinical studies and early clinical studies, if any are commenced, of our product candidates may not be predictive
of the results of later-stage clinical studies. Product candidates that have shown promising results in early-stage clinical studies may
still suffer significant setbacks in subsequent advanced clinical studies. There is a high failure rate for drugs proceeding through clinical
studies, and product candidates in later stages of clinical studies may fail to show the desired safety and efficacy traits despite having
progressed satisfactorily through preclinical studies and initial clinical studies. A number of companies in the pharmaceutical industry
have suffered significant setbacks in advanced clinical studies due to lack of efficacy or adverse safety profiles, notwithstanding promising
results in earlier studies. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses. We
do not know whether any Phase 1, Phase 2, Phase 3 (if any) or other clinical studies we may conduct will demonstrate consistent
or adequate efficacy and safety sufficient to obtain regulatory approval to market our product candidates.
We may find it difficult to enroll patients
in our clinical studies. Difficulty in enrolling patients could delay or prevent clinical studies of our product candidates.
Identifying and qualifying
patients to participate in clinical studies of our product candidates is critical to our success. The timing of our clinical studies depends
in part on the speed at which we can recruit patients to participate in testing our product candidates, and we may experience delays in
our clinical studies if we encounter difficulties in enrollment.
Additionally, the process
of finding patients may prove costly. We also may not be able to identify, recruit and enroll a sufficient number of patients to complete
our clinical studies because of the perceived risks and benefits of the product candidate under study, the availability and efficacy of
competing therapies and clinical studies, the proximity and availability of clinical study sites for prospective patients and the patient
referral practices of physicians. If patients are unwilling to participate in our studies for any reason, the timeline for recruiting
patients, conducting studies and obtaining regulatory approval of potential product candidates will be delayed.
In addition, the COVID-19
pandemic may affect the operations of the FDA and other health authorities, which could result in delays of reviews and approvals. The
evolving COVID-19 pandemic may directly or indirectly impact the pace of enrollment in future clinical trials, if any, as patients may
avoid or may not be able to travel to healthcare facilities and physicians' offices unless due to a health emergency. Additionally,
such facilities and offices have been and may continue to be required to focus limited resources on non-clinical trial matters, including
treatment of COVID-19 patients, thereby decreasing availability, in whole or in part, for clinical trial services. We also do not yet
know if, as a result of the COVID-19 pandemic, people who would otherwise enroll in our or other clinical trials would elect not to participate.
The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change.
10
If we experience delays in
the completion or termination of any clinical study of our product candidates, the commercial prospects of our product candidates will
be harmed, and our ability to generate product candidate revenue from any of these product candidates could be delayed or prevented. In
addition, any delays in completing our clinical studies will increase our costs, slow down our product candidate development and approval
process and jeopardize our ability to commence product candidate sales and generate revenue. Any of these occurrences may harm our business,
financial condition and prospects significantly. In addition, many of the factors that cause, or lead to, a delay in the commencement
or completion of clinical studies may also ultimately lead to the denial of regulatory approval of our product candidates.
We may encounter substantial delays in our
clinical studies, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.
Before obtaining marketing
approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical studies to demonstrate
the safety and efficacy of the product candidates in humans. Clinical testing is expensive, time consuming and uncertain as to outcome.
We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of one or more
clinical studies can occur at any stage of testing, and our future clinical studies may not be successful. Events that may prevent successful
or timely completion of clinical development include but are not limited to:
●
inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of human clinical studies;
●
delays in reaching a consensus with regulatory agencies on study design;
●
delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical study sites;
●
delays in obtaining required Institutional Review Board, or IRB, approval at each clinical study site;
●
imposition of a clinical hold by regulatory agencies, after review of an IND, application, or equivalent application, or an inspection of our clinical study operations or study sites;
●
delays in recruiting suitable patients to participate in our clinical studies;
●
difficulty collaborating with patient groups and investigators;
●
failure by our CROs, other third parties or us to adhere to clinical study requirements;
●
failure to perform in accordance with the FDA's Good Clinical Practices, or GCP, requirements, or applicable regulatory guidelines in other countries;
●
delays in having patients complete participation in a study or return for post-treatment follow-up;
●
patients dropping out of a study;
●
occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits;
●
changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;
●
the cost of clinical studies of our product candidates being greater than we anticipate;
●
clinical studies of our product candidates producing negative or inconclusive results, which may result in us deciding, or regulators requiring us, to conduct additional clinical studies or abandon product candidate development programs; and
●
delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our product candidates for use in clinical studies or the inability to do any of the foregoing.
11
Any inability to successfully
complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenue. We may
also be required to conduct additional safety, efficacy and comparability studies before we will be allowed to start clinical studies
with our repurposed drugs. Clinical study delays could also shorten any periods during which our product candidates have patent protection
and may allow our competitors to bring product candidates to market before we do, which could impair our ability to obtain orphan exclusivity
and successfully commercialize our product candidates and may harm our business and results of operations.
Our product candidates may cause undesirable
side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved
label or result in significant negative consequences following marketing approval, if any.
The use of dronabinol has
been associated with seizures, paranoia, rapid heart rate and unusual thoughts and behaviors. Undesirable side effects caused by our product
candidates could cause us or regulatory authorities to interrupt, delay or halt clinical studies and could result in a more restrictive
marketing label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. Potential side effects
of our cannabinoid-based treatments may include: asthenia, palpitations, tachycardia, vasodilation/facial flush, abdominal pain, nausea,
vomiting, amnesia, anxiety/nervousness, ataxia, confusion, depersonalization, dizziness, euphoria, hallucinations, paranoid reaction,
somnolence and abnormal thinking. Results of our studies may identify unacceptable severity and prevalence of these or other side effects.
In such an event, our studies could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us
to cease further development of or deny or withdraw approval of our product candidates for any or all targeted indications.
Drug-related side effects
could affect patient recruitment, the ability of enrolled patients to complete the study or result in potential product candidate liability
claims.
Additionally, if one or more
of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such product
candidates, a number of potentially significant negative consequences could result, including but not limited to:
●
regulatory authorities may withdraw approvals of such product candidate;
●
regulatory authorities may require additional warnings on the label;
●
we may be required to create a Risk Evaluation and Mitigation Strategy, or REMS, plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers and/or other elements to assure safe use;
●
we could be sued and held liable for harm caused to patients; and
●
our reputation may suffer.
Any of these events could
prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm
our business, results of operations and prospects.
Even if we obtain regulatory approval for
a product candidate, our product candidates will remain subject to regulatory scrutiny.
If our product candidates
are approved, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion,
sampling, record-keeping, conduct of post-marketing studies and submission of safety, efficacy and other post-market information, including
both federal and state requirements in the United States. In addition, manufacturers and manufacturers' facilities are required
to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to current Good
Manufacturing Practices, or cGMP, regulations and Quality System Regulation, or QSR. As such, we and our contract manufacturers will be
subject to continual review and inspections to assess compliance with cGMP, QSR and adherence to commitments made in any NDA. Accordingly,
we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing,
production and quality control.
12
Any regulatory approvals that
we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product candidate
may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4
clinical trials and surveillance to monitor the safety and efficacy of the product candidate. We will also be required to report certain
adverse reactions and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion for
our product candidates. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory
restrictions and must be consistent with the information in the product candidate's approved label. As such, we may not promote
our product candidates for indications or uses for which they do not have FDA approval. The holder of an approved NDA must also submit
new or supplemental applications and obtain FDA approval for certain changes to the approved product candidate, product candidate labeling
or manufacturing process. We could also be asked to conduct post-marketing clinical studies to verify the safety and efficacy of our product
candidates in general or in specific patient subsets. If original marketing approval were obtained via the accelerated approval pathway,
we could be required to conduct a successful post-marketing clinical study to confirm clinical benefit for our product candidates. An
unsuccessful post-marketing study or failure to complete such a study could result in the withdrawal of marketing approval. Furthermore,
any new legislation addressing drug safety issues could result in delays in product candidate development or commercialization or increased
costs to assure compliance. Foreign regulatory authorities impose similar requirements.
If a regulatory agency discovers
previously unknown problems with a product candidate, such as adverse events of unanticipated severity or frequency, or problems with
the facility where the product candidate is manufactured, or disagrees with the promotion, marketing or labeling of a product candidate,
such regulatory agency may impose restrictions on that product candidate or us, including requiring withdrawal of the product candidate
from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among
other things:
●
issue warning letters;
●
impose civil or criminal penalties;
●
suspend or withdraw regulatory approval;
●
suspend any of our ongoing clinical studies;
●
refuse to approve pending applications or supplements to approved applications submitted by us;
●
impose restrictions on our operations, including closing our contract manufacturers' facilities; or
●
seize or detain product candidates, or require a product candidate recall.
Any government investigation
of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity.
Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate
revenue from our product candidates. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company
and our operating results will be adversely affected.
We are subject to numerous complex regulations
and failure to comply with these regulations, or the cost of compliance with these regulations, may harm our business.
The research, testing, development,
manufacturing, quality control, approval, labeling, packaging, storage, recordkeeping, promotion, advertising, marketing, distribution,
possession and use of our product candidates, among other things, are subject to regulation by numerous governmental authorities in the
United States and elsewhere. The FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act of 1938, or the FDC Act, and implementing
regulations. Noncompliance with any applicable regulatory requirements can result in refusal to approve product candidates for marketing,
warning letters, product candidate recalls or seizure of product candidates, total or partial suspension of production, prohibitions or
limitations on the commercial sale of product candidates or refusal to allow the entering into of federal and state supply contracts,
fines, civil penalties and/or criminal prosecution. Additionally, the FDA and comparable governmental authorities have the authority to
withdraw product candidate approvals that have been previously granted. Moreover, the regulatory requirements relating to our product
candidates may change from time to time and it is impossible to predict what the impact of any such changes may be.
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We are developing product
candidates that are controlled substances as defined in the Controlled Substances Act of 1970, or CSA, which establishes, among other
things, certain registration, production quotas, security, recordkeeping, reporting, import, export and other requirements administered
by the Drug Enforcement Administration, or the DEA. The active ingredient in our product candidates is CBD, which, when derived from cannabis,
is a Schedule V controlled substance, meaning that any drug containing it cannot be marketed before it receives regulatory approval from
the FDA.
The manufacture, shipment,
storage, sale and use, among other things, of controlled substances that are pharmaceutical product candidates are subject to a high degree
of regulation. The DEA also conducts periodic inspections of registered establishments that handle controlled substances. Facilities that
conduct research, manufacture, distribute, import or export controlled substances must be registered to perform these activities and have
the security, control and inventory mechanisms required by the DEA to prevent drug loss and diversion. Failure to maintain compliance,
particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect
on our business, results of operations, financial condition and prospects. The DEA may seek civil penalties, refuse to renew necessary
registrations, or initiate proceedings to suspend or revoke those registrations. In certain circumstances, violations could lead to criminal
proceedings.
Individual states also have
controlled substances laws. Though state controlled substances laws often mirror federal law, because the states are separate jurisdictions,
they may separately schedule our product candidates as well. While some states automatically schedule a drug when the DEA does so, other
states schedule drugs through rulemaking or a legislative action. State scheduling may delay commercial sale of any product candidate
for which we obtain federal regulatory approval and adverse scheduling could have a material adverse effect on the commercial attractiveness
of such product candidate. We or our partners must also obtain separate state registrations, permits or licenses in order to be able to
obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory
requirements could lead to enforcement and sanctions from the states in addition to those from the DEA or otherwise arising under federal
law.
If the market opportunities for our product
candidates are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer.
Our projections of both the
number of people who have our target diseases, as well as the subset of people with these diseases who have the potential to benefit from
treatment with our product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources,
including the scientific literature, surveys of clinics, patient foundations or market research and may prove to be incorrect. Further,
new studies may change the estimated incidence or prevalence of these diseases. The number of patients may turn out to be lower than expected.
The effort to identify patients with diseases we seek to treat is in early stages, and we cannot accurately predict the number of patients
for whom treatment might be possible. Additionally, the potentially addressable patient population for each of our product candidates
may be limited or may not be amenable to treatment with our product candidates, and new patients may become increasingly difficult to
identify or gain access to, which would adversely affect our results of operations and our business.
We face intense competition and rapid technological
change and the possibility that our competitors may discover, develop or commercialize therapies that are similar, more advanced or more
effective than ours, which may adversely affect our financial condition and our ability to successfully commercialize our product candidates.
The biotechnology and pharmaceutical
industries are highly competitive. There are many pharmaceutical companies, biotechnology companies, public and private universities and
research organizations actively engaged in the research and development of products that may be similar to our product candidates.
More established companies
may have a competitive advantage over us due to their greater size, cash flows and institutional experience. Compared to us, many of our
competitors may have significantly greater financial, technical and human resources. As a result of these factors, our competitors may
have an advantage in marketing their approved products and may obtain regulatory approval of their product candidates before we are able
to, which may limit our ability to develop or commercialize our product candidates. Our competitors may also develop drugs that are safer,
more effective, more widely used and less expensive than ours, and may also be more successful than us in manufacturing and marketing
their products. These advantages could materially impact our ability to develop and commercialize our product candidates successfully.
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Our product candidates may
also compete with medical and recreational marijuana, in markets where the recreational and/or medical use of marijuana is legal. There
is support in the United States for further legalization of marijuana. In markets where recreational and/or medical marijuana is
not legal, our product candidates may compete with marijuana purchased in the illegal drug market. We cannot assess the extent to which
patients may utilize marijuana obtained illegally for the treatment of the indications for which we are developing our product candidates.
Even if we successfully develop
our product candidates, and obtain marketing approval for them, other treatments or therapeutics may be preferred and we may not be successful
in commercializing our product candidates or in bringing them to market.
Many of our competitors have
substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing
and manufacturing organizations. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in
even more resources being concentrated in our competitors. As a result, these companies may obtain regulatory approval more rapidly than
we are able to and may be more effective in selling and marketing their products as well. Smaller or early-stage companies may also prove
to be significant competitors, particularly through collaborative arrangements with large, established companies. Competition may increase
further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in
these industries. Our competitors may succeed in developing, acquiring or licensing on an exclusive basis, products that are more effective
or less costly than any product candidate that we may develop, or achieve earlier patent protection, regulatory approval, product commercialization
and market penetration than we do. Additionally, technologies developed by our competitors may render our potential product candidates
uneconomical or obsolete, and we may not be successful in marketing our product candidates against competitors.
The commercial success of any current or
future product candidate will depend upon the degree of market acceptance by physicians, patients, third-party payors and others in the
medical community.
Even with the requisite approvals
from the FDA and comparable foreign regulatory authorities, the commercial success of our product candidates will depend in part on the
medical community, patients and third-party payors accepting our product candidates as medically useful, cost-effective and safe. Any
product that we bring to the market may not gain market acceptance by physicians, patients, third-party payors and others in the medical
community. The degree of market acceptance of any of our product candidates, if approved for commercial sale, will depend on a number
of factors, including:
●
the safety and efficacy of the product as demonstrated in clinical studies and potential advantages over competing treatments;
●
the prevalence and severity of any side effects, including any limitations or warnings contained in a product's approved labeling;
●
the clinical indications for which approval is granted;
●
relative convenience and ease of administration;
●
the cost of treatment, particularly in relation to competing treatments;
●
the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
●
the strength of marketing and distribution support and timing of market introduction of competitive products;
●
publicity concerning our products or competing products and treatments; and
●
sufficient third-party insurance coverage and reimbursement.
Even if a potential product
displays a favorable efficacy and safety profile in preclinical and clinical studies, market acceptance of the product will not be fully
known until after it is launched. Our efforts to educate the medical community and third-party payors on the benefits of the product candidates
may require significant resources and may never be successful. If our product candidates are approved but fail to achieve an adequate
level of acceptance by physicians, patients, third-party payors and others in the medical community, we will not be able to generate sufficient
revenue to become or remain profitable.
15
The insurance coverage and reimbursement
status of newly-approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for new or current products
could limit our ability to market those products and decrease our ability to generate revenue.
The pricing, coverage and
reimbursement of our product candidates, if approved, must be adequate to support our commercial infrastructure. Our per-patient prices
must be sufficient to recover our development and manufacturing costs and potentially achieve profitability. Accordingly, the availability
and adequacy of coverage and reimbursement by governmental and private payors are essential for most patients to be able to afford expensive
treatments such as ours, assuming approval. Sales of our product candidates will depend substantially, both domestically and abroad, on
the extent to which the costs of our product candidates will be paid for by health maintenance, managed care, pharmacy benefit and similar
healthcare management organizations, or reimbursed by government authorities, private health insurers and other third-party payors. If
coverage and reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize
our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish
or maintain pricing sufficient to realize a return on our investment.
There is significant uncertainty
related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about coverage
and reimbursement for new drugs are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within
the U.S. Department of Health and Human Services, as CMS decides whether and to what extent a new drug will be covered and reimbursed
under Medicare. Private payors tend to follow the coverage reimbursement policies established by CMS to a substantial degree. It is difficult
to predict what CMS will decide with respect to reimbursement for products such as ours.
Outside the United States,
international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the
increasing emphasis on cost-containment initiatives in Europe, Canada and other countries has and will continue to put pressure on the
pricing and usage of our product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms
as part of national health systems. In general, the prices of medicines under such systems are substantially lower than in the United
States. Other countries allow companies to fix their own prices for medicinal products, but monitor and control company profits. Additional
foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates.
Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and
may be insufficient to generate commercially reasonable revenue and profits.
Moreover, increasing efforts
by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations
to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate
payment for our product candidates. We expect to experience pricing pressures in connection with the sale of any of our product candidates
due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes.
The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has
become very intense. As a result, increasingly high barriers are being erected to the entry of new products.
Healthcare legislative reform measures may
have a material adverse effect on our business and results of operations.
In the United States, there
have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in 2010, the Patient Protection
and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the Affordable Care Act, was
passed. The Affordable Care Act is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare
spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and the health insurance industry,
impose new taxes and fees on the healthcare industry and impose additional health policy reforms. This law revises the definition of "average
manufacturer price" for reporting purposes, which could increase the amount of Medicaid drug rebates to states once the provision
is effective. Further, the law imposes a significant annual fee on companies that manufacture or import branded prescription drug products.
Substantial new provisions affecting compliance have also been enacted, which may require us to modify our business practices with healthcare
practitioners. While the U.S. Supreme Court upheld the constitutionality of most elements of the Affordable Care Act in 2012, other legal
challenges are still pending final adjudication in several jurisdictions. In addition, Congress has also proposed a number of legislative
initiatives, including possible repeal of the Affordable Care Act. At this time, it remains unclear whether there will be any changes
made to the Affordable Care Act, whether to certain provisions or its entirety. We can provide no assurance that the Affordable Care Act,
as currently enacted or as amended in the future, will not adversely affect our business and financial results, and we cannot predict
how future federal or state legislative or administrative changes relating to healthcare reform will affect our business.
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In addition, other legislative
changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. In 2011, the Budget Control Act
of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked
with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required
goals, thereby triggering the legislation's automatic reduction to several government programs. This includes aggregate reductions
of Medicare payments to providers up to 2% per fiscal year. In 2013, the 2% Medicare payment reductions went into effect. We expect
that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that
federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates
or additional pricing pressures.
Risks Related to our Business and Operations
We hold no patents on our products,
and our business employs proprietary technology (know-how) and information may be difficult to protect and/or infringe on the intellectual
property rights of third parties.
Raphael has no patents and
therefore, as a result of the Share Exchange, we did not acquire any patents. As such, we currently rely on trade secrets, proprietary
know-how, and technology methods that we seek to protect, in part, by confidentiality agreements. We cannot assure you that these agreements
will not be breached, that we will have adequate remedies for any breach, or that our trade secrets and proprietary know-how will not
otherwise become known or be independently discovered by others. We currently do not hold patents from the United States Patent and Trademark
Office, or USPTO.
We cannot assure you that
the patents of others will not have an adverse effect on our ability to conduct our business, that any of our trade secrets and applications
will be protected, that we will develop additional proprietary technology (know-how) or methods that is defensible against theft or will
provide us with competitive advantages or will not be challenged by third parties.
We manage our business through our three
executive officers and key consultants and are highly dependent upon our Chief Technology Officer.
Key service providers are
serving as our Chief Executive Officer, Chief Financial Officer and Chief Technology Officer and other scientific services consultants.
Due to the lean nature of our operations and our current operations which mainly consist of outsourcing services, we are highly dependent
upon our Chief Technology Officer. If our Chief Technology Officer, and to a lesser extent, any key consultants, resigns, this could adversely
affect our ability to execute our business plan and harm our operating results. We do not currently carry "key person" insurance
on the lives of members of management.
We will need to expand our organization
and we may experience difficulties in recruiting needed additional employees and consultants, which could disrupt our operations.
As our development and commercialization
plans and strategies develop and because we are so leanly staffed, we will need additional managerial, operational, sales, marketing,
financial, legal and other resources. The competition for qualified personnel in the pharmaceutical field is intense. Due to this intense
competition, we may be unable to attract and retain qualified personnel necessary for the development of our business or to recruit suitable
replacement personnel.
Our management may need to
divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing
these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our
infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees.
Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the
development of additional product candidates. If our management is unable to effectively manage our growth, our expenses may increase
more than expected, our ability to generate and/or grow revenue could be reduced and we may not be able to implement our business strategy.
Our future financial performance and our ability to commercialize product candidates and compete effectively will depend, in part, on
our ability to effectively manage any future growth.
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We may not be successful in our efforts
to identify, license or discover additional product candidates.
Although a substantial amount
of our effort will focus on the continued clinical testing, potential approval and commercialization of our existing product candidates,
the success of our business also depends in part upon our ability to identify, license or discover additional product candidates. Our
research programs or licensing efforts may fail to yield additional product candidates for clinical development for a number of reasons,
including but not limited to the following:
●
our research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates;
●
we may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates;
●
our product candidates may not succeed in preclinical or clinical testing;
●
our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval;
●
competitors may develop alternatives that render our product candidates obsolete or less attractive;
●
product candidates we develop may be covered by third parties' patents or other exclusive rights;
●
the market for a product candidate may change during our program so that such a product may become unreasonable to continue to develop;
●
a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and
●
a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.
If any of these events occur,
we may be forced to abandon our development efforts for a program or programs, or we may not be able to identify, license or discover
additional product candidates, which would have a material adverse effect on our business and could potentially cause us to cease operations.
Research programs to identify new product candidates require substantial technical, financial and human resources. We may focus our efforts
and resources on potential programs or product candidates that ultimately prove to be unsuccessful.
We may be subject, directly or indirectly,
to federal and state healthcare fraud and abuse laws, false claims laws and health information privacy and security laws. If we are unable
to comply, or have not fully complied, with such laws, we could face substantial penalties.
If we obtain FDA approval for
any of our product candidates and begin commercializing those products in the United States, our operations may be directly or indirectly
through our customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback
Statute, the federal False Claims Act and physician sunshine laws and regulations. These laws may impact, among other things, our proposed
sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and
the states in which we conduct our business. The laws that may affect our ability to operate include:
●
the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;
●
federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent;
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the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;
●
HIPAA, as amended by the Health Information Technology and Clinical Health Act, and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information;
●
the federal physician sunshine requirements under the Affordable Care Act requires manufacturers of drugs, devices and medical supplies to report annually to the U.S. Department of Health and Human Services information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; and
●
state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Because of the breadth of these
laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could
be subject to challenge under one or more of such laws. In addition, recent health care reform legislation has strengthened these laws.
For example, the Affordable Care Act, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare
fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. Moreover,
the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of
the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the False Claims Act.
If our operations are found
to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties,
including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare
and Medicaid, imprisonment and the curtailment or restructuring of our operations, any of which could adversely affect our ability to
operate our business and our results of operations.
International expansion of our business
exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the
United States or Israel.
Other than our headquarters
and other operations which are located in Israel (as further described below), we currently have limited international operations, but
our business strategy incorporates potentially significant international expansion, particularly in anticipation of approval of our product
candidates. We plan to maintain sales representatives and conduct physician and patient association outreach activities, as well as clinical
trials, outside of the United States and Israel. Doing business internationally involves a number of risks, including but not limited
to:
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multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses;
●
failure by us to obtain regulatory approvals for the use of our products in various countries;
●
additional potentially relevant third-party patent rights;
●
complexities and difficulties in obtaining protection and enforcing our intellectual property;
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●
difficulties in staffing and managing foreign operations;
●
complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems;
●
limits in our ability to penetrate international markets;
●
financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations;
●
natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions;
●
certain expenses including, among others, expenses for travel, translation and insurance; and
●
regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act, or FCPA, its books and records provisions or its anti-bribery provisions.
Any of these factors could
significantly harm our future international expansion and operations and, consequently, our results of operations.
If we fail to comply with environmental,
health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse
effect on the success of our business.
Our research and development
activities and our third-party manufacturers' and suppliers' activities involve the controlled storage, use and disposal of
hazardous materials, including the components of our product candidates and other hazardous compounds. We and our manufacturers and suppliers
are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. In some
cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers' facilities
pending their use and disposal. We cannot eliminate the risk of contamination, which could cause an interruption of our commercialization
efforts, research and development efforts, business operations and environmental damage resulting in costly clean-up and liabilities under
applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. Although
we believe that the safety procedures utilized by our third-party manufacturers for handling and disposing of these materials generally
comply with the standards prescribed by these laws and regulations, we cannot guarantee that this is the case or eliminate the risk of
accidental contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability
could exceed our resources and state or federal or other applicable authorities may curtail our use of certain materials and/or interrupt
our business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more
stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. We do not currently carry biological
or hazardous waste insurance coverage.
The use of any of our product candidates
could result in product liability or similar claims that could be expensive, damage our reputation and harm our business.
Our business exposes us to
an inherent risk of potential product liability or similar claims. The pharmaceutical industry has historically been litigious, and we
face financial exposure to product liability or similar claims if the use of any of our products were to cause or contribute to injury
or death. There is also the possibility that defects in the design or manufacture of any of our products might necessitate a product recall.
Although we plan to maintain product liability insurance, the coverage limits of these policies may not be adequate to cover future claims.
In the future, we may be unable to maintain product liability insurance on acceptable terms or at reasonable costs and such insurance
may not provide us with adequate coverage against potential liabilities. A product liability claim, regardless of merit or ultimate outcome,
or any product recall could result in substantial costs to us, damage to our reputation, customer dissatisfaction and frustration and
a substantial diversion of management attention. A successful claim brought against us in excess of, or outside of, our insurance coverage
could have a material adverse effect on our business, financial condition and results of operations.
20
Risks Related to Our Reliance on Third Parties
We rely on third parties to conduct our
preclinical and, in the future, clinical studies and perform other tasks for us. If these third parties do not successfully carry out
their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval
for or commercialize our product candidates and our business could be substantially harmed.
We have relied upon and plan
to continue to rely upon third-party CROs to monitor and manage data for our ongoing preclinical and clinical programs. We rely on these
parties for execution of our preclinical and, in the future, clinical studies, and control only certain aspects of their activities. Nevertheless,
we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and
scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities. We and our CROs and other vendors
will be required to comply with current cGMP, GCP, QSR and Good Laboratory Practices, or GLP, which are regulations and guidelines enforced
by the FDA, the Competent Authorities of the Member States of the European Economic Area, and comparable foreign regulatory authorities
for any product candidates that move into clinical development. Regulatory authorities enforce these regulations through periodic inspections
of study sponsors, principal investigators, study sites and other contractors. If we or any of our CROs or vendors fail to comply with
applicable regulations, the clinical data generated in our clinical studies may be deemed unreliable and the FDA, EMA or comparable foreign
regulatory authorities may require us to perform additional clinical studies before approving our marketing applications. We cannot assure
you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical studies comply
with GCP regulations. In addition, our clinical studies must be conducted with product candidates which are produced under cGMP regulations.
Our failure to comply with these regulations may require us to repeat clinical studies, which would delay the regulatory approval process.
If any of our relationships
with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable
terms. In addition, our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot
control whether or not they devote sufficient time and resources to our on-going clinical, nonclinical and preclinical programs. If CROs
do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the
quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory
requirements or for other reasons, our clinical studies may be extended, delayed or terminated and we may not be able to obtain regulatory
approval for or successfully commercialize our product candidates. CROs may also generate higher costs than anticipated. As a result,
our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability
to generate revenue could be delayed.
Switching or adding additional
CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO
commences work. As a result, delays may occur, which could materially impact our ability to meet our desired clinical development timelines.
Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or
delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and
prospects.
We will rely on third parties to grow and
provide us with our active pharmaceutical ingredient, or API, and formulations. Our business could be harmed if those third parties fail
to provide us with sufficient quantities of our needed supplies, or fail to do so at acceptable quality levels or prices.
We do not have the infrastructure
or capability internally to manufacture the API formulations, and we lack the resources and the capability to manufacture any of our product
candidates on a clinical or commercial scale. We plan to rely on third parties for such supplies. In addition, we are reliant on one third
party for the CBD that we intend to use in our preclinical studies, which, has caused us to rely on their cooperation to meet their contractual
obligations, but there can be no guarantee that we are able to meet such obligations. In addition, there may be a need to identify alternate
manufacturers to prevent a possible disruption of our clinical studies. Any significant delay or discontinuity in the supply of these
components could considerably delay completion of our preclinical studies, product candidate testing and potential regulatory approval
of our product candidates, which could harm our business and results of operations.
21
We and our collaborators and contract manufacturers
are subject to significant regulation with respect to manufacturing our product candidates. The manufacturing facilities on which we rely
may not continue to meet regulatory requirements and have limited capacity.
All entities involved in the
preparation of therapeutics for clinical studies or commercial sale, including our existing contract manufacturers for our product candidates,
are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or a product candidate
used in late-stage clinical studies must be manufactured in accordance with cGMP. These regulations govern manufacturing processes and
procedures (including record keeping) and the implementation and operation of quality systems to control and assure the quality of investigational
product candidates and products approved for sale. Poor control of production processes can lead to the introduction of contaminants or
to inadvertent changes in the properties or stability of our product candidates that may not be detectable in final product testing. We,
our collaborators or our contract manufacturers must supply all necessary documentation in support of an NDA, or Marketing Authorization
Application, or MAA, on a timely basis and must adhere to GLP and cGMP QSR regulations enforced by the FDA and other regulatory agencies
through their facilities inspection program. Some of our contract manufacturers have never produced a commercially approved pharmaceutical
product and therefore have not obtained the requisite regulatory authority approvals to do so. The facilities and quality systems of some
or all of our collaborators and third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations
as a condition of regulatory approval of our product candidates or any of our other potential product candidates. In addition, the regulatory
authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of our product candidates or our
other potential product candidates or the associated quality systems for compliance with the regulations applicable to the activities
being conducted. We do not control the manufacturing process of, and are completely dependent on, our contract manufacturing partners
for compliance with the regulatory requirements. If these facilities do not pass a pre-approval plant inspection, regulatory approval
of the product candidates may not be granted or may be substantially delayed until any violations are corrected to the satisfaction of
the regulatory authority, if ever.
The regulatory authorities
also may, at any time following approval of a product candidate for sale, if ever, audit the manufacturing facilities of our collaborators
and third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation
of our product candidate specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant
regulatory authority may require remedial measures that may be costly and/or time consuming for us or a third party to implement, and
that may include the temporary or permanent suspension of a clinical study or commercial sales, or the temporary or permanent closure
of a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business.
If we, our collaborators, or
any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or other applicable regulatory authority can impose
regulatory sanctions including, among other things, refusal to approve a pending application for a new drug product, withdrawal of an
approval or suspension of production. As a result, our business, financial condition and results of operations may be materially harmed.
Additionally, if supply from
one approved manufacturer is interrupted, an alternative manufacturer would need to be qualified through an NDA or MAA amendment, or equivalent
foreign regulatory filing, which could result in further delay. The regulatory agencies may also require additional studies if a new manufacturer
is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in
our desired clinical and commercial timelines.
These factors could cause us
to incur higher costs and, if we commence clinical development, could cause the delay or termination of clinical studies, regulatory submissions,
required approvals or commercialization of our product candidates. Furthermore, if our suppliers fail to meet contractual requirements
and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical studies
may be delayed or we could lose potential revenue.
Our reliance on third parties requires us
to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated
or disclosed.
Because we rely on third parties
to develop and manufacture our product candidates, we must, at times, share trade secrets with them. We seek to protect our proprietary
technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research
agreements, consulting agreements or other similar agreements with our collaborators, advisors, employees and consultants prior to beginning
research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our
confidential information, such as trade secrets. Despite the contractual provisions employed when working with third parties, the need
to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors,
are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our
proprietary position is based, in part, on our know-how and trade secrets, a competitor's discovery of our trade secrets or other
unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.
22
Risks Related to Ownership of Our Securities
Our executive officer, directors and certain
stockholders who are beneficial owners of 5% or more of our outstanding Common Stock possess the majority of our voting power, and through
this ownership, have the ability to control our Company and our corporate actions.
Following the Share Exchange,
our current executive officer, directors and certain stockholders who are beneficial owners of 5% or more of our outstanding Common Stock
hold approximately 53% of the issued and outstanding voting power of the Company's outstanding shares. These persons have a controlling
influence in determining the outcome of any corporate transaction or other matters submitted to our stockholders for approval, including
mergers, consolidations and the sale of all or substantially all of our assets, election of directors, and other significant corporate
actions. As such, our directors and executive officer may have the power, acting alone or together, to prevent or cause a change in control;
therefore, without their consent we could be prevented from entering into transactions that could be beneficial to us. The interests of
our executive officer may give rise to a conflict of interest with the Company and the Company's shareholders.
In addition, we have a number
of stockholders who are beneficial owners of more than 5% of our outstanding Common Stock, as of June 28, 2022, including our Chief Executive
Officer who beneficially owns approximately 26% of our issued and outstanding shares, and as such, also may have the ability to prevent
us from entering into transactions that could be beneficial to us and/or other shareholders. In addition, we have three additional non-affiliated
stockholders who are beneficial owners of more than 5% of our outstanding Common Stock. Although none of these non-affiliated stockholders
currently have a controlling influence in determining the outcome of any corporate transaction or other matters submitted to our stockholders
for approval, including mergers, consolidations and the sale of all or substantially all of our assets, election of directors, and other
significant corporate actions, obtaining their vote on certain matters may be necessary to effect certain actions that our management
and directors otherwise deem to be in the best interests of the Company.
For additional details concerning
beneficial ownership of our securities, please refer to the section below entitled "Beneficial Ownership of the Company's
Common Stock" and with respect to voting power, please refer to the section below entitled "Description of Securities."
Investors may have difficulty in reselling
their shares due to the lack of market or state Blue Sky laws.
Our Common Stock is not
currently traded on any national securities exchange and is not quoted on any over-the-counter market. No market may ever develop for
our Common Stock, or if developed, may not be sustained in the future. The holders of our shares of Common Stock and persons who desire
to purchase them in any trading market that might develop in the future should be aware that there might be significant state law restrictions
upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the shares available for trading
on the over-the-counter markets, investors should consider any secondary market for our Common Stock to be a limited one.
We may seek coverage and publication
of information regarding our Company in an accepted publication, which permits a "manual exemption." This manual exemption
permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing
for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized
manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3)
a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We
may not be able to secure a listing containing all of this information. Furthermore, the manual exemption is a non-issuer exemption restricted
to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are
those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance
Reports, and many states expressly recognize these manuals. A smaller number of states declare that they "recognize securities manuals"
but do not specify the recognized manuals. Accordingly, our Common Stock should be considered totally illiquid, which inhibits investors'
ability to resell their shares
Our Common Stock may never be listed on
a major stock exchange.
While we may seek the listing
of our Common Stock on a national or other securities exchange at some time in the future, we currently do not satisfy the initial listing
standards and cannot ensure that we will be able to satisfy such listing standards or that our Common Stock will be accepted for listing
on any such exchange. Should we fail to satisfy the initial listing standards of such exchanges, or our Common Stock is otherwise
rejected for listing, the trading price of our Common Stock could suffer, the trading market for our Common Stock may be less liquid,
and our Common Stock price may be subject to increased volatility.
23
As a former shell company, resales of shares
of our restricted Common Stock in reliance on Rule 144 of the Securities Act are subject to the requirements of Rule 144(i).
We previously were a "shell
company" and, as such, sales of our securities pursuant to Rule 144 under the Securities Act of 1933, as amended, cannot be made
unless, among other things, at the time of a proposed sale, we are subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, and have filed all reports and other materials required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 as amended, as applicable, during the preceding 12 months, other than Form 8-K reports. Because,
as a former shell company, the reporting requirements of Rule 144(i) will apply regardless of holding period, restrictive legends on certificates
for shares of our Common Stock cannot be removed except in connection with an actual sale that is subject to an effective registration
statement under, or an applicable exemption from the registration requirements of, the Securities Act of 1933, as amended. Because our
unregistered securities cannot be sold pursuant to Rule 144 unless we continue to meet such requirements, any unregistered securities
we issue will have limited liquidity unless we continue to comply with such requirements.
The securities issued in connection with
the Share Exchange are restricted securities and may not be transferred in the absence of registration or the availability of a resale
exemption.
The shares of Common Stock
being issued in connection with the Share Exchange are being issued in reliance on an exemption from the registration requirements under
Section 4(a)(2) of the Securities Act. Consequently, these securities will be subject to restrictions on transfer under the Securities
Act and may not be transferred in the absence of registration or the availability of a resale exemption. In particular, in the absence
of registration, such securities cannot be resold to the public until certain requirements under Rule 144 promulgated under the Securities
Act have been satisfied, including certain holding period requirements. As a result, a purchaser who receives any such securities issued
in connection with the Share Exchange may be unable to sell such securities at the time or at the price or upon such other terms and conditions
as the purchaser desires, and the terms of such sale may be less favorable to the purchaser than might be obtainable in the absence of
such limitations and restrictions.
We do not plan to declare or pay any dividends
to our stockholders in the near future.
We have not declared any dividends
in the past, and we do not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends
will be made at the discretion of the board of directors and will depend upon, among other things, the results of operations, cash flows
and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is
no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such
dividend.
The requirements of being a reporting company
may strain our resources and distract management.
As a reporting company, we
are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act").
These requirements are extensive. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business
and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls
over financial reporting.
We may incur significant costs
associated with our public company reporting requirements and costs associated with applicable corporate governance requirements. We
expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some
activities more time consuming and costly. This may divert management's attention from other business concerns, which could
have a material adverse effect on our business, financial condition and results of operations. We also expect that these applicable
rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may
be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As
a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive
officers. We are currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount
of additional costs we may incur or the timing of such costs.
24
If in the future there is a trading market
for our Common Stock, "penny stock" rules may make buying or selling our Common Stock difficult.
The SEC has adopted regulations
that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain
exceptions. These rules require that any broker-dealer that recommends our Common Stock to persons other than prior customers and accredited
investors, must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser's
written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny
stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage
broker-dealers from effecting transactions in our Common Stock, which could severely limit the market price and liquidity of our Common
Stock.
The sales practice requirements of the Financial
Industry Regulatory Authority, or FINRA, 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 Rule 2111 that requires a broker-dealer to have reasonable grounds for believing
that an investment is suitable for a customer before recommending the investment. 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 the Company's Common Stock, which may limit your ability
to buy and sell the Company's stock and have an adverse effect on the market for our shares.
We have not yet determined whether our existing
internal controls over financial reporting are in compliance with Section 404 of the Sarbanes-Oxley Act.
We are not currently required
to comply with the rules of the SEC implementing Section 404 of the Sarbanes-Oxley Act ("Section 404") and therefore are not
required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Compliance
with the SEC's rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial
and other information in our annual reports and provide an annual management report on the effectiveness of control over financial reporting.
Though we will be required to disclose material changes in internal control over financial reporting on an annual basis, we will not be
required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following
our first annual report required to be filed with the SEC. Additionally, as we do not qualify as an emerging growth company, we are required
to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal
control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal
resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control
over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning
as documented and implement a continuous reporting and improvement process for internal control over financial reporting. We have begun
the process of evaluating the adequacy of our accounting personnel staffing level and other matters related to our internal control over
financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at
all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses
once we are a public company, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability
of our financial statements. As a result, the market price of our Common Stock could be negatively affected, and we could become subject
to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require
additional financial and management resources.
25
Risks Related to our Operations in Israel
Our headquarters and other significant operations
are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel.
Our executive offices are located
in Tel Aviv-Jaffa, Israel. In addition, the majority of our officers and directors are residents of Israel. If these or any future facilities
in Israel were to be damaged, destroyed or otherwise unable to operate, whether due to war, acts of hostility, earthquakes, fire, floods,
hurricanes, storms, tornadoes, other natural disasters, employee malfeasance, terrorist acts, power outages or otherwise, or if performance
of our research and development is disrupted for any other reason, such an event could delay our clinical trials or, if our product candidates
are approved and we choose to manufacture all or any part of them internally, jeopardize our ability to manufacture our products as promptly
as our prospective customers will likely expect, or possibly at all. If we experience delays in achieving our development objectives,
or if we are unable to manufacture an approved product within a timeframe that meets our prospective customers' expectations, our
business, prospects, financial results and reputation could be harmed.
Political, economic and military
conditions in Israel may directly affect our business. Since the establishment of the State of Israel in 1948, a number of armed conflicts
have taken place between Israel and groups in its neighboring countries, Hamas (an Islamist militia and political group that has historically
controlled the Gaza Strip) and Hezbollah (an Islamist militia and political group based in Lebanon). In addition, several countries, principally
in the Middle East, restrict doing business with Israel, and additional countries may impose restrictions on doing business with Israel
and Israeli companies whether as a result of hostilities in the region or otherwise. Any hostilities involving Israel, terrorist activities,
political instability or violence in the region or the interruption or curtailment of trade or transport between Israel and its trading
partners could adversely affect our operations and results of operations and the market price of our ordinary shares.
Our commercial insurance does
not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Although the Israeli
government is currently committed to covering the reinstatement value of direct damages that are caused by terrorist attacks or acts of
war, we cannot assure you that this government coverage will be maintained or, if maintained, will be sufficient to compensate us fully
for damages incurred. Any losses or damages incurred by us could have a material adverse effect on our business, financial condition and
results of operations.
Our operations are subject to currency and
interest rate fluctuations.
Although our functional currency
is the U.S. dollar, and our financial records are maintained in U.S. dollars, we also incur expenses in Euros and New Israeli Shekels.
In the future, we expect that a substantial portion of our revenues will be generated in U.S. dollars, Euros and other foreign currencies,
although we currently incur a significant portion of our expenses in currencies other than U.S. dollars, mainly New Israeli Shekels. As
a result, we are affected by foreign currency exchange fluctuations through both translation risk and transaction risk, and our financial
results may be affected by fluctuations in the exchange rates of currencies in the countries in which our prospective product candidates
may be sold. We currently partially hedge our foreign currency exchange rate risk to decrease the risk of financial exposure from fluctuations
in the exchange rates of our principal operating currencies.
It may be difficult to enforce a judgment
of a U.S. court against us and our executive officers and directors and the Israeli experts named in this prospectus in Israel or the
United States, to assert U.S. securities laws claims in Israel or to serve process on our executive officers and directors and these experts.
We were incorporated in Israel.
Substantially all of our executive officers and directors reside outside of the United States, and all of our assets and most of the assets
of these persons are located outside of the United States. Therefore, a judgment obtained against us, or any of these persons, including
a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and
may not be enforced by an Israeli court. It also may be difficult for you to effect service of process on these persons in the United
States or to assert U.S. securities law claims in original actions instituted in Israel. Additionally, it may be difficult for an investor,
or any other person or entity, to initiate an action with respect to U.S. securities laws in Israel. Israeli courts may refuse to hear
a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum in which to bring
such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable
to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact by expert witnesses,
which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding
case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against
us in Israel, you may not be able to collect any damages awarded by either a U.S. or foreign court. See "Enforceability of Civil
Liabilities" for additional information on your ability to enforce a civil claim against us and our executive officers or directors
named in this prospectus.
26
General Risk Factors
Future changes in financial accounting standards
or practices may cause adverse unexpected financial reporting fluctuations and affect reported results of operations.
A change in accounting standards
or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before
the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and
may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our reported financial
results or the way we conduct business.
Raising additional capital would cause dilution
to our existing shareholders, and may affect the rights of existing shareholders.
We may seek additional capital
through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements.
To the extent that we raise additional capital through the issuance of equity or convertible debt securities, your ownership interest
will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder.
Failure in our information technology systems,
including by cybersecurity attacks or other data security incidents, could significantly disrupt our operations.
Our operations depend, in part,
on the continued performance of our information technology systems. Our information technology systems are potentially vulnerable to physical
or electronic break-ins, computer viruses and similar disruptions. Failure of our information technology systems could adversely affect
our business, profitability and financial condition. Although we have information technology security systems, a successful cybersecurity
attack or other data security incident could result in the misappropriation and/or loss of confidential or personal information, create
system interruptions, or deploy malicious software that attacks our systems. It is possible that a cybersecurity attack might not be noticed
for some period of time. The occurrence of a cybersecurity attack or incident could result in business interruptions from the disruption
of our information technology systems, or negative publicity resulting in reputational damage with our shareholders and other stakeholders
and/or increased costs to prevent, respond to or mitigate cybersecurity events. In addition, the unauthorized dissemination of sensitive
personal information or proprietary or confidential information could expose us or other third parties to regulatory fines or penalties,
litigation and potential liability, or otherwise harm our business.
We may be subject to securities litigation,
which is expensive and could divert management attention.
In the past, companies that
have experienced volatility in the market price of their shares have been subject to securities class action litigation. We may be the
target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management's
attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant
liabilities.
The requirements associated with being a
reporting company will require significant company resources and management attention.
We are subject to the reporting
requirements of the Exchange Act. The Exchange Act requires that we file periodic reports with respect to our business and financial condition
and maintain effective disclosure controls and procedures and internal control over financial reporting. In addition, subsequent rules
implemented by the SEC may also impose various additional requirements on reporting companies. We estimate that these expenses will be
at least several tens of thousand dollars annually. Further, the need to establish the corporate infrastructure demanded of a reporting
company may divert management's attention from implementing our development plans. We have made changes to our corporate governance
standards, disclosure controls and financial reporting and accounting systems to meet our reporting obligations. The measures we take,
however, may not be sufficient to satisfy our obligations as a public company, which could subject us to fines, sanctions and other regulatory
action and potentially civil litigation.
27
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
The Company makes forward-looking
statements in this prospectus, including in the statements incorporated herein by reference. Forward-looking statements provide our current
expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives,
intentions, assumptions and other statements that are not historical facts. Words or phrases such as "anticipate," "believe,"
"continue," "estimate," "expect," "intend," "may," "ongoing,"
"plan," "potential," "predict," "project," "will" or similar words or phrases,
or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily
mean that a statement is not forward-looking. Examples of forward-looking statements in this prospectus include, but are not limited to,
statements regarding our disclosure concerning our operations, cash flows and financial position.
Forward-looking statements
appear in a number of places in this prospectus including, without limitation, in the sections entitled "Management's Discussion
and Analysis of Financial Conditions and Results of Operations," and "Business." The risks and uncertainties include,
but are not limited to:
●
the regulatory pathways that we may elect to utilize in seeking U.S. Food and Drug Administration, or FDA, European Medicines Agency, or EMA, and other regulatory approvals, if any;
●
obtaining (and the cost thereof) FDA and EMA approval of, or other regulatory action in Europe or the United States and elsewhere with respect to our product candidates;
●
the commercial launch and future sales of our product candidates and our advancement of product candidates for other indications in our pipeline;
●
the potential cost of our rheumatoid arthritis product candidate, or RA and RA product candidate, respectively, for patients;
●
our expectations regarding the timing of commencing clinical trials;
●
our expectations regarding the supply of the active pharmaceutical ingredient for our product candidates;
●
third-party payor reimbursement for our product candidates;
●
our estimates regarding anticipated expenses, capital requirements and our needs for additional financing;
●
completion and receiving favorable results of clinical trials for our product candidates;
●
the filing by us, and the subsequent issuance of patents to us, by the U.S. Patent and Trademark Office and other governmental patent agencies;
●
our expectations regarding the impact of the COVID-19 pandemic, including on our planned clinical trials, operations and financial position; and
These statements are only current
predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements.
We discuss many of these risks in this prospectus in greater detail under the section entitled "Risk Factors" and elsewhere
in this prospectus. You should not rely upon forward-looking statements as predictions of future events.
Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance,
or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as
a result of new information, future events or otherwise, after the date of this prospectus.
28
USE OF PROCEEDS
All of the shares of Common
Stock offered by the Selling Securityholders pursuant to this prospectus will be sold by the Selling Securityholders for their respective
accounts. We will not receive any of the proceeds from these sales. All proceeds from the sale of the Common Stock will be paid directly
to the Selling Securityholders.
29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion
and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements
and the related notes included elsewhere herein and in our consolidated financial statements.
In addition to our consolidated
financial statements, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the forward-looking statements. See "Cautionary Statement Regarding
Forward-Looking Statements" and "Risk Factors" for a discussion of the uncertainties, risks and assumptions associated
with these statements.
Overview
We are a pharmaceutical drug
research and development company focused on the discovery and clinical development of life-improving drug therapies based on cannabinoids,
including CBD oil. Unless indicated otherwise, we plan on using oil derived from CBD strains with low levels of THC. All references to
the use of CBD in our product candidates refer to CBD strains with less than 0.3% of THC.
We are currently in the pre-clinical
development stage for our lead product candidate, our RA product candidate for the treatment of RA. In addition, we are aiming to develop
our COVID-19 product candidate, which may be based on data or studies related to our RA product candidate. Our goal is to become a leader
in development of CBD oil-based pharmaceutical drug products for the treatment of indications in which we believe there is a high unmet
medical need in a range of disorders, including those related to inflammation in the body, including RA and COVID-19.
In order to achieve our goal,
we have and will continue to build an experienced team of senior executives and scientists, with experience in all facets of pharmaceutical
research and development, drug formulation, clinical trial execution and regulatory submissions. We intend to leverage the knowledge of
our team in order to complete the clinical trials needed to receive approvals of our product candidates from applicable regulatory authorities.
Initially, we intend to obtain
approvals for our product candidates from the FDA and MOH. Upon obtaining FDA approvals, or in the event that we are not successful in
obtaining such approvals, we intend to apply for EMA and other countries' governmental regulatory agencies approvals for our product
candidates. If we are successful in obtaining FDA approvals for our product candidates, we intend to enter into royalty agreements with
GMP approved medical manufactures and distributors, having them using our medical formulas strains for the purpose of growing, cultivating,
manufacturing, and distributing Raphael Pharmaceutical medical indications in their designated territories.
Components of Operating Results
Operating Expenses
Our current operating expenses
consist of two components – research and development expenses, and general and administrative expenses. To date, we have not generated
any revenues. We do not expect to receive any revenue from our product candidate unless and until we obtain regulatory approval and commercialize
our product candidate or enter into agreements with third parties to commercialize them. There can be no assurance that we will receive
such regulatory approvals, and if our product candidate is approved, that we will be successful in commercializing them.
Research and Development Expenses
Research and development activities
are our primary focus. Products in later stages of clinical development generally have higher development costs than those in earlier
stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research
and development expenses will increase as we prepare for, and commence, registrational clinical trials of our RA and COVID-19 product
candidates. A key activity in progressing our product candidates toward registrational trials is the development of large-scale manufacturing
processes that are tailored specifically to our product candidate. In order to confirm the suitability of a new manufacturing facility
and/or process, numerous experiments are needed. Moreover, the regulatory requirements in preparation for manufacturing a drug to be used
in a registrational trial or for commercial use involve validation activities and extensive updates to our regulatory files, all of which
are lengthy and costly activities. For these reasons, the development of manufacturing processes currently represents the largest portion
of our research and development expenses. Research and development expenses include, but are not limited to, the following:
●
employee-related expenses, such as salaries and share-based compensation;
30
●
expenses of developing manufacturing processes;
●
expenses relating to outsourced and contracted services, such as external laboratories and consulting and advisory services;
●
costs associated with pre-clinical activities;
●
patent application and maintenance expenses;
●
expenses incurred in operating our laboratories and small-scale equipment; and
●
clinical development expenses.
General and Administrative Expenses
General and administrative
expenses consist primarily of employee related expenses, including salaries, benefits, and equity-based compensation, for personnel in
executive, finance, accounting, business development and human resources functions. Other significant costs include facility costs not
otherwise included in research and development expenses, legal fees relating to patent and corporate matters, and fees for accounting
and consulting services.
We anticipate that our general
and administrative expenses will increase in the future to support continued research and development activities, potential commercialization
of our product candidates and increased costs of operating as a public company. These increases will likely include increased costs related
to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses. We also anticipate
increased expenses related to the reimbursements of third-party patent related expenses in connection with the ongoing interference proceeding
with respect to certain of our in-licensed intellectual property. Additionally, we anticipate increased costs associated with being a
public company, including expenses related to services associated with maintaining compliance with SEC requirements and insurance costs.
Comparison of the Year Ended December 31, 2021
to the Year Ended December 31, 2020
Results of Operations
For the
Year Ended
December 31,
For the
Year Ended
December 31,
2021
2020
Operating expenses:
Research and development expenses
$
(776,000
)
$
(461,000
)
General and administrative expenses
(853,000
)
(245,000
)
Operating loss
(1,629,000
)
(706,000
)
Financial Income (expense), net
4,000
(12,000
)
Net loss and comprehensive loss
$
(1,625,000
)
$
(718,000
)
Basic and diluted net loss per share
$
(0.15
)
$
(0.07
)
Weighted average number of shares of ordinary shares used in computing basic and diluted net loss per share
11,171,704
9,459,253
31
Research and Development Expenses
Our research and development
expenses totaled $776,000 for the year ended December 31, 2021, representing an increase of $315,000, or 68%, compared to $461,000 for
the year ended December 31, 2020. The increase was primarily attributable to the increase in our expenses to our consultants and service
providers, which resulted from the increase in research activity, mainly with Rambam Hospital.
General and Administrative Expenses
Our general and administrative
expenses totaled $853,000 for the year ended December 31, 2021, representing an increase of $608,000, or 248%, compared to $245,000 for
the year ended December 31, 2020. The increase was primarily attributable to increase in our fees for our consultants and professional
services which was as a result of increase in our activity and being a public Company.
Operating Loss
As a result of the foregoing,
our operating loss totaled $1,629,000 for the year ended December 31, 2021, representing an increase of $923,000, or 130%, compared to
$706,000 for the year ended December 31, 2020.
Financial income (expense), net
We recognized financing income,
net of $4,000 for the year ended December 31, 2021, representing a decrease of $16,000, or 133%, compared to finance expenses of $12,000
for the year ended December 31, 2020. The decrease was primarily attributable to exchange rate differences between the U.S. dollar and
the New Israeli Shekel.
Net and Comprehensive Loss
As a result of the foregoing,
our loss totaled $1,625,000 for the year ended December 31, 2021, representing an increase of $907,000, or 126%, compared to $718,000
for the year ended December 31, 2020.
Comparison of the Three Months Ended March
31, 2022 to the Three Months Ended March 31, 2021
Results of Operations
For the
Three
Months
Ended
March 31,
For the
Three
Months
Ended
March 31,
2022
2021
(Unaudited)
(Unaudited)
Operating expenses:
Research and development expenses
$
(86,000
)
$
(169,000
)
General and administrative expenses
(89,000
)
(83,000
)
Operating loss
(175,000
)
(252,000
)
Financial expense, net
(10,000
)
(3,000
)
Net loss and comprehensive loss
$
(185,000
)
$
(255,000
)
Basic and diluted net loss per share
$
(0.01
)
$
(0.02
)
Weighted average number of shares of ordinary shares used in computing basic and diluted net loss per share
13,035,371
9,459,253
32
Research and Development Expenses
Our research and development
expenses totaled $86,000 for the three months ended March 31, 2022, representing a decrease of $83,000, or 49%, compared to $169,000 for
the three months ended March 31, 2021. The decrease was primarily attributable to the decrease in pre-clinical trial expenses.
General and Administrative Expenses
Our general and administrative
expenses totaled $89,000 for the three months ended March 31, 2022, representing a increase of $6,000, or 7%, compared to $83,000 for
the three months ended March 31, 2021. The increase was primarily due to lower professional services expenses in 2021.
Operating Loss
Our operating loss totaled
$175,000 for the three months ended March 31, 2022, representing a decrease of $77,000, or 30%, compared to $252,000 for the three months
ended March 31, 2021.
Financial expense
We recognized financial expense
of $10,000 for the three months ended March 31, 2022, representing an increase of $7,000, or 233%, compared to $3,000 for the three months
ended March 31, 2021. The increase was primarily due to an increase in exchange rate differences.
Net Loss
As a result of the foregoing,
our loss totaled $185,000 for the three months ended March 31, 2022, representing a decrease of $70,000, or 27%, compared to $255,000
for the three months ended March 31, 2021.
Critical Accounting Estimates
Our consolidated financial
statements are prepared in accordance with US GAAP. There are no critical accounting estimates for the years ended December 31, 2021 and
2020.
Liquidity and Capital Resources
The Company has funded its
operations to date primarily through equity financing and the issuance of a loan. Additional funding will be required to complete the
Company's research and development and clinical trials, to attain regulatory approvals, to begin the commercialization efforts of
the Company's product and to achieve a level of sales adequate to support the Company's cost structure. As of December 31,
2021, we had $0.15 million in cash and cash equivalents, and have invested most of our available cash funds in ongoing cash accounts.
Overview
The table below presents our
cash flows for the periods indicated:
For the
Year Ended
December 31,
For the
Year Ended
December 31,
For the
Three Months
Ended
March 31,
For the
Three Months
Ended
March 31,
2021
2020
2022
2021
(Unaudited)
(Unaudited)
Cash used in operating activities
$
(1,419,000
)
$
(779,000
)
(82,000
)
(129,000
)
Cash provided by financing activities
$
1,477,000
$
824,000
10,000
44,000
Net increase (decrease) in cash and cash equivalents
$
45,000
$
45,000
(72,000
)
(85,000
)
33
Net cash used in operating
activities was $1,419,000 for the year ended December 31, 2021, compared with net cash used in operating activities of $779,000 for the
year ended December 31, 2020. The $640,000 increase in the net cash used in operating activities during 2021, compared to 2020, was primarily
the result of $907,000 increase in net loss which was offset by an increase of $234,000 in other account payables and accrued expenses
which derived mainly from the increase in Company's activity.
Net cash used in operating
activities was $82,000 for the three months period ended March 31, 2022, compared with net cash used in operating activities of $129,000
for the same period in 2021. The $47,000 decrease in the net cash used in operating activities during 2022, compared to 2021, was primarily
the result of $70,000 decrease in net loss.
Net cash used in investing
activities for the year ended December 31, 2021 and for the year ended December 31, 2020 was zero.
Net cash used in investing
activities for the three months period ended March 31, 2022 and for the same period in 2021 was zero.
Net cash provided by financing
activities for the year ended December 31, 2021 was $1,477,000 compared to $824,000 for the year ended December 31, 2020. The increase
of $653,000 in net cash provided by financing activities during 2021 compared to 2020 was mainly due to increase of $823,000 in issuance
of shares of Common Stock which was offset by a decrease of $183,000 in receipt of a loan.
Net cash provided by financing
activities for the three months period ended March 31, 2022 was $10,000 compared to $44,000 for the same period in 2021. The decrease
in net cash provided by financing activities during 2022 compared to 2021 was mainly due to increase in proceeds from issuance of Common
Stock at the amount of $10,000 which was offset by a receipt of a loan in 2021 at the amount of $44,000.
Current Outlook
We have financed our operations
to date primarily through proceeds from founder's capital and issuance of shares and warrants. We have incurred losses and generated
negative cash flows from operations since inception. To date we have not generated revenue, and we do not expect to generate significant
revenues from the sale of our products in the near future.
We do not believe that our
current cash on hand will be sufficient to fund our projected operating requirements. This raises substantial doubt about our ability
to continue as a going concern. At this time, there is no guarantee that we will be able to obtain an adequate level of financial resources
required for the short and long-term support of our operations or that we will be able to obtain additional financing as needed, or meet
the conditions of such financing, or that the costs of such financing may not be prohibitive. These conditions raise substantial doubt
about our ability to continue as a going concern for a period within one year from the date of the financial statements included elsewhere
in this prospectus.
As of December 31, 2021, our
cash and cash equivalents were $0.15 million. We believe that our existing cash and cash equivalents will be sufficient to fund our projected
cash requirements through June 2022. Therefore, we will require significant additional financing in the near future to fund our operations.
We currently anticipate that we will require approximately $0.6 million for research and development activities over the course of the
next 12 months. We also anticipate that we will require approximately $1.4 million for capital expenditures over such 12-month period,
which consists primarily of expenditures for pre-clinical trials, mice model trials and clinical trials and general Company operating
costs.
34
In addition, our operating
plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than
planned. Our future capital requirements will depend on many factors, including:
●
our research and development efforts, including our ability to finish research and development projects or product development within the allotted or expected timeline;
●
the cost, timing and outcomes of seeking to commercialize our products in a timely manner;
●
our ability to generate cash flows;
●
economic weakness, including inflation, or political instability in particular foreign economies and markets;
●
government regulation in our industry, and more specifically, the costs and timing of obtaining regulatory approval or permits to launch our technology in various geographical markets; and
●
the costs of, and timing for, strengthening our manufacturing agreements for production of our wave energy systems.
In addition to the foregoing,
based on our current assessment, we do not expect any material impact on our long-term liquidity due to the COVID-19 pandemic. However,
we will continue to assess the effect of the pandemic to our operations. The extent to which the COVID-19 pandemic will impact our business
and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the duration
of the COVID-19 pandemic, any restrictions on the ability of hospitals and trial sites to conduct trials that are not designed to address
the COVID-19 pandemic and the perceived effectiveness of actions taken in Israel, the United States and Europe and other countries to
contain and treat the disease. While the potential economic impact brought by COVID-19 may be difficult to assess or predict, a widespread
pandemic could result in significant disruption of global financial markets, reducing our ability to access capital in the future. In
addition, a recession or long-term market correction resulting from the spread of COVID-19 could materially affect our business and the
value of our Common Stock.
Until we can generate significant
revenues, if ever, we expect to satisfy our future cash needs through our existing cash, cash equivalents and short-term deposits, loans,
or debt or equity financings. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If
funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization
efforts with respect to, one or more applications of our products. This may raise substantial doubts about our ability to continue as
a going concern.
Off-Balance Sheet Arrangements
Rambam Research Agreement
On July 17, 2019, we entered
into a sponsored research agreement, or the Research Agreement, with Rambam MT, pursuant to which the Company agreed to fund a research
project, to be performed by Rambam MD, with a research plan aimed at identifying the effects of different cannabis strains on the function
of immune cells. On October 28, 2020, the Company and Rambam MT agreed to expand the research plan to study the anti-inflammatory activities
of cannabis extracts in an RA mouse model. On February 15, 2021, the Company and Rambam MT agreed to further expand the research plan
to study the effect of cannabis extracts on the immunopathology of the COVID-19 disease. The Sponsored Researched Agreement is for an
initial term of 48 months.
35
Pursuant to the Research Agreement,
we agreed to pay Rambam $1.4 million in four equal payments, due on the first day of August on each successive year from 2019 through
2022. Furthermore, in accordance with the terms of the Research Agreement, we and Rambam MT will have joint ownership of any IP created
as a result of research programs covered by such agreement. In connection with the Research Agreement, Rambam MT agreed not to work, study
or develop any technologies with other entities that compete with our work with Rambam MT for our COVID-19 product candidate or RA product
candidate for a term of three and seven years, respectively, from the end of the parties' collaboration with respect to the COVID-19
product candidate and seven years from the end of the term of the Research Agreement with respect to the RA product candidate.
Subject to commercial sales
of any product candidate using the intellectual property created as a part of the research covered by such agreement, Raphael Israel is
required to pay Rambam MT a royalty in an amount equal to 6% of all net sales, subject to certain deductions, such as taxes paid by any
purchaser, transportation and shipping costs, and other customary deductions.
As of June 28, 2022, the Company
has made three of the four equal payments due pursuant to the Research Agreement, for a total amount of $1,050,000.
Way of Life Cannabis Agreement
In October 2020, Raphael Israel
entered into an engagement agreement with Wolc, pursuant to which, subject to its completing the Share Exchange with Easy Energy, Raphael
Israel will be provided with up to 15 liters of CBD oil, from a strain of cannabis during a term of 18 months, to be provided in two to
three deliveries of between one to seven liters of CBD oil. In accordance with Raphael Israel's agreement with Wolc, Raphael Israel
has agreed to issue to certain persons affiliated with Wolc 3% of Raphael's issued and outstanding share capital as of the date
of the Share Exchange, to be provided in three equal issuances; provided, however, that such persons may elect to receive a cash payment
of $100,000 instead of any one issuance of Raphael's shares. In addition to the issuance of shares, Raphael Israel has also agreed
to pay Wolc a royalty fee equal to 15% of the net royalties generated from sales of Raphael Israel's pharmaceutical drug products
that are developed at Rambam hospital in Israel.
Except for the above, we have
not engaged in any off-balance sheet arrangements, such as the use of unconsolidated subsidiaries, structured finance, special purpose
entities or variable interest entities.
We do not believe that our
off-balance sheet arrangements and commitments have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that
is material to investors.
36
BUSINESS
Overview
We are a pharmaceutical drug
research and development company focused on the discovery and clinical development of life-improving drug therapies based on cannabinoids,
including cannabidiol, or CBD, oil. Unless indicated otherwise, we plan on using oil derived from CBD strains with low levels of Tetrahydrocannabinol,
or THC. All references to the use of CBD in our product candidates refer to CBD strains with less than 0.3% of THC.
We are currently in the pre-clinical
development stage for our lead product candidate, our RA product candidate for the treatment of RA. In addition, we are aiming to develop
a pharmaceutical drug product for the treatment of hyperinflammatory syndrome inflammation related to COVID-19, or our COVID-19 product
candidate, which may be based on data or studies related to our RA product candidate. We successfully completed a preclinical study for
the RA product candidate at Rambam Hospital as well as a mice model trial.
On February 9, 2022,
we filed an application for a clinical trial with the Medical Cannabis Unit of the Ministry of Health of Israel, or MOH. On February 16,
2022 we submitted an application with the Helsinki Committee at Rambam Hospital for a clinical trial in COVID-19 patients. The Company
plans to submit such applications for our RA product during 2022.
Our goal is to become a leader
in development of CBD oil-based pharmaceutical drug products for the treatment of indications in which we believe there is a high unmet
medical need in a range of disorders, including those related to inflammation in the body, including RA and COVID-19.
In order to achieve our goal,
we have and will continue to build an experienced team of senior executives and scientists, with experience in all facets of pharmaceutical
research and development, drug formulation, clinical trial execution and regulatory submissions. We intend to leverage the knowledge of
our team in order to complete the clinical trials needed to receive approvals of our product candidates from applicable regulatory authorities.
Initially, we intend to obtain
FDA approvals for our product candidates. Upon obtaining FDA approvals, or in the event that we are not successful in obtaining such approvals,
we intend to apply for EMA and other countries' governmental regulatory agencies approvals for our product candidates. If we are
successful in obtaining FDA approvals for our product candidates, we intend to enter into royalty agreements with GMP approved medical
manufactures and distributors, having them using our medical formulas for the purpose of growing, cultivating, manufacturing, and distributing
Raphael Pharmaceutical medical indications in their designated territories.
Our discovery platform currently
focuses the use of CBD oil, one of the cannabinoids in cannabis plants, as the active pharmaceutical ingredient, or API, for our RA product
candidate and COVID-19 product candidate. Research results published in 2018 ("Translational Investigation of the Therapeutic Potential
of Cannabidiol (CBD): Toward a New Age") has shown that there may be benefits to treading medical conditions, or their effects,
with cannabinoids, and more specifically, with CBD, which may help reduce chronic pain by impacting endocannabinoid receptor activity,
reducing inflammation and interacting with neurotransmitters. This research has also shown that CBD may have neuroprotective properties,
and could have the ability to (i) reduce anxiety and depression, (ii) alleviate cancer-related symptoms, (iii) reduce acne and (iv) benefit
heart health.
Over the last few years, pharmaceutical
drug products that include parts of the cannabis plant have begun to receive regulatory approvals for use in patients suffering from certain
disorders, as highlighted below.
●
Nabiximols, better known under the tradename Sativex, is a botanical mouth spray consisting of natural THC and CBD extracts, that received approval in the United Kingdom in 2010 for the alleviation of multiple sclerosis, or MS, symptoms like spasticity, pain and overactive bladder.
●
Dronabinol, better known under the name Marinol, contains mainly THC and is a partial agonist of the cannabinoid receptor type 1, or CB1, in the nervous system and a partial agonist of the cannabinoid receptor type 2, or CB2, in the periphery that activates appetite, mood, cognition, memory and perception. Dronabinol received FDA-approval for use in United States in 1985 for treatment of anorexia in acquired immunodeficiency syndrome, or AIDS, patients and for the prevention of chemotherapy-induced nausea and vomiting, or CINV. A Lack of randomized controlled trials, or RCTs, makes a recommendation for usage of dronabinol as a third-line treatment for CINV difficult. Dronabinol in the form of an oral tablet is known under the trade name Namisol. It has high bioavailability and a long shelf life and is indicated for MS, chronic pain and behavioral disturbances in dementia patients.
●
Nabilone, better known under the tradename Cesamet, contains primarily THC, is approved for use as an anti-emetic and adjunctive analgesic for neuropathic pain, CINV and treatment for anorexia in AIDS patients in Canada, Mexico, the UK and the United States. Its main usage today is as adjunct medicine for chronic pain management.
37
In light of the past regulatory
approvals for other pharmaceutical drug products and, more specifically, the potential beneficial effects of CBD and other parts of the
cannabis plant, we believe that a drug discovery platform based on CBD may offer new and differentiated treatment options for patients.
Prior regulatory approvals of other companies' pharmaceutical drug products do not serve as an indication as to the ability or likelihood
that we receive regulatory approval to commercialize any of our product candidates.
After two successful years
of pre-clinical research and studies at the laboratories of Rambam Hospital, in January 2021, we commenced a pre-clinical trial in mice
for our RA product candidate that we expect will take four to five months. Following the completion of this pre-clinical trial, we intend
on submitting an Investigational New Drug, or IND, application to the FDA and MOH. See "– Research and Clinical Development
Strategy – Clinical Development Plan" for additional information on the ongoing pre-clinical trial and our planned clinical
trial for our RA product candidate. In addition, with respect to our COVID-19 product candidate, our clinical research partners have been
focused on the effect of cannabinoids and cannabis extracts on immune cells which induce acute inflammation. This study will begin in
the pre-clinical level in immune cell models and, subject to positive results that exhibit downregulation of pro-inflammatory cytokines
by cannabis extract, the study was completed successfully. Following the completion of the pre-clinical study, a mice model was conducted
to analyze for acute inflammation, which resembles the immunopathology of COVID-19. The mice model was successfully completed and we have
registered for a clinical trial in patients with the MOH.
As a pharmaceutical research
and clinical development company we do not own or operate, and currently do not intend on creating an in-house team to manufacture and
commercialize our pharmaceutical drug products, if any, that receive regulatory approval allowing for commercialization. We currently
rely, and expect to continue to rely, on third parties for the manufacturing of our product candidates for preclinical and clinical testing,
as well as for commercial manufacturing of any pharmaceutical drug products for which we may receive regulatory approval. Subject to the
receipt of such regulatory approvals, we intend on cooperating with manufacturers and other third parties to manufacture and commercialize
approved pharmaceutical drug products.
Product Pipeline
Currently, we have begun development
for our RA and COVID-19 product candidates, which are in the pre-clinical stage.
Assuming that we successfully
complete the clinical development of our RA and COVID-19 product candidates, we intend to then turn our attention to the clinical development
of cannabinoid-based drug products for the treatment of certain oncology indications. Unlike our RA and COVID-19 product candidate, the
use of our cannabinoid based drug products for the treatment of certain oncology indications will require specific dosing and potentially,
a different regulatory pathway than our existing product candidates.
We intend to apply for MOH
approval, as well as the FDA and EMA approvals right afterwards, subject to the completion of the applicable clinical trials, for our
RA product candidate as well as our COVID-19 product candidate using the FDA's regulatory pathway for drug products.
Indications and Market
Rheumatoid Arthritis
RA is an autoimmune disease
of unknown cause characterized by inflammation in multiple joints, including synovial inflammation with hyperplasia. Inflammation is also
associated with reduced hemoglobin (anemia) and reduced albumin and changes in levels of cholesterol and triglycerides. In addition to
the inflammation associated with RA, studies, including a 2018 publication entitled, "Cartilage and bone damage in rheumatoid arthritis,"
patients suffering from RA generally also suffer from chronic pain, fatigue, progressive joint damage, disability, hyperplasia, production
of autoantibodies such as rheumatoid factor and anti–citrullinated protein antibody, cartilage damage and bone erosions.
Research has shown that in
about 30% of RA patients, current conventional synthetic and biologic disease modifying anti-rheumatic drugs and targeting molecules may
fail or induce only partial responses, both of which we believe are insufficient for patients suffering from RA. Using disease modified
anti-rheumatic drugs, or DMARD, based treatments, as shown in a 2017 study from Sohita Dhillon, patients tend to report at follow-up meetings
that pain relief is unsatisfactory and although there is an initial improvements in the average pain score, a plateau may be reached beyond
which DMARDs are not able to resolve RA pain. As a result, we believe that RA patients need ongoing therapy as RA relapses are frequent.
During RA flareups, patients experience acute and chronic pain, fatigue, sleep disturbances, and morning stiffness which significantly
reduces their quality of life. Furthermore, damage is accumulated by long-term disease which also interferes with pain, fatigue and quality
of life.
38
All types of pain (acute or
chronic, widespread or local and nociceptive) have been reported in RA. Patients with RA may develop fibromyalgia, or FM, especially with
long-term disease. Concomitant FM is a key factor for discordance between PRO and clinical outcomes in assessment of RA patients including
in RCTs. Peripheral sensitization, induced by local inflammation or damage, and pain augmentation by the central nervous system, or CNS,
both drives the pain problems in RA patients. Anxiety or depression, impaired sleep and fatigue all contribute to pain sensitization in
RA patients. As noted in the study, "Tackling Pain Associated with Rheumatoid Arthritis: Proton-Sensing Receptors," some RA
patients have allodynia and peripheral neuropathies that contribute to refractory chronic pain.
We believe that clinical studies
on the use of cannabinoids in rheumatic conditions, and particularly RA, are logically advocated as possible positive effectors of the
inflammatory pathway of RA, as well as symptomatic pain relievers that may have the potential to also improve fatigue, sleep disorder
and tolerability of DMARDs. Through our Sponsored Research Agreement (as further detailed below), we believe that we have arrived at an
understanding as to how cannabinoids influence inflammation. Applying immune cells models in our pre-clinical research, we identified
specific strains of cannabis which reduce the capacity of the immune cells to communicate during inflammation, thus decreasing their capacity
to participate in chronic inflammation. For a deeper understanding of the mechanism in which cannabinoids effect inflammation, we developed
a unique, real time-Polymerase chain reaction, or RT-PCR, method to identify 10 different receptors to cannabinoids, both in human and
mice models. We believe that this technology will allow us to identify which cannabinoids receptors are participating in the downregulation
of inflammation, which we believe will help us develop our RA product candidate.
In 2015 alone, research conducted
by the NIH National Library of Medicine showed that RA affected about 24.5 million people as of 2015, which reflected between 0.5% and
1% of adults in the developed world, with an additional 5 to 50 per 100,000 people developing the condition each year. It is
believed that onset is most frequent during middle age and women are affected 2.5 times as frequently as men. Further research indicates
that RA resulted in 38,000 deaths in 2013, up from 28,000 deaths in 1990.
Hyperinflammatory Syndrome Related to COVID-19
Since the first emergence
of COVID-19 in December 2019 in Wuhan, China, COVID-19 has spread across more than 200 countries across the world and over 112 million
cases of the virus have been reported. Most patients develop only mild symptoms of COVID-19; however, some develop severe symptoms including
dyspnea, hypoxia and lung involvement which requires hospitalization. Based on research, we believe that most of the severe COVID-19 symptoms
are related to hyperinflammation caused by failure of resolution of the immunological response to the infection similar as observed in
cytokine release syndrome. Treatments with anti-inflammatory or anti-viral drugs are still experimental or have not reduced mortality.
Moreover, they are administered only to inpatients in a severe disease state. As a result of the foregoing, the necessity of finding new
anti-inflammatory therapies that have the potential to prevent deterioration of the symptoms is heightened.
Research and Clinical Development Strategy
Research and clinical development
of our pharmaceutical drug product candidates is our core business. We are currently focused on developing innovative cannabinoid-based
medical indications that we aim to push through Phase 2A and Phase 2B approval from both the FDA and EMA.
The research efforts that
have been conducted to date by the team at Rambam Med-Tech Ltd., or Rambam MT, are aimed at revealing the mechanism which structures the
activity of cannabinoids in human cells and organs, while applying a variety of disease models. We are using our PCR method to identify
different receptors to cannabinoids and which we believe will allow us to identify which cannabinoids receptors are participating in the
downregulation of inflammation. We believe that this strategy will allow us to identify the cannabinoids components of a chosen strain
in order to accurately administer cannabinoids targeted to the treatment of patients.
39
Research Agreement with Rambam MT
On July 17, 2019, we entered
into a sponsored research agreement, or the Research Agreement, with Rambam MT, pursuant to which the Company agreed to fund a research
project, to be performed by Rambam MD, with a research plan aimed at identifying the effects of different cannabis strains on the function
of immune cells. On October 28, 2020, the Company and Rambam MT agreed to expand the research plan to study the anti-inflammatory activities
of cannabis extracts in an RA mouse model. On February 15, 2021, the Company and Rambam MT agreed to further expand the research plan
to study the effect of cannabis extracts on the immunopathology of the COVID-19 disease. The Sponsored Researched Agreement is for an
initial term of 48 months.
Pursuant to the Research Agreement,
we agreed to pay Rambam $1.4 million in four equal payments, due on the first day of August on each successive year from 2019 through
2022. Furthermore, in accordance with the terms of the Research Agreement, we and Rambam MT will have joint ownership of any IP created
as a result of research programs covered by such agreement. In connection with the Research Agreement, Rambam MT agreed not to work, study
or develop any technologies with other entities that compete with our work with Rambam MT for our COVID-19 product candidate or RA product
candidate for a term of three and seven years, respectively, from the end of the parties' collaboration with respect to the COVID-19
product candidate and seven years from the end of the term of the Research Agreement with respect to the RA product candidate.
Subject to commercial sales
of any product candidate using the IP created as a part of the research covered by such agreement, we are required to pay Rambam MT a
royalty in an amount equal to 6% of all net sales, subject to certain deductions, such as taxes paid by any purchaser, transportation
and shipping costs, and other customary deductions.
As of June 28, 2022, the Company
has made three of the four equal payments due pursuant to the Research Agreement, for a total amount of $1,050,000.
We and Rambam MT are currently
focused on characterizing the activity of cannabinoids in RA and in hyperinflammatory syndrome related to COVID-19. RA is a long-term
autoimmune disorder, and as such, the research conducted by Rambam MT has focused on identifying the effect of cannabinoids on inflammatory
processes related to RA, while, with respect to our COVID-19 product candidate, their research has been focused on the effect of cannabinoids
and cannabis extracts on immune cells which induce acute inflammation.
Pre-Clinical Studies for RA Product Candidate
In Vitro Study
Pursuant to the Research Agreement,
the team at Rambam MT established a study in order to determine which cannabis strains extracts may affect inflammation. The lab applied an
in vitro
system, allowing them to screen a variety of cannabis derived oil extracts and their influence on cytokine secretion,
which is a type of response to injury and infection in the body.
The researchers employed human
THP1 cells, which can be induced to differentiate macrophages (specialized cells involved in the detection, phagocytosis and destruction
of bacteria and other harmful organisms) and to secrete cytokines (which is aimed as serving as a bridge for cross-communication with
other innate immune cells). Using this system, our partners from Rambam MT have established a variety of cannabinoids and studied their
influence on pro-inflammatory and anti-inflammatory cytokines. Most interestingly the study has identified a non-psychoactive cannabis
strain, which we refer to as "CAN1." Our study showed that CAN1 reduced TNFα and IL-6 secretion but increased the secretion
of the anti-inflammatory cytokine IL-10, while also reducing the secretion of the pro-inflammatory chemokine IL-8, as highlighted in Figure
1 below. Based on the results from this pre-clinical study, we believe that CAN1 strain, may be a potential anti-inflammatory agent with
the ability to influence both activation and migration of cells during inflammation.
40
Figure 1.
CAN1 downregulates pro-inflammatory
cytokines (TNFα, IL-8, IL-6) and upregulates the anti-inflammatory counterpart IL-10.
The results in Figure 1 above
reflect the results from our in vitro study of THP1 cells (0.25*10^6/ml) incubated with phorbol 12-myristate 13-acetate (PMA) (50 ng/ml)
to induce THP1 cells to differentiate to macrophages. for 48 hours. Then, cells were washed twice with phosphate buffer saline (PBS) and
treated with Can1 (1 µg/ml) in medium free serum for 24 hours. Then, cells were washed twice with PBS and incubated with LPS (Lipopolysaccharides)
to induce cytokines secretion (1 µg/ml) overnight. Supernatants were collected and frozen. Levels of TNFα, IL-8, IL-6 and
IL-10 were determined by the enzyme-linked immunosorbent assay (ELISA).
Pre-Clinical Study in Mice
In January 2021, we commenced
a pre-clinical study in mice. Mice in our pre-clinical study are being treated with cannabis strains that we previously identified in
our in vitro study and other prior research as potential candidates in the cell models. Following the treatment, we expect to examine
the ability of the treatment to modulate the immune function, specifically in the case of chronic inflammation, in order to optimize treatment
for RA.
This pre-clinical study is
expected to be focused on the following results.
●
Aim 1: Evaluating the immune modulatory properties of different cannabis strains related to the immunopathology (i.e., the immune responses) in RA;
●
Aim 2: Demonstrating the immunomodulatory properties of specific cannabis extracts on a mouse model for RA;
●
Aim 3: Elucidating the mechanisms of action, or MOA, of cannabinoids that are involved in the regulation of inflammation in RA; and
●
Aim 4: Establishing a phase 1 and 2 clinical trial experiment in compliance with FDA and EMA rules and regulations to study the effect of cannabis-based medical indication on RA.
41
In addition, this pre-clinical
study is expected to enable us to examine how we manufacture the API, the dosage design, analytical and bioanalytical method development
and validation, metabolism and pharmacokinetics, toxicology, both safety and genetic toxicology and possibly safety pharmacology; and
good manufacturing practice, or GMP, manufacture and documentation of drug product for use in clinical trials.
Aim 1. Evaluating the immune modulation
properties of different cannabis strains
Rheumatic diseases, including
RA, are characterized by chronic inflammation that affects the connective tissue or supporting structures of the body, most commonly the
joints, but also tendons, ligaments, bones, and muscles, while certain rheumatic diseases can also have an adverse effect on certain organs.
RA, the latter of which means "joint inflammation," encompasses more than 100 different disorders, including, for example,
join inflammation disorders, including RA, psoriatic arthritis, or PsA, systemic lupus erythematosus, or SLE, or lupus, gout and ankylosing
spondylitis, or AS. Therefore, a major goal for therapies of rheumatic diseases is the application of agents with immune modulation properties
with the ability to suppress effector autoimmune cells and to increase the activity of regulatory immune cells.
It is our belief, based on
the research conducted by our partners, and that or our industry peers, that cannabinoids have immunomodulatory properties, although the
exact effects are not fully comprehended. Together with the team at the Medical Cannabis Research and Innovation Center, we intend on
working to identify and characterize the types of cannabis strains as well as specific cannabinoids with immune modulatory function that
lie in the usage of cannabis in the treatment of rheumatic diseases. We aim to do this by evaluating the immune regulatory properties
of different cannabis strains on a variety of subsets of immune cells including lymphocytes and myeloid cells, which we plan to have purified
from the rodent model of rheumatic disease and from healthy humans or humans diagnosed with RA. For each isolated immune cell type, we
expect to evaluate the impact of cannabis on a variety of functions, such as cytokine and chemokine secretion, proliferation and migration.
Aim 2. Demonstrating the immune modulatory
properties of specific cannabis extract on mouse models for RA.
Cannabis is not an isolated
substance; it contains a plethora of biologically active substances. The most common substances are THC and CBD. Today more than 140 cannabinoids
are known to be expressed in the plant. In addition to cannabinoids, the plants contain flavonoids and terpenes. This greatly complicates
our ability to understand the effects of cannabis on the physiology because the different substances may have different (and even contradictory)
effects. Therefore, the use of different cannabis varieties with diverse ingredients may produce distinct and unexpected results.
In the current study, we expect
to examine whether cannabis is a potential treatment for RA in the in vivo mouse model of RA. We expect to test particular inflammation
markers, such as the cytokines tumor necrosis factor alpha, interferon gamma, monocyte chemoattractant protein-1, or MCP-1/CCL2 and Interleukin-6
during the onset of RA disease and investigate the effects of the different cannabis strains on particular inflammatory disease markers.
We then intend on comparing the effects of cannabis strains with high CBD-concentrations to those with high THC-concentrations in order
to be able to better understand the main effects of the major ingredients of each of CBD and THC. Furthermore, we intend on conducting
a pharmacokinetic analysis of the cannabinoid profile in the mouse blood. To this end, we expect to expose mice to a chronic controlled
administration of known doses of cannabis extracts from different strains. Following the exposure, we intend on measuring the effect of
chronic exposure over time and doses on RA markers. We believe that this information, together with additional data that we collect from
our clinical studies, will enable us to complete the clinical development of a cannabis-based treatment for patients with RA.
Aim 3. Elucidating the MOA of cannabinoids
that are involved in the regulation of inflammation in RA.
Upon activation, it is the
cannabinoid receptors, or CBrs, in the endocannabinoid system, or ECS, which initiate numerous regulatory functions in a mammal. CBrs
have been found in a variety of species including human, monkey, pig, dog, rat and mouse. The discovery of membrane receptors found in
the brain, central nervous system as well as peripheral tissues and organs that bind cannabimimetic compounds was a critical turning point
that paved the way towards the pharmacological understanding of cannabis-derived compounds.
42
The most studied CBrs are
CB1 and CB2; both belong to the G protein-coupled receptors (these cell surface receptors act like an inbox for messages in the form of
light energy, peptides, lipids, sugars, and proteins), or GPCR, family. GPCRs constitute a large protein family of receptors that detect
molecules outside the cell and activate internal signal transduction pathways and cellular responses. GPCRs, are called seven-transmembrane
receptors because they pass through the cell membrane seven times. Heterotrimeric G proteins are activated by GPCRs and are made up of
three subunits, α, β and γ. G proteins are divided into four main classes: Gαs, Gαi, Gαq and Gα12.
These proteins are activated depending on the ability of the G protein α-subunit, or Gα, to cycle between an inactive guanosine
diphosphate, or GDP, bound conformation and an active guanosine triphosphate, or GTP, bound conformation that can modulate the activity
of downstream effector-proteins. Additional receptors have been shown to bind cannabinoids: G protein-coupled receptor 55, or GPR55, several
transient receptor potential, or TRP, channels (TRPV1, TRPV2, TRPA1, TRPM8), and glycine receptors.
Figure 2.
CB1 downstream signaling network.
Adapted from Chakravarti et al., 2014
43
Since most of the biological
properties related to phytocannabinoids, a type of natural cannabinoid, rely on their interactions with receptors of the endocannabinoid
system, it is crucial to define which receptors are expressed and activated in the target cells. As a result, we have developed a system
with the capacity to identify ten cannabinoid receptors simultaneously and measure their expression levels using quantitative real-time
PCR. We have applied this method in examining cells of the immune system, and more specifically, in monocytes, before and after differentiation
to macrophages, or after stimulation to secrete cytokines. Using this methodology, we were able to identify a differential expression
pattern of the receptors under different conditions.
To obtain a deep understanding
on the mechanism of action of the cannabis strains, we will apply our research system and establish a unique study to research the response
of 10 different receptors to Cannabis in RA patients, which aims to identify the specific cannabinoids receptors on the cells of RA patients.
The data from this study is expected to subsequently be used to set up a system for analyzing and matching the specific cannabis treatment
to the specific cannabinoids receptors that are expressed in the patient's cells. We believe that if cannabinoid treatments correspond
to the receptors in the patient's cells, the treatment may be more accurate for treating that specific patient's RA symptoms.
Aim 4. Establish a Phase 1 & 2B clinical
trial according to FDA rules and regulations to study the effect of cannabis-based medical indications on RA.
Our goal for the treatment
of RA is to achieve disease remission or low disease activity, or LDA. LDA is measured with several assessment metrics that are intended
to measure the effect of the treatment on a number of physical phenomena that are connected to RA. These metrics include, but are not
limited to: (i) Disease Activity Score based on assessment of 28 joints, or DAS28, patient's assessment, (ii) erythrocyte sedimentation
rate (a common hematology test, and is a non-specific measure of inflammation) or C-reactive protein, or CRP, test, which is a blood test
that measures the CRP in a person's blood, (iii) SDAI and CDAI (Simple and Complex Disease Activity Indices) as compared to DAS28,
(iv) patient's and physician's assessment, including global assessment scores, or PtGA and PhGA, respectively (v) pain visual
analogue scale and (vi) health assessment questionnaire disability index, or HAQ-DI.
Clinical Development Plan for RA Product Candidate
We intend to utilize the knowledge
and results that we obtain from our pre-clinical study to establish, initially a Phase 1 clinical trial, which we expect will take approximately
3 months, followed by a Phase 2 clinical trial to study the effect of cannabis-based medical intervention on RA, which we expect will
take approximately 24 months, following which, we hope to receive FDA approval to allow for the commercialization of our RA product candidate.
Specifically, we intend to study the changes in RA patients' status after cannabis compounds were added to their stable conventional
treatment. We currently plan that our partners at Rambam MT will carry out these trials at the Rambam Health Care Campus in Haifa, Israel.
Our hypothesis is that in
patients with RA, the regular addition of cannabinoids in a defined dosage to basic treatment of RA might add to the patients' quality
of life. We intend to measure quality of life by scores for fatigue using the fatigue severity scale, pain using the visual analogue scale,
the Pittsburgh Sleep Quality Index, PtGA, PhGA, HAQ-DI and the 6-Item Short Form Health Survey. We also propose that cannabinoids may
influence the disease status. This may be measured by DAS28, SDAI, CDAI, CRP, ESR, albumin and Hb levels and also by levels of key cytokines
and chemokines. As part of these clinical studies, we currently plan to assess changes in RA patients' status after cannabis compounds
were added to their stable conventional treatment.
Pre-Clinical Studies for Treatment of Hyperinflammatory
Syndrome Related to COVID-19
We are studying the potential of
cannabis extracts to downregulate the hyperinflammation and the immunopathology in COVID-19 patients. Our partners at Rambam MT have been
conducting research on the use of cannabis to treat disorders with widespread inflammatory responses, such as RA and COVID-19. We hope
that by decoding the cannabinoid mechanism of action during inflammatory storms, we can treat inflammation associated with COVID-19 where
conventional drugs and other therapies have failed.
At the outbreak of the COVID-19
pandemic, members of the Rambam MT team directed their efforts and experience to join the world-wide battle against the COVID-19 pandemic.
Their research found that cannabinoids contribute to the sophisticated fabric network of intercellular communications. Based on this research,
we believe, that if we understand how cannabinoid components are used in intercellular communication, we can help influence this communication
in the event of a disease, to disrupt it or empower the communication to convey desired messages.
44
In order to properly understand
cannabis' effects on COVID-19, the Rambam MT team compiled its Biobank database. In generating the Biobank database, the Rambam
MT team found what they believed to be a safe way to separate the white blood cells, including the immune cells, from verified patients.
We believe that this is crucial as blood samples are the most accessible resource for continuous sampling (allowing for the understanding
of biological processes during the disease) and to develop vaccines and drugs for treatment of the condition.
In February 2021, we entered
into an agreement with Rambam MT for investigation of CBD oil extracts as a potential treatment for COVID-19 related inflammation. In
accordance therewith, the Rambam MT team is investigating the effect of cannabis extracts oil on the inflammation response of immune cells
derived from COVID-19 patients as well as a deep study on the capacity of cannabis extract oil to reduce acute inflammation and lung inflammation
in mouse models which resembles the immunopathology of COVID-19.
This study will begin in the
pre-clinical level in immune cell models and, subject to positive results that exhibit downregulation of pro-inflammatory cytokines by
cannabis extract, the study is expected to continue to a mouse model to analyze for acute inflammation, which resembles the immunopathology
of COVID-19. We believe that our strategy to investigate the response of ex-vivo immune cells to cannabis extract together with the analysis
of the
in-vivo
model for acute and lung inflammations, will allow us to identify the medical cannabis extracts, if any, that have
the potential to treat patients with COVID-19 related hyperinflammatory syndrome.
Competition and Competitive Position
The pharmaceutical industry
is characterized by rapidly advancing technologies and intense competition. While we believe that our knowledge, experience and scientific
resources provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical,
specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research
institutions. Any product candidates for which we complete clinical development successfully and for which we receive marketing approval
may compete with existing therapies and new therapies that may become available in the future.
Many of our competitors have
far greater marketing and research capabilities than us. We also face potential competition from academic institutions, government agencies
and private and public research institutions, among others, which may in the future develop products to treat those diseases that we currently
or, in the future, seek to treat. All of these companies and institutions may have product candidates in development that are or may become
superior to our RA product candidate or any other product candidate that we may seek to develop. Our commercial opportunity would be reduced
significantly if our competitors develop and commercialize products that are safer, more effective, more convenient, have fewer side effects
or are less expensive than our product candidates.
In addition, although our
product candidates may, if approved, be considered advantageous to existing therapies, such as the use of corticosteroids and DMARDs for
the treatment of RA, our target market may continue to use existing therapies.
However, we do believe, specifically
with respect to our competitors not using cannabis in their pharmaceutical drug products that our use of, and experience with, cannabinoids
provides us with a potential competitive advance. Our research has shown that the use of cannabinoids for the treatment of RA is justified
based on its positive effect on pain, fatigue, sleep problems and its potential safety profile. Growing evidence on the anti-inflammatory
effect of cannabinoids provide more strong ground for their use in the treatment of RA.
Although the use of any part
of the cannabis plant in pharmaceutical drug products was once non-existent or minimal, in addition to approved pharmaceutical drug products
that use parts of the cannabis plant (see "Overview" for additional information), we are aware that there is at least one
plan for a multicenter randomized control trial on the use of medical cannabidiol in Danish patients with RA and Ankylosing Spondylitis
(inflammatory joint and spine disease), as previously published in an issue of BMJ Open in 2019. As the medical benefits of cannabis become
more well-known, we believe that we may face more competition from both new startup pharmaceutical and biotechnology companies and from
well-funded and experienced organizations and it is therefore imperative that we face as few delays as possible in our pre and clinical
development plan or we may otherwise face more competition.
45
The following table highlights
the estimated cost that RA patients incur on an annual basis based on a 2017 report from the Canadian Agency for Drugs and Technologies
in Health.
Drug Product
Strength
Dose Form
Price ($)
Recommended Dose
Annual Drug Cost ($)
Sarilumab (Kevzara)
150 mg/1.14 mL 200 mg/1.14 mL
Pre-filled syringe
700.0000
200 mg SC every two weeks
18,200
Abatacept SC (Orencia)
125 mg/mL
Pre-filled syringe
366.1000
125 mg weekly
19,037
Abatacept IV (Orencia)
250 mg/15 mL
Vial
490.0500
Patients < 60 kg: 500 mg Patients 60 to 100 kg: 750 mg Patients > 100 kg: 1,000 mg 500 to 1,000 mg at weeks 0, 2, and 4 then every 4 weeks
Year 1: 20,582 Thereafter: 19,112
Adalimumab SC (Humira)
40 mg/0.8 mL
Pre-filled syringe or pen
769.9700
40 mg every other week
20,019
Anakinra (Kineret)
100 mg
Pre-filled syringe
48.0571
100 mg daily
17,493
Certolizumab pegol (Cimzia)
200 mg/mL
Pre-filled syringe
664.5100
400 mg at weeks 0, 2 and 4 then 200 mg every 2 weeks
Year 1: 19,271 Thereafter: 17,277
Etanercept (Enbrel)
25 mg
Vial
202.9300
50 mg weekly or two 25 mg doses on same day every week or every 3 or 4 days
21,105
50mg/mL
Pre-filled syringe or auto-injector
405.9850
21,111
Entanercept (Brenzys)
50 mg/mL
Pre-filled syringe
305.0000
d
50 mg weekly
15,860
Golimumab SC (Simponi)
50 mg/0.5 mL
Pre-filled syringe or auto-injector
1,555.17
50 mg monthly
18,662
Golimumab IV (Simponi)
50 mg/4 mL
Vial
849.5000
b
2 mg/kg at weeks 0 and 4, then every 8 weeks thereafter
Year 1:17,829 Thereafter: 16,565
Infliximab (Remicade)
100 mg
Vial
987.5600
3 mg/kg at weeks 0, 2, and 6, then every 8 weeks thereafter
Depending on clinical response, dose can be increased to 10 mg/kg and/or up to every four weeks
Year 1: 23,701 Thereafter: 19,257 10 mg/kg every 4 weeks: $102,706 annually
Infliximab (Inflectra)
100 mg
Vial
525.0000
Year 1: 12,600
b
Thereafter: 10,238
b
10 mg/kg every 4 weeks: $54,600 annually
15
Rituximab (Rituxan)
100 mg/10 mL 500 mg/50 mL
Vial
466.3200 2,331.61
A course consists of 1,000 mg infusions at weeks 0 and 2.   Reassess for retreatment at week 26, no sooner than 16 weeks after previous
18,653 assumes 2 courses Per course: 9,326
Tocilizumab SC (Actemra)
162 mg/0.9 mL
Pre-filled syringe
355.0000
Patients < 100 kg: 162 mg SC every two weeks, increasing to weekly based on clinical response. Patients ≥ 100 kg: 162 mg SC weekly
Every two weeks: 9,230 Weekly: 18,460
Tocilizumab IV (Actemra)
80 mg/4 mL 200 mg/10mL 400 mg/20 mL
Vial
180.8100 452.0300 904.0600
4 mg/kg every 4 weeks followed by an increase to 8 mg/kg based on clinical response
4 mg/kg: 10,577 8 mg/kg: 17,629
Tofacitinib (Xeljanz)
5 mg
Tablet
23.5585
5 mg p.o. twice daily
17,151
IV = intravenous; p.o. = orally;
SC = subcutaneous.
46
Although there can be no guarantee,
we believe that our RA product candidate, if approved for commercialization by regulators, will be available to patients at a lower price
than that of other available treatments.
With respect to our development
of a product candidate to treat inflammation associated with COVID-19, we will face competition from major pharmaceutical companies that
have developed or that will develop vaccines, along with other companies and organizations that have or will develop therapies or pharmaceutical
drug products aimed at treating the underlying symptoms of COVID-19.
Cultivation of our API
In October 2020, we entered
into an engagement agreement with Way of Life Cannabis Ltd., or Wolc, pursuant to which, subject to its completing the Share Exchange,
Raphael Israel is scheduled to be provided with up to 15 liters of CBD oil, from a strain of cannabis of our selection, during a term
of 18 months, to be provided in two to three deliveries of between one to seven liters of CBD oil. In accordance with the agreement with
Wolc, we have agreed to issue to certain persons affiliated with Wolc 3% of our issued and outstanding share capital as of the date of
the Share Exchange, to be provided in three equal issuances; provided, however, that such persons may elect to receive a cash payment
of $100,000 instead of any one issuance of our shares. In addition to the issuance of shares, we have also agreed to pay Wolc a royalty
fee equal to 15% of net income royalties generated from sales of our pharmaceutical drug products that are developed at Rambam hospital
in Israel.
At this time, we only require
a limited amount of our API for our studies and trials and, to date, we have received oil extracted from high CBD strains, from Wolc in
the amounts that we require in order to conduct our pre-clinical trials. Pursuant to our agreement with Wolc, pending FDA approval of
any of our product candidates, Wolc is expected to transfer seeds used for the FDA-approved product candidate to growers in California,
Colorado and Oklahoma. Wolc is a fully licensed Israeli cannabis company focused on growing, cultivating and manufacturing cannabis medical
oil, located in Aviel, Israel. As an owner and operator of green houses for growing organic cannabis plants and a GMP manufacturing facility
located in Netanya, Israel, we intend to utilize, pursuant to an agreement between the parties, Wolc for the growing and cultivation of
the CBD oil needed for our product candidates.
We believe that our current
agreement with Wolc will provide us with sufficient amounts of CBD oil in order to complete our clinical development and for initial sales
of our pharmaceutical drug products. In the future, as our demand for pharmaceutical products grows, if ever, we may need to find additional
partners that may provide us with sufficient amounts of CBD oil and/or amend or terminate our engagement with Wolc.
Manufacturing
We do not own or operate,
and currently have no plans to establish, any manufacturing facilities for final manufacture. We currently rely, and expect to continue
to rely, on third parties for the manufacture of our product candidates for preclinical and clinical testing, as well as for commercial
manufacturing of any pharmaceutical drug products for which we receive regulatory approval.
Commercialization Plan
Subject to the receipt of
regulatory approval to commercialize our pharmaceutical product candidates, our goal is to distribute our approved formulas to good manufacturing
practice, or GMP, approved medical cannabis manufacturers and global medical cannabis distributors. Depending on the expertise of the
distributors, we expect the licensing agreements to provide us with royalty-based payments for the sale of each of our approved pharmaceutical
drug products. In Israel, pursuant to our agreement with Wolc, the parties are expected to negotiate an exclusive distribution agreement
in Israel, pursuant to which Wolc will be the exclusive supplier of any approved pharmaceutical drug products of the Company in Israel.
Although we expect government
regulation of pharmaceutical products derived from cannabis to develop over the next few years, we may be limited in the manner in which
we commercialize our product candidates. We fully intend on being fully complaint with local and state-wide government regulations and
therefore we expect to enter into licensing agreements with vendors only if such vendor may legally distribute our product candidate within
the region for which they have obtained a license from us to sell our pharmaceutical product.
Intellectual Property
We do not currently have any
patents, and currently rely on our know-how and trade secrets. However, subject to the completion of our pre-clinical trial for our RA
product candidate, and prior to the completion of our clinical development plan, we intend on seeking patent protection in the United
States and/or internationally for such product candidate and, potentially for other product candidates that we may seek to develop. Our
policy is to pursue, maintain and defend patent rights developed internally and to protect the technology, inventions and improvements
that are commercially important to the development of our business.
47
Governmental Regulation
Government authorities in
the United States, at the federal, state and local levels, and in other countries and jurisdictions, including the EU, extensively regulate,
among other things, the research, development, testing, manufacture, sales, pricing, reimbursement, quality control, approval, packaging,
storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, post-approval monitoring and reporting, and import
and export of biopharmaceutical products. The processes for obtaining marketing approvals in the United States and in foreign countries
and jurisdictions, along with compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure
of substantial time and financial resources.
We are a research and development
company collaborating with our partners at Rambam MT to research and develop our COVID-19 and RA product candidates. We do not grow or
cultivate cannabis and we have no physical connection to the raw cannabis materials, which is shipped directly to Rambam MT. Pre-clinical
research, animal models and clinical trials are sponsored by us through our agreement with Rambam MT. Such research and trials are being
done by Rambam MT's medical team, researchers, doctors and professors.
We do not own or operate,
and currently have no plans to establish, any manufacturing facilities for final manufacturing of our products. We do not distribute,
and we have no plans to distribute, our products. Once we receive regulatory approval for our products, we intend to license to our future
candidate partners the rights to commercialize our medical formulas. Our future candidate partners will be responsible for the manufacturing,
distributing, promoting, and marketing of medical indications. We intend to engage with candidate partners that are GMP approved professionals,
well established and experienced medical manufacturers and distributors in the U.S. and other countries.
Our future candidate partners
will be entirely responsible and liable for regulatory compliance, including but not limited to cannabis growing and cultivation, GMP
manufacturing, distribution, advertising and promotional regulations, marketing, labeling, post-market approval reporting and record keeping.
We intend to hire and train
quality assurance professional that will inspect periodically the facilities of our future candidate partners as well as the methods of
production, marketing and distribution under applicable governmental regulatory guidelines.
U.S. Cannabis Market
The emergence of the legal
cannabis sector in the United States, both for medical and adult use, has been rapid as more states adopt regulations for its production
and sale. A majority of Americans now live in a state where cannabis is legal in some form and almost a quarter of the population lives
in states in which both medical and recreational use is permitted as a matter of, and in accordance with, applicable state and local laws. According
to Fortune Business Insights, the global legal marijuana market is anticipated to reach a value of US$97.35 billion by the end of 2026
from US$10.60 billion in 2018. The market is predicted to rise at a compounded annual growth rate of 32.6% during the period 2019 to 2026.
The use of cannabis and cannabis
derivatives to treat or alleviate the symptoms of a wide variety of chronic conditions, while not recognized by the FDA, has been accepted
by a majority of citizens with a growing acceptance by the medical community. A review of the research, published in 2015 in the Journal
of the American Medical Association, found solid evidence that cannabis can treat pain and muscle spasms. The pain component is particularly
important, because other studies have suggested that cannabis can replace pain patients' use of highly addictive, potentially deadly
opiates. Although hemp, defined as cannabis and derivatives of cannabis with not more than 0.3% THC, has been descheduled from the
Controlled Substances Act, the FDA has regulatory oversight over foods, drugs, cosmetics containing cannabis under the Food, Drug and
Cosmetics Act of 1938. All references to the use of CBD in our product candidates refer to CBD strains with less than 0.3% of THC. It
is possible that as the federal and state agencies legalize certain products, the FDA may issue rules and regulations, including good
manufacturing practices related to the growth, cultivation, harvesting and processing of such products, even if they are not marketed
as drugs. It is possible that the FDA would require that facilities where medical-use cannabis is grown to register with the FDA and comply
with certain federally prescribed regulations, certifications, testing, or other requirements. The potential impact on the cannabis industry
is uncertain and could include the imposition of new costs, requirements, and prohibitions.
Although we are not currently
engaged and do not expect to be engaged in the production or distribution of medical marijuana products, the FDA has jurisdiction over
our flower, oil, vape and edible products, among others. The FDA is currently taking action in the form of Warning Letters, but may also
take more extreme enforcement such as recalls, disgorgement or penalties.
48
Polls conducted throughout
the United States consistently show overwhelming support for the legalization of medical cannabis, together with strong majority support
for the full legalization of recreational adult-use cannabis. According to a Pew Research Center survey, as of November 11, 2019, "Around
nine-in-ten Americans favor legalization for recreational or medical purposes" and "Only 8% say it should not be legal." These
are large increases in public support over the past 40 years in favor of legal cannabis use.
As of the date of this prospectus,
cannabis is legal in some form in a total of 36 states, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands. On the
recreational side, there are currently 15 states, plus the District of Columbia and four U.S. territories, in which the recreational sale
of cannabis has been approved. These states include Oregon, Washington, Nevada, California, Colorado, Massachusetts, Michigan, Vermont,
Alaska, Illinois, Maine, New Jersey, Arizona, South Dakota and Montana. With respect to medical marijuana, as more research centers study
the effects of cannabis-based products in treating or addressing therapeutic needs, and assuming that research findings demonstrate that
such products are effective in doing so, management believes that the size of the U.S. medical cannabis market will also continue to grow
as more States expand their medical marijuana programs and new states legalize medical marijuana.
Notwithstanding that 36 states
and the District of Columbia have now legalized adult-use and/or medical cannabis, cannabis remains illegal under U.S. federal law with
cannabis listed as a Schedule I drug under the Controlled Substance Act, or CSA.
Government Regulation and Product Approval
We are a preclinical to early
clinical stage pharmaceutical company that intends to engage third parties to test, register and license the rights to commercialize our
products in the United States and other jurisdictions. Such third parties may be subject to extensive regulation by various regulatory
authorities. The primary regulatory agency in the United States is the FDA and in Europe it is the EMA. Along with these two, there are
other federal, state, and local regulatory agencies. In the United States, the Federal Food, Drug, and Cosmetic Act, or the FDCA, and
its implementing regulations set forth, among other things, requirements for the research, testing, development, manufacture, quality
control, safety, effectiveness, approval, labeling, storage, record keeping, reporting, distribution, import, export, advertising and
promotion of our products. Although the discussion below focuses on regulation in the United States, we anticipate seeking approval for,
and marketing of, our products in other countries.
Generally, our activities
outside the United States will be subject to regulation that is similar in nature and scope as that imposed in the United States, although
there can be important differences. Approval in the United States, Canada, or Europe does not assure approval by other regulatory agencies,
although often test results from one country may be used in applications for regulatory approval in another country. Additionally, some
significant aspects of regulation in Europe are addressed in a centralized way through the EMA but country specific regulation remains
essential in many respects. A major difference in Europe, when compared to Canada and the United States, is with the approval process.
In Europe, there are different procedures that can be used to gain marketing authorization in the European Union. The first procedure
is referred to as the centralized procedure and requires that a single application be submitted to the EMA and, if approved, allows marketing
in all countries of the European Union. The centralized procedure is mandatory for certain types of medicines and optional for others.
The second procedure is referred to as national authorization and has two options; the first is referred to as the mutual recognition
procedure and requires that approval is gained from one member state, after which a request is made to the other member states to mutually
recognize the approval, whilst the second is referred to as the decentralized procedure which requires a member state to act as the reference
member state through a simultaneous application made to other member states.
The process of obtaining regulatory
marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require
the expenditure of substantial time and financial resources and may not be successful. See "Risk Factors" for additional information.
U.S. Government Regulation
The FDA is the main regulatory
body that controls pharmaceuticals in the United States, and its regulatory authority is based in the FDCA. Pharmaceutical products are
also subject to other federal, state and local statutes. A failure to comply explicitly with any requirements during the product development,
approval, or post approval periods, may lead to administrative or judicial sanctions. These sanctions could include the imposition by
the FDA or an Institutional Review Board of a hold on clinical trials, refusal to approve pending marketing applications or supplements,
withdrawal of approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution,
injunctions, fines, civil penalties or criminal prosecution.
49
The steps required before
a new drug may be marketed in the United States generally include:
●
completion of preclinical studies, animal studies and formulation studies in compliance with the FDA's GLP regulations;
●
submission to the FDA of an IND application to support human clinical testing in the United States;
●
approval by an IRB at each clinical site before each trial may be initiated;
●
performance of adequate and well-controlled clinical trials in accordance with federal regulations and with GCP regulations to establish the safety and efficacy of the investigational product candidate for each target indication;
●
submission of a new drug application, or NDA, to the FDA;
●
satisfactory completion of an FDA Advisory Committee review, if applicable;
●
satisfactory completion of an FDA inspection of the manufacturing facilities at which the investigational product candidate is produced to assess compliance with cGMP, and to assure that the facilities, methods and controls are adequate; and
●
FDA review and approval of the NDA.
Clinical Trials and the FDA Approval Process
An IND is a request for authorization
from the FDA to administer an investigational product candidate to humans. This authorization is required before interstate shipping and
administration of any new drug product to humans in the United States that is not the subject of an approved NDA. A 30-day waiting period
after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has neither commented
on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin. Clinical trials involve the administration
of the investigational product candidate to healthy volunteers or patients with the disease under study, under the supervision of qualified
investigators following GCPs, an international standard intended to protect the rights and health of patients with the disease under study
and define the roles of clinical trial sponsors, administrators and monitors. Clinical trials are conducted under protocols that detail
the parameters to be used in monitoring safety, and the efficacy criteria to be evaluated. Each protocol involving testing on patients
in the United States and subsequent protocol amendments must be submitted to the FDA as part of the IND. Rambam MT has not yet submitted
an IND in the United States for any clinical programs.
The clinical investigation
of an investigational product candidate is generally divided into three phases. Although the phases are usually conducted sequentially,
they may overlap or some may be combined. The three phases of clinical investigation are as follows:
●
Phase I. Phase I includes the initial introduction of an investigation product candidate into humans. Phase I clinical trials may be conducted in patients with the target disease or condition, or in healthy volunteers. These studies are designed to evaluate the safety, metabolism, pharmacokinetics, or "PK", and pharmacologic actions of the investigational product candidate in humans, the side effects associated with increasing doses, and if possible, to gain early evidence on effectiveness. During Phase I clinical trials, sufficient information about the investigational product candidate's PK and pharmacological effects may be obtained to inform the design of Phase II clinical trials. The total number of participants included in Phase I clinical trials varies but is generally in the range of 20 to 80. We expect that it will take approximately 3 months for Rambam MT to complete Phase I.
50
●
Phase II. Phase II includes the controlled clinical trials conducted to evaluate the effectiveness of the investigational product candidate for a particular indication(s) in patients with the disease or condition under study, to determine dosage tolerance and optimal dosage, and to identify possible adverse side effects and safety risks associated with the product candidate. Phase II clinical trials are typically well controlled, closely monitored, conducted in a limited subject population and usually involving no more than several hundred participants. Rambam MT is planning to divide Phase II into two parts:
&cir;
Phase IIa. Phase IIa will include a randomized, double-blind, placebo-controlled, multiple ascending dose study in Israel to determine the maximum CBD extract administered sublingually to assess the safety, tolerability, pharmacokinetics, pharmacodynamics and efficacy for at least 4 weeks in RA patients in the presence of concurrent active therapies, such as non-steroidal anti-inflammatory drugs, or NSAIDs, and steroids. We expect that Phase IIa will take approximately 6 months.
&cir;
Phase IIb. Phase IIb will include IND submission for randomized, multi center double blinded, placebo-controlled dose response finding, or DRF, study for at least 12 weeks with either CBD extract or placebo administered sublingually in the presence of concurrent active therapies such as NSAIDs and steroids. This study will include 300-400 patients (80-100 patients per cohort) to study safety and efficacy of the product in active RA patients. We expect that Phase IIb will take approximately 18 months.
●
Phase III. Phase III clinical trials are controlled clinical trials conducted in an expanded subject population at geographically dispersed clinical trial sites. They are performed after preliminary evidence suggesting effectiveness of the investigational product candidate has been obtained, are intended to further evaluate dosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the product candidate, and to provide an adequate basis for drug approval. Phase III clinical trials usually involve several hundred to several thousand participants. In most cases, the FDA requires two adequate and well controlled Phase III clinical trials to demonstrate the efficacy of the drug.
The decision to terminate
development of an investigational product candidate may be made by either a health authority body, such as the FDA or IRB/ethics committees,
or by a company for various reasons. The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time, or
impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents
an unacceptable risk to the clinical trial patients. In some cases, clinical trials are overseen by an independent group of qualified
experts organized by the trial sponsor or the clinical monitoring board. This group provides authorization for whether or not a trial
may move forward at designated check points. These decisions are based on the limited access to data from the ongoing trial. The suspension
or termination of development can occur during any phase of clinical trials if it is determined that the participants or patients are
being exposed to an unacceptable health risk. In addition, there are requirements for the registration of ongoing clinical trials of Product
Candidates on public registries and the disclosure of certain information pertaining to the trials as well as clinical trial results after
completion.
New Drug Applications
In order to obtain approval
to market a drug in the United States, a marketing application must be submitted to the FDA that provides data establishing the safety
and effectiveness of the product candidate for the proposed indication. The application includes all relevant data available from pertinent
preclinical studies and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed
information relating to the product's chemistry, manufacturing, controls and proposed labeling, among other things. Data can come
from company sponsored clinical trials intended to test the safety and effectiveness of a product, or from a number of alternative sources,
including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity
to establish the safety and effectiveness of the investigational product candidate to the satisfaction of the FDA. In most cases, the
NDA must be accompanied by a substantial user fee; there may be some instances in which the user fee is waived. The FDA will initially
review the NDA for completeness before it accepts the NDA for filing. The FDA has 60 days from its receipt of an NDA to determine whether
the application will be accepted for filing based on the agency's threshold determination that it is sufficiently complete to permit
substantive review. After the NDA submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain
performance goals in the review of NDAs. Most such applications for standard review Product Candidates are reviewed within ten to twelve
months. The FDA can extend this review by three months to consider certain late submitted information or information intended to clarify
information already provided in the submission. The FDA reviews the NDA to determine, among other things, whether the proposed product
is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMP. The FDA may refer applications
for novel Product Candidates that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes
clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what
conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when
making decisions.
51
Before approving an NDA, the
FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the
manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product
within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure
compliance with GCP. After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete
response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional
testing or information in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the
FDA's satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. Notwithstanding the submission of any requested
additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.
An approval letter authorizes
commercial marketing of the drug with specific prescribing information for specific indications. Product approval may require substantial
post-approval testing and surveillance to monitor the drug's safety or efficacy. Once granted, product approvals may be withdrawn
if compliance with regulatory standards is not maintained or problems are identified following initial marketing.
Disclosure of Clinical Trial Information
Sponsors of clinical trials
of certain FDA regulated products, including prescription drugs, are required to register and disclose certain clinical trial information
(though not specifically required for Phase I trials) on a public website maintained by the U.S. National Institutes of Health, or "NIH".
Information related to the product, patient population, phase of investigation, study sites and investigator, and other aspects of the
clinical trial is made public as part of the registration. Sponsors are also obligated to disclose the results of these trials after completion.
Disclosure of the results of these trials can be delayed until the product or new indication being studied has been approved. Competitors
may use this publicly available information to gain knowledge regarding the design and progress of our development programs.
Advertising and Promotion
The FDA and other federal
regulatory agencies closely regulate the marketing and promotion of drugs through, among other things, standards and regulations for direct-to-consumer
advertising, communications regarding unapproved uses, industry-sponsored scientific and educational activities, and promotional activities
involving the Internet. A product cannot be commercially promoted before it is approved. After approval, product promotion can include
only those claims relating to safety and effectiveness that are consistent with the labeling (package insert) approved by the FDA. Healthcare
providers are permitted to prescribe drugs for "off-label" uses — that is, uses not approved by the FDA and, therefore,
not described in the drug's labeling — because the FDA does not regulate the practice of medicine. However, FDA regulations
impose stringent restrictions on manufacturers' communications regarding off-label uses.
Post-Approval Regulations
After regulatory approval
of a drug is obtained, a company is required to comply with a number of post-approval requirements. For example, as a condition of approval
of an NDA, the FDA may require post-marketing testing, including Phase IV clinical trials, and surveillance to further assess and monitor
the product's safety and effectiveness after commercialization. In addition, as a holder of an approved NDA, a company would be
required to report adverse reactions and production problems to the FDA, to provide updated safety and efficacy information, and to comply
with requirements concerning advertising and promotional labeling for any of its products. Also, quality control and manufacturing procedures
must continue to conform to cGMP after approval to assure and preserve the long-term stability of the drug or biological product. The
FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural and substantive
record keeping requirements. In addition, changes to the manufacturing process are strictly regulated, and, depending on the significance
of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any
deviations from cGMP and impose reporting and documentation requirements upon a company and any third-party manufacturers that a company
may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control
to maintain compliance with cGMP and other aspects of regulatory compliance.
52
Controlled Substances
The CSA and its implementing
regulations establish a "closed system" of regulations for controlled substances. The CSA imposes registration, security,
recordkeeping and reporting, storage, manufacturing, distribution, importation and other requirements under the oversight of the DEA,
which is the federal agency responsible for regulating controlled substances, and requires those individuals or entities that manufacture,
import, export, distribute, research, or dispense controlled substances to comply with the regulatory requirements in order to prevent
the diversion of controlled substances to illicit channels of commerce.
Facilities that research,
manufacture, distribute, import or export any controlled substance must register annually with the DEA. The DEA registration is specific
to the particular location, activity(ies) and controlled substance schedule(s). For example, separate registrations are required for importation
and manufacturing activities, and each registration authorizes which schedules of controlled substances the registrant may handle. However,
certain coincident activities are permitted without obtaining a separate DEA registration, such as distribution of controlled substances
by the manufacturer that produces them.
The DEA categorizes controlled
substances into one of five schedules — Schedule I, II, III, IV, or V— with varying qualifications for listing in each schedule.
Schedule I substances by definition have a high potential for abuse, have no currently "accepted medical use" in treatment
in the United States and lack accepted safety for use under medical supervision. They may be used only in federally approved research
programs and may not be marketed or sold for dispensing to patients in the United States. Pharmaceutical products having a currently accepted
medical use that are otherwise approved for marketing may be listed as Schedule II, III, IV or V substances, with Schedule II substances
presenting the highest potential for abuse and physical or psychological dependence, and Schedule V substances presenting the lowest relative
potential for abuse and dependence. The regulatory requirements are more restrictive for Schedule II substances than Schedule III substances.
For example, all Schedule II drug prescriptions must be signed by a physician, physically presented to a pharmacist in most situations,
and cannot be refilled. Once FDA has approved a medical use for Schedule I drugs, the DEA must reschedule the drug. For example, after
FDA approval for Epidiolex®, a purified CBD oil, for the treatment of two rare forms of epilepsy, DEA placed it in Schedule V. Further,
on April 6, 2020, GW Pharma announced that Epidiolex® was descheduled by the DEA and is no longer considered a controlled substance.
The DEA inspects all manufacturing
facilities to review security, record keeping, reporting and handling prior to issuing a controlled substance registration. The specific
security requirements vary by the type of business activity and the schedule and quantity of controlled substances handled. The most stringent
requirements apply to manufacturers of Schedule I and Schedule II substances. Required security measures commonly include background checks
on employees and physical control of controlled substances through storage in approved vaults, safes and cages, and through use of alarm
systems and surveillance cameras. Manufacturing facilities must maintain records documenting the manufacture, receipt and distribution
of all controlled substances. Manufacturers must submit periodic reports to the DEA of the distribution of Schedule I and II controlled
substances, Schedule III narcotic substances, and other designated substances. In addition to an importer or exporter registration, importers
and exporters must obtain a permit for every import or export of a Schedule I and II substance or Schedule III, IV and V narcotic, and
submit import or export declarations for Schedule III, IV and V non-narcotics.
For drugs manufactured in
the United States, the DEA establishes annually an aggregate quota for the amount of substances within Schedules I and II that may be
manufactured or produced in the United States based on the DEA's estimate of the quantity needed to meet legitimate medical, scientific,
research and industrial needs. The quotas apply equally to the manufacturing of the API and production of dosage forms.
The states also maintain separate
controlled substance laws and regulations, including licensing, recordkeeping, security, distribution, and dispensing requirements. State
Authorities, including Boards of Pharmacy, regulate use of controlled substances in each state. Failure to maintain compliance with applicable
requirements, particularly as manifested in the loss or diversion of controlled substances, can result in enforcement action that could
have a material adverse effect on our business, operations and financial condition. The DEA may seek civil penalties, refuse to renew
necessary registrations, or initiate proceedings to revoke those registrations. In certain circumstances, violations could lead to criminal
prosecution.
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Cannabinoids as a Controlled Substance
Cannabinoids are subject to
the United Nations Single Convention on Narcotic Drugs (1961) adopted by numerous countries globally, which prohibits the production and
supply of specific drugs, except for scientific and research purposes. Under the current UN definition, Cannabis extracts and tinctures
are controlled substances. Individual countries (and sometimes jurisdictions within countries) are rapidly changing how they interpret
and apply the international rules. Currently there is a broad spectrum of legal statuses based on strength, source and intended use. We
are closely monitoring these changes. We expect that there may be different requirements in each region where we have clinical sites.
Several Cannabis-related drugs
were placed in lower schedules once they were approved as drugs. For example, the US DEA reduced Epidiolex® (CBD) to Schedule V after
it was approved for treatment of two rare forms of childhood epilepsy. In April 2020, the DEA descheduled Epidiolex® entirely.
The passage of the Farm Bill
in December 2018 legalized the cultivation of hemp in the United States and the production of hemp-derived non-THC cannabinoids, removing
these products from the CSA. Our products use oil extracted from CBD strains, containing <0.3% THC.
We plan to engage third parties
to conduct clinical trials for our product candidates outside the United States, subject to regulatory approval. As a result, such third
parties will also be subject to controlled substance laws and regulations from the various other regulatory agencies in other countries
where we develop, manufacture or commercialize our product candidates in the future.
Marketing Exclusivity
Upon NDA approval of a new
chemical entity, which for this purpose is defined as a drug that contains no active moiety that has been approved by the FDA in any other
NDA, that drug receives five years of marketing exclusivity during which the FDA cannot approve any abbreviated new drug application,
or ANDA, seeking approval of a generic version of that drug. Certain changes to the scope of an approval for a drug, such as the addition
of a new indication to the package insert, are associated with a three-year period of exclusivity during which the FDA cannot approve
an ANDA for a generic drug that includes the change. A Section 505(b)(2) NDA may be eligible for three-year marketing exclusivity,
assuming the NDA includes reports of new clinical studies (other than bioequivalence studies) essential to the approval of the NDA.
An ANDA may be submitted one
year before marketing exclusivity expires if a Paragraph IV certification is filed. In this case, the 30 months stay, if applicable, runs
from the end of the five-year marketing exclusivity period. If there is no listed patent in the FDA's Approved Drug Products with
Therapeutic Equivalence Evaluations, commonly known as the Orange Book, there may not be a Paragraph IV certification, and, thus, no ANDA
may be filed before the expiration of the exclusivity period.
Additionally, six months of
marketing exclusivity in the United States is available under Section 505A of the FDCA if, in response to a written request from
the FDA, a sponsor submits and the agency accepts requested information relating to the use of the approved drug in the pediatric population.
This six-month pediatric exclusivity period is added to any existing patent or non-patent exclusivity period for which the drug product
is eligible.
Patent Term Extension
The term of a patent that
covers an FDA approved drug may be eligible for patent-term extension, which provides patent-term restoration as compensation for the
patent term lost during the FDA regulatory review process. The United States Federal Drug Price Competition and Patent Term Restoration
Act of 1984 permits a patent-term extension of up to five years beyond the expiration of the patent. The length of the patent-term extension
is related to the length of time the drug is under regulatory review. Patent extension cannot extend the remaining term of a patent beyond
a total of 14 years from the date of product approval and only one patent applicable to an approved drug may be extended. Similar provisions
are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug.
54
European and Other International Government
Regulation
In addition to regulations
in the United States and Canada, our third-party licensees will be subject to a variety of regulations in other jurisdictions governing,
among other things, clinical trials and any commercial sales and distribution of our products. Whether or not we obtain FDA approval for
a product, such third-party licensees must obtain the requisite approvals from regulatory authorities in foreign countries prior to the
commencement of clinical trials or marketing of the product in those countries. Some countries outside of the United States have a similar
process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials.
In Europe, for example, a clinical trial application must be submitted to each country's national health authority and an independent
ethics committee, much like the FDA and IRB, respectively. Once the clinical trial application is approved in accordance with a country's
requirements, clinical trial development may proceed.
The UK was previously in a
transition period until December 31, 2020, during which time it continued to abide by the EU regulatory processes; however, they may adopt
different or additional procedures.
To obtain regulatory approval
to commercialize a new drug under EU regulatory systems, it is required to submit a MAA. The MAA is similar to the NDA, with the exception
of, among other things, country-specific document requirements.
For other countries outside
of the EU, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product
licensing, pricing and reimbursement vary from country to country. Internationally, clinical trials are generally required to be conducted
in accordance with GCP, applicable regulatory requirements of each jurisdiction and the medical ethics principles that have their origin
in the Declaration of Helsinki.
Compliance
During all phases of development
(pre- and post-marketing), failure to comply with applicable regulatory requirements may result in administrative or judicial sanctions.
These sanctions could include the FDA's imposition of a clinical hold on trials, refusal to approve pending applications, withdrawal
of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, product
detention or refusal to permit the import or export of products, injunctions, fines, civil penalties or criminal prosecution. Any agency
or judicial enforcement action could have a material adverse effect.
Other Special Regulatory Procedures
Priority Review (United
States) and Accelerated Assessment (European Union)
Based on results of the Phase
III clinical trial(s) submitted in an NDA, upon the request of an applicant, a priority review designation may be granted to a product
by the FDA, which sets the target date for FDA action on the application at six months from the FDA's decision on priority review
application, or eight months from the NDA filing. Priority review is given where preliminary estimates indicate that a product, if approved,
has the potential to provide a safe and effective therapy where no satisfactory alternative therapy exists, or a significant improvement
compared to marketed products is possible. If criteria are not met for priority review, the standard FDA review period is ten months from
the FDA's decision on priority review application, or 12 months from the NDA filing. The priority review designation does not change
the scientific/medical standard for approval or the quality of evidence necessary to support approval.
Under the Centralized Procedure
in the European Union, the maximum timeframe for the evaluation of a MAA is 210 days (excluding "clock stops," when additional
written or oral information is to be provided by the applicant in response to questions asked by the Committee for Medicinal Products
for Human Use, or "CHMP"). Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product
is expected to be of a major public health interest, which takes into consideration: the seriousness of the disease (e.g., disabling or
life-threatening diseases); the absence or insufficiency of an appropriate alternative therapeutic approach; and anticipation of high
therapeutic benefit. In this circumstance, EMA ensures that the opinion of the CHMP is given within 150 days.
55
Accelerated Approval
Under the FDA's accelerated
approval regulations, the FDA may approve a drug for a serious or life-threatening illness that provides meaningful therapeutic benefit
to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit. This approval
mechanism is provided for under 21CRF314 Subpart H and 21CRF601 Subpart E. In this case, clinical trials are conducted in which a surrogate
endpoint is used as the primary outcome for approval. A surrogate endpoint is reasonably likely to predict clinical benefit, or an effect
on a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality, that is reasonably likely to
predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence
of the condition and the availability or lack of alternative treatments. This surrogate endpoint substitutes for a direct measurement
of how a patient feels, functions, or survives and is considered reasonably likely to predict clinical benefit. Such surrogate endpoints
may be measured more easily or more rapidly than clinical endpoints. A drug candidate approved on this basis is subject to rigorous post-marketing
compliance requirements, including the completion of Phase IV or post-approval clinical trials to confirm the effect on the clinical endpoint.
When the Phase IV commitment is successfully completed, the biomarker is deemed to be a surrogate endpoint. Failure to conduct required
post-approval studies or confirm a clinical benefit during post-marketing studies, could lead the FDA to withdraw the drug from the market
on an expedited basis. All promotional materials for drug candidates approved under accelerated regulations are subject to prior review
by the FDA.
Other Healthcare Laws and Compliance Requirements
In the United States, our
activities are potentially subject to additional regulation by various federal, state and local authorities in addition to the FDA, including,
among others, the Centers for Medicare and Medicaid Services, other divisions of HHS, the DOJ, and individual United States Attorney offices
within the DOJ and state and local governments.
Compliance with Environmental Laws
Other than our ongoing research
and development, our only operations consist of our pre-clinical trial being in conducted in Israel for RA, which may further our COVID-19
product candidate. At this time, compliance with environmental laws in Israel, where we conduct our operations, has not been a burden
and has not required from us the use of material resources or capital expenditures.
Employees
As of June 28, 2022, we do
not have any employees. Our officers are engaged through consulting agreements.
Corporate Information
Easy Energy was incorporated
under the laws of the State of Nevada in May 2017. On May 14, 2021, Raphael Israel and Easy Energy completed the Share Exchange, pursuant
to which we changed our name to Raphael Pharmaceutical Inc. Our registered address is 4 Lui Paster, Tel Aviv-Jaffa, Israel 6803605. Our
website address is https://www.raphaelpharmaceutical.com/. Information contained on, or that can be accessed through, our website is not
incorporated by reference into this prospectus, and you should not consider information on our website to be part of this prospectus. We
have included our website address in this prospectus solely as an inactive textual reference.
The SEC also maintains an
Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically
with the SEC. Our filings with the SEC are also available to the public through the SEC's website at http://www.sec.gov.
56
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth
information regarding beneficial ownership of our Common Stock as of June 28, 2022 by:
●
each person, or group of affiliated persons, known to us to be the beneficial owner of at least 5% of our outstanding Common Stock;
●
each of our directors and executive officers; and
●
all of our directors and executive officers as a group.
Beneficial ownership is determined
in accordance with the rules of the SEC and includes voting or investment power with respect to Common Stock. Percentage of shares beneficially
owned is based on 13,945,540 shares of Common Stock outstanding on June 28, 2022.
Except as indicated in footnotes
to this table, we believe that the shareholders named in this table have sole voting and investment power with respect to all shares shown
to be beneficially owned by them, based on information provided to us by such shareholders. Unless otherwise noted below, each beneficial
owner's address is: 4 Lui Paster, Tel Aviv-Jaffa, Israel 6803605.
No. of
Shares
Beneficially
Owned
Percentage
Owned
Holders  of more than 5% of our voting securities:
Haim Castro
1,255,325
9
%
Directors and executive officers:
Shlomo Pilo
3,783,701
27
%
Guy Ofir
575,263
4
%
Professor Joseph Press, M.D.
0
0
%
Dr. Igal Louria Hayon
0
0
%
Dr. Yehuda Eliya
0
0
%
All directors and executive officers as a group (5 persons)
4,358,964
30
%
57
MANAGEMENT
The following sets forth information
regarding our executive officers and the members of our Board of Directors as of June 28, 2022.
All directors hold office
for one-year terms until the election and qualification of their successors. Officers are appointed by our Board of Directors and serve
at the discretion of our Board of Directors.
Name
Age
Position(s)
Professor Joseph Press, M.D.
68
Director and Chairman of the Board
Shlomo Pilo
68
Chief Executive Officer and Director
Guy Ofir
49
Chief Financial Officer and Director
Dr. Igal Louria Hayon
49
Chief Technology Officer and Director
Dr. Yehuda Eliya
48
Director
Professor Joseph Press
M.D.
, has been a director and our Chairman of the Board since the Share Exchange. Since 2008, Professor Press has been the Chief Executive
Officer of Schneider Children's Medical Center of Israel. Before that, from 2002 to 2007, Professor Press was Chairman of Soroka
University Medical Center in Israel.
Shlomo Pilo
, has been
our Chief Executive Officer and a member of our board of directors since the Share Exchange and previously served in such capacity with
Raphael Israel from July 2019. In addition, following the founding of Sheffa Enterprises Inc. in 2009, Mr. Pilo is also engaged in providing
food brokering services, representing seven food manufacturers in Europe and North America. Before founding Sheffa Enterprises Inc., Mr.
Pilo served as VP Sales & Marketing of Alle Processing Corporation, the world's largest Glatt Kosher food manufacturer.
Guy Ofir
, has been
our Chief Financial Officer and a member of our board of directors since September 27, 2021. Mr. Ofir is a qualified lawyer in Israel
and the owner of "Guy Ofir Adv" law firm since 2000, with a main practice in civil and business law. In 2007 he established
and registered a company named Easy Energy Inc. that developed a green energy patent. Mr. Ofir owns an investment company, which has invested
in land and construction in Romania since 2005.
Dr. Igal Louria-Hayon
,
has been our Chief Technology Officer and member of our board of directors since September 27, 2021. Dr. Louria-Hayon serves as a scientific
director of the Medical Cannabis Research and Innovation Center at Rambam Health Care Campus and Head of the Leukemia & Immunotherapy
Research Laboratory in the Clinical Research Institute at Rambam. In addition, Dr. Louria-Hayon served as Senior Research Fellow in the
Technion's Cannabinoid Research Laboratory.
Dr. Yehuda Eliya
, has
been a member of our board of directors since September 27, 2021. Dr. Eliya is a partner at one of the largest accounting firms in Israel
and the owner of a law firm. Dr. Eliya is the Vice President of the Chamber of Internal Auditors in Israel. In addition, Dr. Eliya is
a member of the presidency of ZAKA, a series of volunteer community emergency response teams in Israel, a parliamentary adviser to the
Republic of Abkhazia and serves as a director in several non-profit organizations in Israel.
Scientific Advisory Board
Professor Alexandra Balbir-Gurman
,
Frontline Director of Clinical Trials (Rambam) and Director of the B. Shine Rheumatology Unit at Rambam Health Care Campus, a member
of the Executive Committee of the Israeli Society of Rheumatology, an active member of the Scleroderma Research Group (EUSTAR) and a member
of the EULAR Target US initiative.
Dr. Shachar Eduardo,
Frontline Director of Clinical Trials (Rambam), is the Director of the Clinical Immunology Unit at Rambam Health Care Campus.
Prof. Shai Israeli
,
Head of the Division of Pediatric Hematology-Oncology Center, Schneider Children's' Medical Center of Israel (affiliated to
Tel Aviv University), is a member of the executive Board of the European Hematology Association (EHA).
Family Relationships
There are no family relationships
among the directors and officers of the Company.
58
EXECUTIVE COMPENSATION
We currently have no written
employment agreements with any of our officers and directors. We have entered into a written consulting agreements with our executive
officers, including our Chief Executive Officer who is also a member of our board of directors.
Summary Compensation Table
The table below summarizes
all compensation awarded to, earned by, or paid to our named executive officers for the fiscal years ended December 31, 2021 and 2020.
Summary Compensation Table
Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
All Other
Compensation
($)
Total
($)
Shlomo Pilo
2021
120,000
-
-
-
-
120,000
2020
110,000
-
-
-
-
110,000
Guy Ofir
2021
75,000
-
-
-
-
75,000
2020
-
-
-
-
-
-
Dr. Igal Louria-Hayoun
2021
115,500
115,500
2020
72,500
72,500
Our Chief Executive Officer
provides services to the Company pursuant to a consulting agreement, entered into on June 1, 2020, by and between the Company and Sheffa
Enterprises, Inc., a New Jersey corporation, or Sheffa. Pursuant to the terms thereof, we pay Sheffa $10,000 per month, payable in quarterly
installments, for management services. The agreement is in effect until December 31, 2022; provided, however that the Company may terminate
the agreement prior to the termination date by providing 120 days' advance written notice and paying Sheffa a termination fee equal
to the lesser of (i) $1 million, or (ii) the monthly management fee paid or payable to Sheffa for the remaining term of the agreement.
Furthermore, as disclosed in the agreement, the Company agreed to indemnify Sheffa against and in respect of any losses arising out of
or due to the operation of the business by the Company, its affiliates, agents, servants and/or employees.
Our Chief Financial Officer
provides services to our Company pursuant to an arrangement, which has not been reduced to a written agreement between the Company and
Guy Ofir & Co. S.R.L, a Romanian corporation owned by our Chief Financial Officer. Pursuant to this arrangement, we paid our Chief
Financial Officer $75,000 for his services for the fiscal year ended December 31, 2021.
Our Chief Technology Officer
provides services to our Company pursuant to a consulting agreement, as amended, by and between Dr. Igal Louria Hayoun and Raphael Israel.
Pursuant to the terms thereof, Dr. Hayoun provides consulting services the the Company to engage with an array of science consultants
and to coordinate collaborations with hospitals on medical cannabis research. Raphael Israel pay Dr. Hayoun $9,000 per month, and agreed
to pay him 15% of the Company's net income from worldwide sales of any of Raphael Israel's cannabis-based medical indications
treating COVID-19.
As of June 28, 2022, there
were no outstanding equity awards to any of our executive officers or the members of our board of directors. The Company has no stock
option, retirement, pension, or profit sharing programs for the benefit of directors, officers or other employees, but our board of directors
may recommend adoption of one or more such programs in the future.
See "Certain Relationships
and Related Party Transactions, and Director Independence" below for additional information.
59
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
Share Exchange
In connection with the Share
Exchange, certain of our shareholders and directors received shares of our Company as a result of shares that they held in Raphael Israel.
Consulting Agreements
We have entered into a written
consulting agreements with our executive officers, including our Chief Executive Officer who is also on our board of directors.
Our Chief Executive Officer
provides services to our Company pursuant to a consulting agreement between Raphael Israel and Sheffa Enterprises, Inc., a New Jersey
corporation. Pursuant to the terms thereof, we pay our Chief Executive Officer $10,000 per month, payable in quarterly installments. The
agreement is in effect until December 31, 2022; provided, however that Raphael Israel may terminate the agreement prior to the termination
date by providing 120 days' advance written notice and paying our Chief Executive Officer a termination fee equal to the lesser
of $1 million of the monthly management fee paid or payable to the Chief Executive Officer for the remaining term of the agreement. Furthermore,
as disclosed in the agreement, Raphael Israel has undertaken to indemnify Sheffa Enterprises, Inc. against and in respect of any and losses
arising out of or due to the operation of the business by Raphael Israel, its affiliates, agents, servants and/or employees.
Our Chief Technology Officer
provides services to our Company pursuant to a consulting agreement, as amended, by and between Dr. Igal Louria Hayoun and Raphael Israel.
Pursuant to the terms thereof Dr. Hayoun provides consulting services the the Company to engage with an array of science consultants and
to coordinate collaborations with hospitals on medical cannabis research. Raphael Israel pay Dr. Hayoun $9,000 per month and agreed to
pay him 15% of the Company's net royalties income from worldwide sales of any of Raphael Israel's cannabis-based medical indications
treating COVID-19.
Raphael Israel has entered
into a consulting agreement with Professor Joseph Press, who is also a member of our board of directors, pursuant to which Prof. Press
provides Raphael Israel with medical research services for $3,000 per month.
Indemnification Agreements
We have entered into indemnification
agreements with our directors pursuant to which we agreed to indemnify each director for any liability he or she may incur by reason of
the fact that he or she serves as our director, to the maximum extent permitted by law.
Policies and Procedures for Related-Party
Transactions
Our Company does not have
any formal written policies or procedures for related party transactions, however in practice, our board of directors' reviews and
approves all related party transactions and other matters pertaining to the integrity of management, including potential conflicts of
interest and adherence to standards of business conduct. We have two independent directors on our board of directors. See "—Director
Independence" for further information.
Director Independence
None of our securities are
listed or trade on any securities or currency exchange or other established public trading market. However, the members of our board of
directors have reviewed their relationship with the Company in conjunction with Nasdaq Listing Rule 5605(a)(2) that provides that an "independent
director" is 'a person other than an executive officer or employee of the Company or any other individual having a relationship
which, in the opinion of the Company's board of directors, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director.' Based upon information requested from and provided by each director concerning their background,
employment and affiliations, including family relationships, our board of directors has affirmatively determined that each of Prof. Press
and Dr. Eliya has no relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director and is independent within the meaning of the director independence standards of the Nasdaq rules and the SEC. Our members
of the board of directors have determined that Dr. Louria-Hayon, Mr. Ofir and Mr. Pilo do not qualify as independent directors pursuant
to the standards described above.
Our Company does not have
a separately designated audit, nominating or compensation committee or committee performing similar functions; therefore, our full board
of directors currently serves in these capacities.
60
SELLING SECURITYHOLDERS
Up to 1,667,393 shares of
Common Stock may be offered for resale, from time to time, by the Selling Securityholders under this prospectus.
The following tables set forth,
with respect to each Selling Securityholder, the number of shares of Common Stock (i) known to us to be beneficially owned as of June
28, 2022, (ii) being offered hereby and (iii) beneficially owned after giving effect to the sale by such Selling Securityholder of all
of its Offered Securities. The immediately following table also sets forth the percentage of Common Stock beneficially owned by a Selling
Securityholder after giving effect to the sale by such Selling Securityholder of all Offered Securities, based on 13,945,540 shares of
Common Stock outstanding as of June 28, 2022.
The Selling Securityholders
are not making any representation that any shares of Common Stock covered by this prospectus will be offered for sale. Because each Selling
Securityholder may dispose of all, none or some portion of their securities, no estimate can be given as to the number of securities that
will be beneficially owned by a Selling Securityholder upon termination of this offering. In addition, the Selling Securityholders may
have sold, transferred or otherwise disposed of their securities in transactions exempt from the registration requirements of the Securities
Act after the date on which the information in the table is presented.
We may amend or supplement
this prospectus from time to time in the future to update or change this Selling Securityholders list and the securities that may be resold.
Number of
Shares of
Common
Stock
Beneficially
Number of
Shares of
Common
Stock
Offered
Shares of Common
Stock Beneficially
Owned After
Completion of the
Offering
(1)
Name
Owned
(1)
Hereby
Number
Percentage
Haim Kastro
1,255,325
54,000
1,201,325
8.6
%
Rachel Mellul
460,000
370,000
90,000
*
Arie Kalmanzon
414,370
36,000
378,370
2.7
%
Avner Josef
279,185
90,000
189,185
1.3
%
Doron Fishbin
270,000
270,000
0
*
Amir Nahmani
190,000
190,000
0
*
Erel Pilo
141,889
141,889
0
*
Leeor Pilo
141,889
141,889
0
*
Mary Rabinovitch
139,593
45,000
94,593
*
Amnon Yosef
139,593
45,000
94,593
*
Cheni Zabzarsky
136,750
103,000
33,750
*
Adi Kaplan
46,148
22,500
23,648
*
Joseph Gueta
45,000
45,000
0
*
Hay Amira
35,000
35,000
0
*
Guy Mizrahi
30,000
30,000
0
*
Vladimir Elkin
30,000
30,000
0
*
Josef Guy Mosseri
18,115
18,115
0
*
*
Less than 1%.
(1)
The amounts and percentages of Common Stock beneficially owned are determined in accordance with the SEC's rules, pursuant to which a person is deemed to be a "beneficial owner" of a security if that person has or shares voting or investment power or has the right to acquire such power within 60 days through exercise of any option, warrant or other right. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person's ownership percentage, but not for purposes of computing any other person's percentage. Under these rules, more than one person may be deemed beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Except as otherwise indicated in these footnotes, each of the beneficial owners has, to our knowledge, sole voting and investment power with respect to the indicated shares of Common Stock.
61
PLAN OF DISTRIBUTION
We are registering the resale
of Common Stock offered by this prospectus on behalf of the Selling Securityholders. The Selling Securityholders, which as used herein
includes donees, pledgees, transferees or other successors-in-interest selling Common Stock received after the date of this prospectus
from a Selling Securityholder as a gift, pledge, limited liability company or partnership distribution or other transfer, may, from time
to time, sell, transfer or otherwise dispose of any or all of their securities on any stock exchange, market or trading facility on which
such securities are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time
of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale or at negotiated prices.
The Selling Securityholders
may use any one or more of the following methods when disposing of their securities or interests therein:
●
in market transactions, including
transactions on a national securities exchange or quotations service or OTC market;
●
in privately negotiated transactions;
●
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
●
in a block trade in which a broker-dealer will attempt to sell a block of securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;
●
through the settlement of short sales (including short sales "against the box"), in each case subject to compliance with the Securities Act and other applicable securities laws;
●
through one or more underwriters in a public offering on a firm commitment or best-efforts basis;
●
an exchange distribution in accordance with the rules of the applicable exchange, if any;
●
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
●
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
●
broker-dealers may agree with the Selling Securityholders to sell a specified number of such securities at a stipulated price per security;
●
directly to one or more purchasers;
●
in other ways not involving market makers or established trading markets;
●
by pledge to secure debts and other obligations;
●
through agents; or
●
in any combination of the above or by any other legally available means.
The Selling Securityholders
may, from time to time, pledge or grant a security interest in some or all of the securities owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may offer and sell their securities, from time to time, under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending
the list of Selling Securityholders to include the pledgee, transferee or other successors in interest as Selling Securityholders under
this prospectus. The Selling Securityholders also may transfer their securities in other circumstances, in which case the transferees,
pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
62
In connection with the sale
of our securities or interests therein, the Selling Securityholders may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of our securities in the course of hedging the positions they assume. The Selling
Securityholders may also sell their securities short and deliver these securities to close out their short positions, or loan or pledge
such securities to broker-dealers that in turn may sell these securities. The Selling Securityholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the
delivery to such broker-dealers or other financial institutions of securities offered by this prospectus, which securities such broker-dealers
or other financial institutions may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to
the Selling Securityholders from the sale of the securities offered by them will be the purchase price of the security less discounts
or commissions, if any. Each of the Selling Securityholders reserves the right to accept and, together with their agents from time to
time, to reject, in whole or in part, any proposed purchase of their securities to be made directly or through agents. We will not receive
any of the proceeds from the resale of securities being offered by the Selling Securityholders named herein. However, we will receive
proceeds from the exercise of the Warrants if they are exercised by a holder thereof.
The Selling Securityholders
also may resell all or a portion of their securities in open market transactions in reliance upon Rule 144 under the Securities Act, provided
that they meet the criteria and conform to the requirements of that rule.
The Selling Securityholders
and any broker-dealers that act in connection with the sale of securities might be deemed to be "underwriters" within the
meaning of Section 2(a)(11) of the Securities Act, and any commissions received by such broker-dealers and any profit on the resale of
the securities sold by them while acting as principals might be deemed to be underwriting discounts or commissions under the Securities
Act.
To the extent required, the
securities to be sold, the names of the Selling Securityholders, the respective purchase prices and public offering prices, the names
of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth
in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this
prospectus.
63
DESCRIPTION OF SECURITIES
The following summary of
the terms of our Common Stock does not purport to be complete and is subject to and qualified in its entirety by reference to our articles
of incorporation and bylaws.
Common Stock
The holders of outstanding
shares of Common Stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends of such
times and in such amounts as the board from time to time may determine. Holders of Common Stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders. There is no cumulative voting of the election of directors then standing for
election. The Common Stock are not entitled to pre-emptive rights and are not subject to conversion or redemption. Upon liquidation, dissolution
or winding up of the Company, the assets legally available for distribution to stockholders are distributable ratably among the holders
of the Common Stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors. Each outstanding
common share is duly and validly issued, fully paid and non-assessable.
Our Transfer Agent and Warrant Agent
The transfer agent for our
shares of Common Stock is Pacific Stock Transfer Company, 6725 Via Austi Pkwy, Suite 300, Las Vegas, Nevada 89119.
Special meeting of stockholders
Our Bylaws provide that special
meetings of our stockholders may be called only by a majority vote of our Board of Directors, or by our President, or by the holders of
a majority of the outstanding shares of capital stock of the Company, the holders of which are entitled to vote on matters that are to
be voted on at such meeting.
Rule 144
Pursuant to Rule 144, a person
who has beneficially owned restricted shares of our Common Stock for at least six months would be entitled to sell their securities provided
that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding,
a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have
filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required
to file reports) preceding the sale.
Persons who have beneficially
owned restricted shares of our Common Stock for at least six months but who are our affiliates at the time of, or at any time during the
three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any
three-month period only a number of securities that does not exceed the greater of:
●
1% of the total number of shares of Common Stock then outstanding; or
●
the average weekly reported trading volume of the Common Stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
Sales by our affiliates under
Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about
us.
64
Restrictions on the Use of Rule 144 by Shell
Companies or Former Shell Companies
Rule 144 is not available
for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers
that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the
following conditions are met:
●
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
●
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
●
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
●
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
The Company filed its Form
10 with SEC on July 29, 2021, as amended by Amendment No. 1 and Amendment No. 2 to Form 10 filed by the Company on September 2, 2021 and
September 23, 2021, respectively.
65
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion
of the material U.S. federal income tax considerations generally applicable to the acquisition, ownership and disposition of our Common
Stock. This discussion is limited to certain U.S. federal income tax considerations to beneficial owners of our securities who hold the
securities as a capital asset within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended (the "Code").
This discussion does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances, including
the alternative minimum tax, the Medicare contribution tax on certain investment income and the different consequences that may apply
if you are subject to special rules that apply to certain types of investors, such as:
●
financial institutions or financial services entities;
●
broker-dealers;
●
insurance companies;
●
governments or agencies or instrumentalities thereof;
●
regulated investment companies;
●
real estate investment trusts;
●
expatriates or former long-term residents of the United States;
●
persons that actually or constructively own five percent or more of our voting shares;
●
persons that acquired our securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation;
●
dealers or traders subject to a mark to market method of accounting with respect to the securities;
●
persons holding the securities as part of a "straddle," hedge, constructive sale, conversion or other integrated or similar transaction;
●
U.S. holders (as defined below) whose functional currency is not the U.S. dollar;
●
persons subject to special tax accounting rules under Section 451(b) of the Code; partnerships or other pass through entities for U.S. federal income tax purposes; and
●
tax exempt entities.
If you are a partnership for
U.S. federal income tax purposes, the U.S. federal income tax treatment of your partners will generally depend on the status of the partners
and your activities.
This discussion is based on
the Code and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof,
changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein. This discussion does
not address any aspect of state, local or non-U.S. taxation, or any U.S. tax law other than the U.S. federal income tax (such as gift,
estate or Medicare contribution taxes) or except as discussed below, any tax reporting obligations of a holder of our securities. This
discussion also assumes that any distribution made (or deemed made on our securities and any consideration received (or deemed received)
by a holder from the sale or other disposition of our securities will be in U.S. dollars.
66
We have not sought, and will
not seek, a ruling from the Internal Revenue Service (the "IRS") as to any U.S. federal income tax consequence described herein.
The IRS may disagree with the discussion herein, and its determination may be upheld by a court. Moreover, there can be no assurance that
future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in
this discussion.
THIS DISCUSSION IS ONLY
A SUMMARY OF THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES. EACH PROSPECTIVE
INVESTOR IN OUR SECURITIES IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF
THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, AND NON-U.S.
TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS AND ANY APPLICABLE TAX TREATIES.
U.S. Holders
This section applies to you
if you are a "U.S. holder." A U.S. holder is a beneficial owner of our securities that is, for U.S. federal income tax purposes:
●
an individual who is a citizen or resident of the United States;
●
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof or the District of Columbia;
●
an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
●
a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) it has in effect a valid election to be treated as a U.S. person.
Taxation of Distributions.
If
we pay cash distributions to U.S. holders of shares of our Common Stock, such distributions generally will be treated as a dividend for
U.S. federal income tax purposes to the extent the distribution is paid out of our current or accumulated earnings and profits, as determined
under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits will constitute a return
of capital that will be applied against and reduce (but not below zero) the U.S. holder's adjusted tax basis in our Common Stock.
Any remaining excess will be treated as gain realized on the sale or other disposition of the Common Stock and will be treated as described
under "U.S. holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Our Securities" below.
Dividends we pay to a U.S.
holder that is a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied.
With certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction
limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. holder generally will
constitute "qualified dividends" that will be subject to tax at the maximum tax rate accorded to long-term capital gains.
Gain or Loss on Sale, Taxable
Exchange or Other Taxable Disposition of Our Securities.
Upon a sale or other taxable disposition of our securities which, in
general, would include a redemption of Common Stock or warrants, a U.S. holder generally will recognize capital gain or loss in an amount
equal to the difference between the amount realized and the U.S. holder's adjusted tax basis in such securities. Any such capital
gain or loss generally will be long-term capital gain or loss if the U.S. holder's holding period for the securities so disposed
of exceeds one year. Long-term capital gains recognized by non-corporate U.S. holders will be eligible to be taxed at reduced rates. The
deductibility of capital losses is subject to various limitations that are not described herein because a discussion of such limitations
depends on each U.S. holder's particular facts and circumstances.
Generally, the amount of gain
or loss recognized by a U.S. holder is an amount equal to the difference between (i) the sum of the amount of cash and the fair market
value of any property received in such disposition and (ii) the U.S. holder's adjusted tax basis in its securities so disposed of.
A U.S. holder's adjusted tax basis in its Common Stock or warrants generally will equal the U.S. holder's acquisition cost
less, in the case of a share of Common Stock, any prior distributions treated as a return of capital.
67
Information Reporting and
Backup Withholding.
In general, information reporting requirements may apply to dividends paid to a U.S. holder and to the proceeds
of the sale or other disposition of our securities, unless the U.S. holder is an exempt recipient. Backup withholding may apply to such
payments if the U.S. holder fails to provide a taxpayer identification number, a certification of exempt status or has been notified by
the IRS that it is subject to backup withholding (and such notification has not been withdrawn).
Any amounts withheld under
the backup withholding rules will be allowed as a refund or a credit against a U.S. holder's U.S. federal income tax liability provided
the required information is timely furnished to the IRS.
Non-U.S. Holders
This section applies to you
if you are a "Non-U.S. holder." A Non-U.S. holder is a beneficial owner of our securities who or that is, for U.S. federal
income tax purposes:
●
a non-resident alien individual, other than certain former citizens and residents of the United States subject to U.S. tax as expatriates;
●
a foreign corporation; or
●
an estate or trust that is not a U.S. holder;
but does not include an individual who is present
in the United States for 183 days or more in the taxable year of disposition.
If you are such an individual,
you should consult your tax advisor regarding the U.S. federal income tax consequences of the sale or other disposition of a security.
Taxation of Distributions.
In general, any distributions we make to a Non-U.S. holder of shares of our Common Stock, to the extent paid out of our current or
accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal
income tax purposes and, provided such dividends are not effectively connected with the Non-U.S. holder's conduct of a trade or
business within the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless
such Non-U.S. holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification
of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E). Any distribution not constituting a dividend will
be treated first as reducing (but not below zero) the Non-U.S. holder's adjusted tax basis in its shares of our Common Stock and,
to the extent such distribution exceeds the Non-U.S. holder's adjusted tax basis, as gain realized from the sale or other disposition
of the Common Stock, which will be treated as described under "Non-U.S. holders — Gain on Sale, Taxable Exchange or Other
Taxable Disposition of Our Securities" below. In addition, if we determine that we are classified as a "United States real
property holding corporation" (see "Non-U.S. holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of
Our Securities" below), we will withhold 15% of any distribution that exceeds our current and accumulated earnings and profits.
The withholding tax does not
apply to dividends paid to a Non-U.S. holder who provides a Form W-8ECI, certifying that the dividends are effectively connected with
the Non-U.S. holder's conduct of a trade or business within the United States. Instead, the effectively connected dividends will
be subject to regular U.S. federal income tax as if the Non-U.S. holder were a U.S. resident, subject to an applicable income tax treaty
providing otherwise. A Non-U.S. corporation receiving effectively connected dividends may also be subject to an additional "branch
profits tax" imposed at a rate of 30% (or a lower treaty rate).
Possible Constructive Distributions.
Under certain circumstances, a Non-U.S. holder may be deemed to have received a constructive dividend (see "U.S. holders"
above). Any such constructive distribution deemed received will be treated, and therefore generally be subject to withholding, in the
same manner as an actual dividend received (and may be subject to information reporting), as discussed above under "Non-U.S. Holders
— Taxation of Distributions." Because a constructive dividend received by a Non-U.S. holder would not give rise to any cash
from which any applicable withholding tax could be satisfied, if we or the withholding agent pays withholding taxes on the Non-U.S. holder's
behalf with respect to amounts which are includible in the Non-U.S. holder's income but which are not paid in cash, we or the withholding
agent may withhold any such withholding tax from any other payments owed to the Non-U.S. holder or other assets, including cash payments
of interest payable on the notes, shares of Common Stock or cash payable upon conversion, or proceeds from a sale subsequently paid or
credited to the Non-U.S. holder. If we deduct, or such withholding agent deducts, any such amount from interest payments on a Non-U.S.
holder's notes under these circumstances, such Non-U.S. holder should consult its own tax advisor as to whether it can obtain a
refund for all or a portion of any tax withheld.
68
Gain on Sale, Taxable Exchange
or Other Taxable Disposition of Our Securities.
A Non-U.S. holder generally will not be subject to U.S. federal income or withholding
tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of our securities unless:
●
the gain is effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States (and, under certain income tax treaties, is attributable to a United States permanent establishment or fixed base maintained by the Non-U.S. holder); or
●
we are or have been a "U.S. real property holding corporation" for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the Non-U.S. holder held our securities, and, in the case where shares of our Common Stock are regularly traded on an established securities market, the Non-U.S. holder has owned, directly or constructively, more than 5% of our Common Stock at any time within the shorter of the five-year period preceding the disposition or such Non-U.S. holder's holding period for the shares of our Common Stock. There can be no assurance that our Common Stock will be treated as regularly traded on an established securities market for this purpose.
Unless an applicable treaty
provides otherwise, gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income
tax rates as if the Non-U.S. holder were a U.S. resident. Any gains described in the first bullet point above of a Non-U.S. holder that
is a foreign corporation may also be subject to an additional "branch profits tax" at a 30% rate (or lower treaty rate).
If the second bullet point
above applies to a Non-U.S. holder, gain recognized by such holder on the sale, exchange or other disposition of our securities will be
subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of our securities from such holder may be required
to withhold U.S. federal income tax at a rate of 15% of the amount realized upon such disposition. We will be classified as a U.S. real
property holding corporation if the fair market value of our "U.S. real property interests" equals or exceeds 50% of the sum
of the fair market value of our worldwide real property interests plus our other assets used or held for use in a trade or business, as
determined for U.S. federal income tax purposes.
Information Reporting and
Backup Withholding.
Information returns will be filed with the IRS in connection with payments of dividends and the proceeds from
a sale or other disposition of our securities. A Non-U.S. holder may have to comply with certification procedures to establish that it
is not a United States person in order to avoid information reporting and backup withholding requirements. The certification procedures
required to claim a reduced rate of withholding under a treaty will satisfy the certification requirements necessary to avoid the backup
withholding as well. The amount of any backup withholding from a payment to a Non-U.S. holder will be allowed as a credit against such
holder's U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely
furnished to the IRS.
FATCA Withholding Taxes
Provisions commonly referred
to as "FATCA" impose withholding of 30% on payments of dividends (including constructive dividends) on our securities, and
sales or other disposition proceeds from our securities to "foreign financial institutions" (which is broadly defined for
this purpose and in general includes investment vehicles) and certain other Non-U.S. entities unless various U.S. information reporting
and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have
been satisfied, or an exemption applies (typically certified as to by the delivery of a properly completed IRS Form W-8BEN-E). If FATCA
withholding is imposed, a beneficial owner of the payment that is not a foreign financial institution (or that is a foreign financial
institution entitled to a reduced rate of withholding tax with respect to such payment under an income tax treaty) generally may be entitled
to a refund or credit of any amounts withheld by filing a U.S. federal income tax return and providing certain other information to the
IRS (which may entail significant administrative burden). Foreign financial institutions located in jurisdictions that have an intergovernmental
agreement with the United States governing FATCA may be subject to different rules. Notwithstanding the foregoing, the IRS has issued
proposed regulations, upon which taxpayers may generally rely, that exclude gross proceeds from the sale or other disposition of our securities
from the application of the withholding tax imposed under FATCA. Prospective investors should consult their tax advisers regarding the
effects of FATCA on their investment in our securities.
69
LEGAL MATTERS
The validity of the securities
offered by this prospectus will be passed upon for us by Sullivan & Worcester LLP.
EXPERTS
The financial statements of
the Company as of and for the years ended December 31, 2021 and 2020 included in this prospectus have been so included in reliance on
the reports (which contains an explanatory paragraph relating to the Company's ability to continue as a going concern as described
in Note 1B to the financial statements) of Brightman Almagor Zohar & Co., a firm in the Deloitte global network, an independent registered
public accounting firm, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the filing
requirements of the Exchange Act. Therefore, we file periodic reports, proxy statements and other information with the Securities and
Exchange Commission. The Securities and Exchange Commission maintains a website (www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically.
We make our Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to such reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange Act available free of charge through a link on the Investors section of our website located
at www.raphaelpharmaceutical.com as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange
Commission. The information contained in or accessible through our website or contained on other websites is not a part of, and is not
incorporated into, this prospectus.
For further information about
us, please visit our main website located at www.raphaelpharmaceutical.com. Information contained on these websites is not a part of this
prospectus.
You should rely only on
the information contained in this prospectus. We have not authorized anyone to provide you with different information. Therefore, if anyone
gives you different or additional information, you should not rely on it. The information contained in this prospectus is correct as of
its date. It may not continue to be correct after this date.
70
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Audited Consolidated Financial Statements
Report of independent Registered Public Accounting Firm (PCAOB ID No. 1197)
F-2
Consolidated Balance Sheets
F-4
Consolidated Statements of Comprehensive Loss
F-5
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
F-6
Consolidated Statements of Cash Flows
F-7
Notes to Consolidated Financial Statements
F-8 – F-17
Unaudited Consolidated Financial Statements
Condensed Consolidated Interim Balance Sheets
F-18
Condensed Consolidated Interim Statements of Comprehensive Loss
F-19
Condensed Consolidated Interim Statements of Changes in Stockholders' Equity
F-20
Condensed Consolidated Interim Statements of Cash Flows
F-21
Notes to Condensed Consolidated Interim Financial Statements
F-22 – F-24
F-
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and Board of Directors of Raphael Pharmaceutical
Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of Raphael Pharmaceutical Inc. and its subsidiary (the "Company") as of December 31, 2021 and 2020, the related
consolidated statements of comprehensive loss, changes in shareholders' deficit and cash flows for each of the two years in the
period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020
and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with
accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 1b to the financial statements, the Company's
lack of revenues and accumulated operating losses raise substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1b. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
F-
2
Critical Audit Matter
The critical audit matter communicated below is
a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the
audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion
on the critical audit matter or on the accounts or disclosures to which it relates.
Changes in Ordinary Share Capital –
refer to note 7 to the consolidated financial statements
Critical Audit Matter Description
During the year ended December 31, 2021, the Company
raised equity in the aggregate amount of $1,290 thousands, through equity transactions, by issuing shares and warrants.
We deemed our audit over the allocation, classification
and accuracy of equity transactions as challenging from a perspective of audit effort in comparison to our audit as a whole, because of
the amount of equity transactions and due to the magnitude of total amounts raised. As such, we believe this represents a critical audit
matter.
How the Critical Audit Matter Was Addressed
in the Audit
Our audit procedures related to equity transactions
included the following, among others:
●
We read the agreements and analyzed the terms of the Company's equity transactions.
●
We evaluated the interpretation and application of the relevant accounting guidance in relation to the appropriateness of the equity classification of warrants issued in these transactions.
●
We agreed the consideration received from the transactions to the respective bank statements.
●
We compared the shares issued and outstanding to the confirmation obtained directly from the transfer agent.
/s/
Brightman Almagor Zohar & Co.
Certified Public Accountants
A Firm in the Deloitte Global Network
Tel Aviv, Israel
March 30, 2022
We have served as the Company's auditor since 2021.
F-
3
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEETS
U.S dollars in thousands (except for share
and per share data)
As of December 31,
Note
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
153
$
95
Other current assets
3
269
228
Total current assets
422
323
Total assets
$
422
$
323
Liabilities and stockholders' equity (deficit)
Current liabilities:
Other accounts payable and accrued expenses
4
272
-
Payable to related party
22
9
Loan
5
-
357
Total current liabilities
294
366
Stockholders' equity (deficit):
Common stock, $0.01 par value:
Authorized: 21,020,560 shares;
Issued and outstanding:
12,970,540
and
9,459,253
as of December 31, 2021 and December 31, 2020, respectively
130
95
Additional paid-in capital
2,665
905
Accumulated deficit
(
2,667
)
(
1,043
)
Total stockholders' equity (deficit)
128
(
43
)
Total liabilities and stockholders' equity (deficit)
$
422
$
323
The accompanying notes are an integral part of
the condensed consolidated financial statements.
F-
4
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
U.S dollars in thousands (except for share
and per share data)
For the year ended
December 31,
Note
2021
2020
Research and development expenses
10a
$
776
$
461
General and administrative expenses
10b
853
245
Operating loss
1,629
706
Total financial expense, net
10c
(
4
)
12
Net loss and comprehensive loss
1,625
718
Basic and diluted net loss per share
0.15
0.07
Weighted average number of common shares used in computing basic and diluted net loss per share (*)
11,171,704
9,459,253
(*)
Number of shares has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the reverse recapitalization transaction and to reflect adjustment to the share par value (refer to Note 1a).
The accompanying notes are an integral part of
the condensed consolidated financial statements.
F-
5
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CHANGES STOCKHOLDERS' IN EQUITY (DEFICIT)
U.S dollars in thousands (except for share
and per share data)
Common shares
Additional
paid-in
Accumulated
Total
Number
Amount
capital
Deficit
equity
Balance as of January 1, 2020 (**)
9,459,253
$
95
$
438
$
(
325
)
$
208
Issuance of common stock
-
(*
)
467
-
467
Net loss
-
-
-
(
718
)
(
718
)
Balance as of December 31, 2020
9,459,253
$
95
$
905
$
(
1,043
)
$
(
43
)
Common stock
Additional
paid-in
Accumulated
Total
Number
Amount
capital
Deficit
equity
Balance as of January 1, 2021 (**)
9,459,253
$
95
$
905
$
(
1,043
)
$
(
43
)
Issuance of common stock and warrants
2,460,259
25
1,265
-
1,290
Effect of reverse recapitalization transaction (Notes 1a and 7b)
1,051,028
10
496
-
506
Net loss
-
-
-
(
1,625
)
(
1,625
)
Balance as of December 31, 2021
12,970,540
$
130
$
2,666
$
(
2,668
)
$
128
(*)
Represents amount less than $1
(**)
Number of shares has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the reverse recapitalization transaction and to reflect adjustment to the share par value (refer to Note 1a).
The accompanying notes are an integral part of
the consolidated financial statements.
F-
6
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
U.S dollars in thousands (except for share
and per share data)
Year Ended
December 31,
2021
2020
Cash flows from operating activities
Net loss
$
(
1,625
)
$
(
718
)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in:
Other current assets
(
41
)
(
70
)
Related parties
13
9
Other accounts payables and accrued expenses
234
-
Net cash used in operating activities
(
1,419
)
(
779
)
Cash flows from financing activities
Receipt of a loan
174
357
Proceeds from issuance of common stock and warrants
1,290
467
Cash acquired in the reverse recapitalization (*)
13
-
Net cash provided by financing activities
1,477
824
Change in cash and cash equivalents
58
45
Cash and cash equivalents at the beginning of the year
95
50
Cash and cash equivalents at the end of the year
$
153
$
95
Non cash supplement
Non cash issuance costs
$
102
-
(*) Cash acquired in the reverse recapitalization:
Current assets (excluding cash and cash equivalents)
(
531
)
-
Current liabilities
38
-
Reverse recapitalization effect on equity
506
-
Cash acquired in connection with reverse recapitalization transaction
13
-
The accompanying notes are an integral part of the consolidated financial
statements.
F-
7
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
U.S dollars in thousands (except for share
and per share data)
NOTE 1:-
GENERAL
a.
Raphael Pharmaceutical Inc (formerly Easy Energy, Inc.) (the "Company") was incorporated under the laws of the State of Nevada on May 17, 2007. The Company is headquartered in Tel Aviv-Jaffa, Israel. From April 1, 2011 until December 31, 2019, the Company was not active.
On October 8, 2020, the Company and its stockholders entered into a Share Exchange Agreement (the "Share Exchange") with an Israeli pharmaceutical company ("Raphael"), according to which, among other matters, all shareholders of Raphael will sell and convey the entire holdings in Raphael to the Company such that following the Share Exchange, the shareholders of Raphael will hold 90% of the issued and outstanding common stock of the Company, and the existing shareholders of the Company will hold the remaining 10% of the issued and outstanding common stock.
On May 14, 2021, the Company's board of directors and stockholders approved a 1-for-100 reverse split of the Company's common stock, which was implemented and became effective as of May 14, 2021.
The reverse split combined each one hundred (100) shares of the Company's issued and outstanding Common stock into one share of common stock. No fractional shares were issued in connection with the reverse split, and any fractional shares resulting from the reverse split were rounded up to the nearest whole share.
On May 14, 2021, Raphael and the Company, completed the Share Exchange pursuant to which
9,459,253
common stock were issued to the shareholders of Raphael so that they became the holders of
90
% of the issued and outstanding common stock of the Company immediately after the Share Exchange while the Company's shareholders hold, following the Share Exchange,
1,051,028
common stock which represents
10
% of the Company. On May 19, 2021, as agreed by the parties to the Share Exchange, the Company changed its name to Raphael Pharmaceutical Inc. Following such Share Exchange, Raphael's activities are the sole activities of the Company.
The Share Exchange was accounted for as a reverse recapitalization which is outside the scope ASC 805, "Business Combinations" ("ASC 805"), as the Company, the legal acquirer, is considered a non-operating public shell, and is therefore not a business as defined in ASC 805. As the shareholders of Raphael received the largest ownership interest in the Company, Raphael was determined to be the "accounting acquirer" in the Share Exchange. As a result, the historical financial statements of the Company were replaced with the financial statement of Raphael for all periods presented.
b.
Going concern and management plans
The accompanying consolidated financial statements
have been prepared on a going-concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal
course of business. Since its inception, the Company has devoted substantially all of its efforts to research and development, clinical
trials, and raising capital. The Company is still in its development and pre-clinical stage and has not yet generated revenues. The extent
of the Company's future operating losses and the timing of becoming profitable are uncertain. As of December 31, 2021, the Company's
accumulated deficit was $
2,668
, the net loss for the year then ended was $
1,625
and the net cash used in operating activities was $
1,419
.
The Company has funded its operations to date primarily through equity financing and the issuance of a loan.  Additional funding
will be required to complete the Company's research and development and clinical trials, to attain regulatory approvals, to begin
the commercialization efforts of the Company's product and to achieve a level of sales adequate to support the Company's cost
structure.
F-
8
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
U.S dollars in thousands (except for share
and per share data)
NOTE 1:-
GENERAL (Cont.)
Management's plans include, but are not
limited to, raising capital in the United States. There can be no assurance that it will be able to successfully raise additional financing,
including in a public offering, or obtain additional financing on a timely basis or on terms acceptable to the Company, or at all.
Management expects that the Company will continue
to generate losses from the development, clinical development and regulatory activities of its product, which will result in negative
cash flow from operating activity. This has led management to conclude that substantial doubt about the Company's ability to continue
as a going concern exists in the event that additional funding does not occur. If such sufficient financing is not received timely, the
Company will not have sufficient cash flows and liquidity to finance its business operations as currently contemplated and would then
need to pursue a plan to license its assets, seek to be acquired by another entity, cease operations and/or seek bankruptcy protection.
The Company's financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES
a.
Basis of presentation:
The consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").
The consolidated financial statements include
the accounts of the Company and its subsidiary. Intercompany accounts and transactions have been eliminated upon consolidation.
b.
Use of estimate in preparation of financial statements:
The preparation of consolidated financial statements
in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in
the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company's management
believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made.
These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the dates of the financial statements, and the reported amounts of expenses during the reporting periods. Actual results
could differ from those estimates.
c.
Financial statements in United States dollars:
The Company's functional currency is the
U.S. dollar ("dollar" or "$") since the dollar is the currency of the primary economic environment in which the
Company has operated and expects to continue to operate in the foreseeable future. Transactions and balances denominated in dollars are
presented at their original amounts. Transactions and balances denominated in currencies other than dollars have been re-measured to dollars.
All transaction gains and losses from re-measurement of monetary balance sheet items denominated in currencies other than dollars are
reflected in the statements of comprehensive loss as financial expenses, net.
F-
9
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
U.S dollars in thousands (except for share
and per share data)
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
d.
Cash and cash equivalents:
Cash equivalents are short-term highly liquid
investments that are readily convertible to cash with original maturities of three months or less as of the date acquired and that are
exposed to insignificant risk of change in value.
e.
Fair value measurements:
The carrying values of Company's financial
assets and liabilities, including cash and cash equivalents, other current assets, accounts payable and accrued expenses, payable to related
party and loan approximate their fair value due to the short-term maturity of these instruments.
f.
Research and development expenses:
Research and development expenses are charged
to the statements of comprehensive loss as incurred.
g.
Income taxes:
The Company accounts for income taxes in accordance
with ASC 740, "Income Taxes". ASC 740 prescribes the use of the liability method whereby deferred tax assets and liability
account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances in respect
of deferred tax assets are provided for, if necessary, to reduce deferred tax assets to amounts more likely than not to be realized. As
of December 31, 2021, and 2020, the Company had a full valuation allowance on its deferred tax assets.
h.
Basic and diluted net loss per share:
Earnings or loss per share ("EPS")
is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or
loss per share. EPS is computed pursuant to ASC 260-10-45. Pursuant to ASC 260-10-45-10 through 260-10-45-16 Basic EPS is computed by
dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator)
during the period. Loss available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred
stock (whether or not paid) from loss from operating loss (if that amount appears in the statements of comprehensive loss) and also from
net loss. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include
the number of additional common shares that would have been outstanding if the dilutive potential common stock had been issued during
the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement,
stock options or warrants.
F-
10
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
U.S dollars in thousands (except for share
and per share data)
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The net loss per share and the weighted average
number of shares used in computing basic and diluted net loss per share is as follows:
For the Year Ended
December 31,
2021
2020
Numerator:
Net loss applicable to common stockholders
$
(
1,625
)
$
(
718
)
Denominator:
Number of shares of common stock used in computing basic and diluted net loss per share
11,171,704
9,459,253
Net loss of shares of common, basic and diluted
$
(
0.15
)
$
(
0.07
)
i.
Leases
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize their leases contracts as assets and liabilities
in the financial statements. Furthermore, the ASU requires the Company to continue recognizing expenses but recognize expenses on their
statements of comprehensive loss in a manner similar to current lease accounting. The amendments in this ASU are effective January 1,
2019. In July 2018, the FASB issued ASU 2018-11, Leases - Targeted Improvements, to allow a company to elect an optional modified retrospective
transition method that applies the new lease requirements through a cumulative-effect adjustment in the period of adoption.
Effective January 2019, the Company adopted the
new lease accounting standard. The Company elected to apply the practical expedients permitted under the transition guidance within the
new standard. As such, there was no impact on the Company's financial statements as a result of adopting ASU 2016-02. See note 6a
for more details.
j.
Recently issued accounting pronouncements
In June 2016, the FASB issued ASU 2016-13, "Financial
Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13").
ASU 2016-13 replaces the current incurred loss model guidance with a new method that reflects expected credit losses. Under this guidance,
an entity would recognize an allowance for credit losses equal to its estimate of expected credit losses on financial assets measured
at amortized cost. In November 2019, the FASB extended the effective date of ASU 2016-13 for smaller reporting companies. As a result,
ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2022, with early adoption
permitted. The standard is not expected to have a significant impact on the Company's consolidated financial statements.
F-
11
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
U.S dollars in thousands (except for share
and per share data)
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
In May 2021, the Financial Accountings Standards
Board ("FASB") issued Accounting Standards Update ("ASU") 2021-04, "Earnings Per Share (Topic 260), Debt—Modifications
and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts
in Entity's Own Equity (Subtopic 815- 40): Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified
Written Call Options" ("ASU 2021-04"). The guidance is effective for the Company on January 1, 2022. The Company is
currently evaluating the impact of adopting this standard
NOTE 3:-
OTHER CURRENT ASSETS
As of
December 31,
2021
2020
Receivables from governmental authorities
$
92
$
27
Prepaid expenses
177
201
$
269
$
228
NOTE 4:-
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
As of
December 31,
2021
2020
Account payables
$
107
$
9
Accrued expenses
165
-
$
272
$
9
NOTE 5:-
LOAN
In August 31, 2020, the Company and Raphael signed
an investment agreement according to which the Company will raise up to $
950
from investors. Under the agreement, the funds which the
Company raised were transferred to Raphael for its current activity. The funds transferred to Raphael by the Company were considered as
a loan which bears no interest and has no repayment date. Based on the agreement, the loan will become an equity interest once the Share
Exchange is complete. As of part of the Share Exchange, the loan was converted into stockholders' equity without any issuance of
shares and recorded as part of the Company's additional paid in capital
F-
12
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
U.S dollars in thousands (except for share
and per share data)
NOTE 6:-
CONTINGENT LIABILITIES AND COMMITMENTS
a.
Lease commitments:
Starting July 14, 2019, the Company began renting
its offices from a third party for a rental monthly fee of approximately $
3
per month. The rent period is for a period of one month which
renews on a monthly basis.
Effective July 14, 2019, the Company adopted the
new lease accounting standard. The Company elected to apply the practical expedients permitted under the transition guidance within the
new standard, and the Company also elected not to apply the recognition requirements in the lease standard to short-term leases (less
than 12 months) as of the adoption date. As such, there was no impact on the Company's financial statements as a result of adopting
ASU 2016-02.
b.
Rambam research agreement
The Company's research and development efforts
relating to its COVID-19 and rheumatoid arthritis ("RA") product candidates are being conducted by Rambam Med-Tech Ltd., or
Rambam MT, a part of the Rambam Health Care Campus in Israel, in accordance with a Sponsored Research Agreement (the "Research Agreement"),
that was entered into by the Company and Rambam MT in July 2019, to be in effect for a period of 48 months and which includes a non-compete
extension option for an additional 48 months of research and development. Pursuant to the Research Agreement, the Company agreed to pay
Rambam MT $
1.4
million in four equal milestone payments, due on the first day of August on each successive year from 2019 through 2022.
Furthermore, in accordance with the terms of the Research Agreement, the Company and Rambam MT will have joint ownership of any IP created
as a result of research programs covered by such agreement. In addition, subject to commercial sales of any product candidate using the
IP created as a part of the research covered by the Research Agreement, the Company is required to pay Rambam MT a royalty in an amount
equal to
6
% of all net sales, subject to certain deductions, such as taxes paid by any purchaser, transportation and shipping costs, and
other customary deductions.
As of December 31, 2021 the Company paid $
1,050
(three out of four milestones' payments).
c.
Way of Life Cannabis research agreement
In October 2020, Raphael Israel entered into an
engagement agreement with Wolc, pursuant to which, subject to its completing the Share Exchange with Easy Energy, Raphael Israel will
be provided with up to 15 liters of CBD oil, from a strain of cannabis during a term of 18 months, to be provided in two to three deliveries
of between one to seven liters of CBD oil. In accordance with Raphael Israel's agreement with Wolc, Raphael Israel has agreed to
issue to certain persons affiliated with Wolc
3
% of Raphael's issued and outstanding share capital as of the date of the Share Exchange,
to be provided in three equal issuances; provided, however, that such persons may elect to receive a cash payment of $
100
instead of any
one issuance of Raphael's shares. In addition to the issuance of shares, Raphael Israel has also agreed to pay Wolc a royalty fee
equal to
15
% of the net royalties generated from sales of Raphael Israel's pharmaceutical drug products that are developed at Rambam
hospital in Israel.
F-
13
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
U.S dollars in thousands (except for share
and per share data)
NOTE 6:-
CONTINGENT LIABILITIES AND COMMITMENTS (Cont.)
d.
Consulting agreement with the Chief Executive Officer
In June 2019, the Company entered into an agreement
with Sheffa Enterprises Inc, a company wholly owned by the Company's Chief Executive Officer ("CEO"). According to the
terms of the agreement, the CEO will provide consulting services to the Company until December 31, 2022 ("termination date").
The fees for his services will be $
10
per month. Furthermore, the Company may terminate the agreement prior to the termination date by
providing 120 days' advance written notice and paying the CEO a termination fee equal to the lesser of $
1,000
or the monthly fee
agreed, for the remaining term of the agreement.
e.
Consulting agreement with the Chief Technology Officer
In September 2019, the Company entered into an
agreement with its Chief Technology Officer ("CTO"). According to the terms of the agreement, the CTO will provide consulting
services to the Company that include engaging with an array of science consultants and coordinating collaborations with hospitals on medical
cannabis research. The fees for his services will be $
9
per month. Furthermore, the CTO will receive
15
% of the Company's net royalties'
from worldwide sales of any of the Company's cannabis-based medical indications treating COVID-19, once the Company starts generating
revenues.
NOTE 7:- STOCKOLDERS' EQUITY
a.
Between January and September 2021, the Company raised $
578
(net of issuance expenses of $
52
) and issued
1,632,509
shares of common stock. An amount of $
160
was received before the Share Exchange (see Note 1a) and an amount of $
470
was received after the Share Exchange.
b.
On May 14, 2021, the Company, completed a Share Exchange pursuant to which the Company issued
9,459,253
common stock to the shareholders of Raphael, and the shareholders of Raphael became the holders of
90
% of the issued and outstanding common stock of the Company while the Company's shareholders hold, immediately following the Share Exchange,
1,051,028
common stock, which represents
10
% of the Company (see also Note 1a).
c.
In October through December 2021, the Company raised $
820
and issued
715,250
shares of common stock and
441,000
warrants to purchase common stock in private placement. The warrants are exercisable at an exercise price of $
1.12
-$
1.25
per share into common stock and expire in November and December 2022. As part of the fund raising, the Company issued
112,500
common stock to certain third parties as a finder fee. As such, an amount of $
102
was recorded as non cash issuance costs.
F-
14
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
U.S dollars in thousands (except for share
and per share data)
NOTE 8:-
RELATED PARTIES BALANCES AND TRANSACTIONS
A.
Balances
The following related party payables are included
in accounts payable and accrued expenses.
As of December 31,
2021
2020
Payables to related party - Officers (*)
22
10
22
10
(*)
Relates to Chief Executive Officer's and Chief Financial Officer's services
B.
Transactions
Year ended December 31,
2021
2020
Consulting services (*)
120
110
Legal fee (**)
75
-
195
110
(*)
Including salary expenses to Company's CEO.
For further details on the consulting
agreement with Company's CEO, refer to Note 6d.
(**)
Including legal services provided to Company's subsidiary by Company's Chief Financial Officer with respect to an agreement between the Company and its Chief Financial Officer.
NOTE 9:-
TAXES ON INCOME
a.
As of December 31, 2021, the Company had U.S. federal net operating loss carryforwards of approximately $
3,912
available to reduce future taxable income. There is a limitation on the amount of taxable income that can be offset by carryforwards after a change in control (generally greater than a
50
% change in ownership). Losses from 2018 and forward that can only offset
80
% of taxable income in a future year.
F-
15
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
U.S dollars in thousands (except for share
and per share data)
NOTE 9:-
TAXES ON INCOME (Cont.)
Income tax rates applicable to the Company in
2021 and 2020 was
21
%.
b.
Foreign income tax:
1.
Income tax rates:
Presented hereunder are the income tax rates relevant to the Company's
Israeli subsidiary
2021 -
23
%
2020 -
23
%
2.
The Company's Israeli subsidiary have estimated total available carryforward operating tax losses for Israeli income tax purposes of approximately $
1,843
as of December 31, 2021.
c.
Deferred income taxes:
Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's deferred tax assets are as follows:
As of December 31,
2021
2020
Deferred tax assets:
Net operating loss carry forward
$
5,746
$
687
Deferred tax asset before valuation allowance
1,243
158
Valuation allowance
(
1,243
)
(
158
)
Net deferred tax asset
$
-
$
-
In assessing the realization of deferred tax assets,
management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized.
The ultimate realization of the deferred tax assets
is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and net operating
losses are utilized. Based on consideration of these factors, the Company recorded a full valuation allowance as of December 31,
2021 and 2020.
F-
16
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
U.S dollars in thousands (except for share
and per share data)
NOTE 9:-
TAXES ON INCOME (Cont.)
d.
Reconciliation of the theoretical tax expense to the actual tax expense:
The main reconciling item between the statutory
tax rate of the Company and the effective tax rate is the recognition of valuation allowance in respect of deferred taxes relating to
accumulated net operating losses carried forward due to the uncertainty of the realization of such deferred taxes.
Year ended December 31,
2021
2020
Net loss, as reported in the consolidated statements of comprehensive loss
$
1,625
$
718
Statutory tax rate
21
%
21
%
Computed "expected" tax income
341
151
Valuation allowance
(
341
)
(
151
)
Taxes on income
$
-
$
-
NOTE 10:-
SELECTED STATEMENTS OF COMPREHENSIVE LOSS DATA
a.
Research and development expenses:
For the Year Ended
December 31
2021
2020
Subcontractors and consultants
$
765
$
455
Laboratory services
11
6
$
776
$
461
b.
General and administrative expenses:
For the Year Ended
December 31
2021
2020
Professional services
$
697
$
94
Consulting services
120
110
Rent and office maintenance
31
32
Others
5
9
$
853
$
245
c.
Financial expenses, net:
For the Year Ended
December 31
2021
2020
Bank fees
2
1
Exchange rate differences
(
6
)
11
Total financial expenses, net
$
(
4
)
$
12
F-
17
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED INTERIM BALANCE SHEETS
U.S dollars in thousands (except for share
and per share data)
As of
March 31,
As of
December 31,
2022
2021
(Unaudited)
(Audited)
Assets
Current assets:
Cash and cash equivalents
$
81
$
153
Other current assets
99
269
Total current assets
180
422
Total assets
$
180
$
422
Liabilities and stockholders' equity
Current liabilities:
Other account payables and accrued expenses
76
272
Payable to related party
1
22
Total current liabilities
77
294
Stockholders' equity:
Common stock, $0.01 par value:
Authorized: 21,020,560 shares at March 31, 2022 and December 31, 2021;
Issued and outstanding:
13,290,540
and
12,970,540
at March 31, 2022 and December 31, 2021, respectively;
133
130
Additional paid-in capital
2,823
2,665
Accumulated deficit
(
2,853
)
(
2,667
)
Total stockholders' equity
103
128
Total liabilities and stockholders' equity
$
180
$
422
The accompanying notes are an integral part of
the condensed consolidated interim financial statements.
F-
18
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
U.S dollars in thousands (except for share
and per share data)
Three months ended
March 31,
2022
2021
Unaudited
Research and development expenses
$
86
$
169
General and administrative expenses
89
83
Operating loss
175
252
Total financial expense
10
3
Net loss
$
185
$
255
Basic and diluted net loss per share
$
0.01
$
0.02
Weighted average number of shares of common stock used in computing basic and diluted net loss per share (*)
13,035,371
9,459,253
(*)
Number of shares has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the reverse recapitalization transaction and to reflect adjustment to the share par value (refer to Note 1a).
The accompanying notes are an integral part of
the condensed consolidated interim financial statements.
F-
19
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
U.S dollars in thousands (except for share
and per share data)
Common stock
Additional
paid-in
Accumulated
Number
Amount
capital
Deficit
Total equity
Balance as of January 1, 2022
12,970,540
$
130
$
2,666
$
(
2,668
)
$
128
Issuance of common stock and warrants
320,000
3
157
-
160
Net loss
-
-
-
(
185
)
(
185
)
Balance as of March 31, 2022
13,290,540
$
133
$
2,823
$
(
2,853
)
$
103
Common stock
Additional
paid-in
Accumulated
Number
Amount
capital
Deficit
Total equity
Balance as of January 1, 2021 (*)
9,459,253
$
95
$
905
$
(
1,043
)
$
(
43
)
Net loss
-
-
-
(
255
)
(
255
)
Balance as of March 31, 2021 (*)
9,459,253
$
95
$
905
$
(
1,298
)
$
(
298
)
(*)
Number of shares has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the reverse recapitalization transaction and to reflect adjustment to the share par value (refer to Note 1a).
The accompanying notes are an integral part of
the condensed consolidated interim financial statements.
F-
20
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
U.S dollars in thousands (except for share
and per share data)
Three months ended
March 31,
2022
2021
Cash flows from operating activities
Net loss
$
(
185
)
$
(
255
)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in:
Other current assets
170
99
Account payables
(
67
)
27
Net cash used in operating activities
(
82
)
(
129
)
Cash flows from investing activities
-
-
Net cash provided by investing activities
-
-
Cash flows from financing activities
Issuance of common stock and warrants
10
-
Receipt of a loan
-
44
Net cash provided by financing activities
10
44
Change in cash and cash equivalents
(
72
)
(
85
)
Cash and cash equivalents at the beginning of the period
153
95
Cash and cash equivalents at the end of the period
$
81
$
10
Non cash supplement
Issuance of common stock and warrants
$
150
-
The accompanying notes are an integral part of
the condensed consolidated interim financial statements.
F-
21
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
U.S dollars in thousands (except for share
and per share data)
NOTE 1:-
GENERAL
a.
Raphael Pharmaceutical Inc (formerly Easy Energy, Inc.) (the "Company") was incorporated under the laws of the State of Nevada on May 17, 2007. The Company is headquartered in Tel Aviv-Jaffa, Israel. From April 1, 2011 until December 31, 2019, the Company was not active.
On October 8, 2020, the Company and its stockholders entered into a Share Exchange Agreement (the "Share Exchange") with an Israeli pharmaceutical company ("Raphael"), according to which, among other matters, all shareholders of Raphael will sell and convey the entire holdings in Raphael to the Company such that following the Share Exchange, the shareholders of Raphael will hold 90% of the issued and outstanding common stock of the Company, and the existing shareholders of the Company will hold the remaining 10% of the issued and outstanding common stock.
On May 14, 2021, the Company's board of directors and stockholders approved a 1-for-100 reverse split of the Company's common stock, which was implemented and became effective as of May 14, 2021.
The reverse split combined each one hundred (100) shares of the Company's issued and outstanding Common stock into one share of common stock. No fractional shares were issued in connection with the reverse split, and any fractional shares resulting from the reverse split were rounded up to the nearest whole share.
On May 14, 2021, Raphael and the Company, completed the Share Exchange pursuant to which
9,459,253
common stock were issued to the shareholders of Raphael so that they became the holders of
90
% of the issued and outstanding common stock of the Company immediately after the Share Exchange while the Company's shareholders hold, following the Share Exchange,
1,051,028
common stock which represents
10
% of the Company. On May 19, 2021, as agreed by the parties to the Share Exchange, the Company changed its name to Raphael Pharmaceutical Inc. Following such Share Exchange, Raphael's activities are the sole activities of the Company.
The Share Exchange was accounted for as a reverse recapitalization which is outside the scope ASC 805, "Business Combinations" ("ASC 805"), as the Company, the legal acquirer, is considered a non-operating public shell, and is therefore not a business as defined in ASC 805. As the shareholders of Raphael received the largest ownership interest in the Company, Raphael was determined to be the "accounting acquirer" in the Share Exchange. As a result, the historical financial statements of the Company were replaced with the financial statement of Raphael for all periods presented.
b.
Going concern and management plans
The accompanying financial statements
have been prepared on a going-concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal
course of business. Since its inception, the Company has devoted substantially all of its efforts to research and development, clinical
trials, and raising capital. The Company is still in its development and clinical stage and has not yet generated revenues. The extent
of the Company's future operating losses and the timing of becoming profitable are uncertain. As of March 31, 2022, the Company's
accumulated deficit was $
2,853
. The Company has funded its operations to date primarily through equity financing and the issuance of a
loan.  Additional funding will be required to complete the Company's research and development and clinical trials, to attain
regulatory approvals, to begin the commercialization efforts of the Company's product and to achieve a level of sales adequate to
support the Company's cost structure.
F-
22
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
U.S dollars in thousands (except for share
and per share data)
NOTE 1:-
GENERAL (Cont.)
Management's plans include, but
are not limited to, raising capital in the United States. There can be no assurance that it will be able to successfully raise additional
financing, including in a public offering, or obtain additional financing on a timely basis or on terms acceptable to the Company, or
at all.
Management expects that the Company
will continue to generate losses from the development, clinical development and regulatory activities of its product, which will result
in negative cash flow from operating activity. This has led management to conclude that substantial doubt about the Company's ability
to continue as a going concern exists in the event that additional funding does not occur. If such sufficient financing is not received
timely, the Company will not have sufficient cash flows and liquidity to finance its business operations as currently contemplated and
would then need to pursue a plan to license its assets, seek to be acquired by another entity, cease operations and/or seek bankruptcy
protection. The Company's financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES
These unaudited interim financial
statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31,
2021. The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2021, are applied
consistently in these interim financial statements.
NOTE 3:-
UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed
consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP")
for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation
S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting
only of normal recurring adjustments except as otherwise discussed). For further information, reference is made to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. Operating
results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending
December 31, 2022.
F-
23
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
U.S dollars in thousands (except for share
and per share data)
NOTE 4:-
SHAREHOLDERS' EQUITY
a.
On March 2, 2022, the Company raised $
10
and issued
50,000
shares of common stock and
30,000
warrants to purchase common stock at an exercise price of $
1.25
per share to certain investors of the Company. The warrants were classified as equity and are exercisable until February 28, 2023.
b.
On March 15, 2022, the Company issued
270,000
shares of common stock and
180,000
warrants to purchase common stock at an exercise price of $
1.13
per share to Company's service provider in consideration of past services at the amount of $
150
. The warrants were classified as equity and are exercisable until December 31, 2023.
NOTE 5:-
SUBSEQUENT EVENTS
a.
On April 28, 2022, the Company signed an agreement to raise $
50
and to issue
300,000
shares of common stock and
100,000
warrants to purchase common stock at an exercise price of $
0.7
per share to certain investor of the Company. The warrants are exercisable until April 30, 2024.The funds were received in May 2022.
b.
On April 28, 2022 the Company and a certain investor signed a finder fee agreement according to which the Company will issue to the investor 70,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $0.5 per share.
The warrants will be exercisable until April 30, 2024. The agreement will become effective once the investor will provide the Company with an equity investment of $
550
.
c.
On May 2, 2022, the Company signed several agreements to raise $
250
and to issue
250,000
shares of common stock and
100,000
warrants to purchase common stock at an exercise price of $
1.13
per share to certain investors of the Company. The warrants are exercisable until April 30, 2024. The funds were received in May 2022.
In addition, it was agreed that the Company will issue
250,000
shares of common stock and
100,000
warrants to purchase common stock at an exercise price of $
1.13
per share to a certain investor in consideration of additional $
250
if the Company's stock will be publicly traded on the OTC market prior to August 15, 2022. The additional warrants once issued will be exercisable for
2
years.
F-
24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth
the various expenses to be incurred in connection with the registration of the securities being registered hereby, all of which will be
borne by us.
SEC registration fee
$
408.57
Transfer agent's fees and expenses
$
900
Printing expenses
$
1,000
Legal fees and expenses
$
6,000
Accounting fees and expenses
$
10,000
Miscellaneous
$
-
Total expenses
$
18,308.57
Item 14. Indemnification of Directors and Officers.
Nevada Revised Statutes, or
the NRS, 78.138(7) provides that, subject to limited statutory exceptions and unless the articles of incorporation or an amendment thereto
(in each case filed on or after October 1, 2003) provide for greater individual liability, a director or officer is not individually liable
to a corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a
director or officer unless it is proven that: (i) the act or failure to act constituted a breach of his or her fiduciary duties as a director
or officer and (ii) the breach of those duties involved intentional misconduct, fraud or a knowing violation of law.
NRS 78.7502(1) provides that
a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation),
by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with the action, suit or proceeding if the person (i) is not liable pursuant to NRS 78.138 or (ii)
acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful. NRS 78.7502(2) provides
that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was
a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid
in settlement and attorneys' fees actually and reasonably incurred by the person in connection with the defense or settlement of
the action or suit if the person (a) is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of the corporation. To the extent that a director, officer, employee
or agent of a corporation has been successful on the merits or otherwise in defense of any such action, suit or proceeding, or in defense
of any claim, issue or matter therein, the corporation shall indemnify him or her against expenses, including attorneys' fees, actually
and reasonably incurred by him or her in connection with the defense. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person
is liable pursuant to NRS 78.138 or did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed
to the best interests of the corporation, or that, with respect to any criminal action or proceeding, he or she had reasonable cause to
believe that the conduct was unlawful. Indemnification may not be made for any claim, issue or matter as to which such a person has been
adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts
paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court
of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
II-
1
NRS 78.751(1) provides that
any discretionary indemnification pursuant to NRS 78.7502 (unless ordered by a court or advanced pursuant to NRS 78.751(2)), may be made
by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee
or agent is proper in the circumstances. The determination must be made (i) by the stockholders; (ii) by the board of directors by majority
vote of a quorum consisting of directors who were not parties to the action, suit or proceeding; (iii) if a majority vote of a quorum
consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion;
or (iv) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion. NRS 78.751(2) provides that the corporation's articles of incorporation or bylaws, or an agreement
made by the corporation, may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit
or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding,
upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court
of competent jurisdiction that the director or officer is not entitled to be indemnified by the corporation.
Under the NRS, the indemnification
pursuant to NRS 78.7502 and advancement of expenses authorized in or ordered by a court pursuant to NRS 78.751:
●
Does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in the person's official capacity or an action in another capacity while holding office, except that indemnification, unless ordered by a court pursuant to NRS 78.7502 or for the advancement of expenses made pursuant to NRS 78.751(2), may not be made to or on behalf of any director or officer if a final adjudication establishes that the director's or officer's acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action; and
●
Continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of such a person.
A right to indemnification
or to advancement of expenses arising under a provision of the articles of incorporation or any bylaw is not eliminated or impaired by
an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative
or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect
at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
Our governing documents provide
that to the fullest extent permitted under the NRS (including, without limitation, to the fullest extent permitted under NRS 78.7502 and
78.751(3)) and other applicable law, that we shall indemnify our directors and officers in their respective capacities as such and in
any and all other capacities in which any of them serves at our request.
Item 15. Recent Sales of Unregistered Securities.
Set forth below are the sales
of all securities by the Company since May 2019, which were not registered under the Securities Act. The Company believes that each of
such issuances was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and/or Regulation
S under the Securities Act.
Between June 2019 and June
2022, we issued and sold an aggregate of 3,812,747 shares of Common Stock, which were not registered under the Securities Act, to investors
and service providers for aggregate proceeds of approximately $2,225,160 in gross proceeds.
On May 14, 2021, pursuant
to the Share Exchange, Easy Energy issued an aggregate of 9,459,252 shares of its common stock to the Raphael Israel shareholders in exchange
for their shares of Raphael Israel.
II-
2
Item 16. Exhibits and Financial Statement Schedules
(a)
Exhibits.
EXHIBIT INDEX
3.1
Restated Certificate of Incorporation (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)
3.2
Bylaws (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)
5.1*
Opinion of Sullivan & Worcester LLP
10.1
Share Exchange Agreement by and between Easy Energy, Inc. and Raphael Pharmaceutical Ltd. (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)
10.2
Form of Indemnification Agreement (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)
10.3
Consulting Agreement with Sheffa Enterprises, Inc. (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)
10.4
Services Agreement for Finance Services between Raphael Pharmaceutical Ltd. and Shimony Yosef Certified Public Accountant (Isr.) (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)
10.5
Contractual Agreement between Raphael Pharmaceutical Ltd. and Way of Life Cannabis Ltd. (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)
10.6
Sponsored Research Agreement with Rambam Med-Tech Ltd. (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)
16.1
Letter from Weinstein International. C.P.A. to the SEC, dated July 2, 2021 (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)
21.1
List of Subsidiaries (incorporated by reference from Amendment No. 2 to our registration statement on Form 10 filed September 23, 2021)
23.1*
Consent of Sullivan & Worcester LLP (included in Exhibit 5.1)
23.2*
Consent of Brightman Almagor Zohar & Co.
101.INS
Inline XBRL Instance Document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
107
Fee Table
*
Filed herewith.
(b)
Financial Statements
. See page F-1 for an index to the financial statements and schedules included in the registration statement.
II-
3
Item 17. Undertakings
(a)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
(b)
The undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
II-
4
(5)
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes
that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting
method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to
such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
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5
SIGNATURES
Pursuant to the requirements
of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing
on Form S-1 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized,
in Tel Aviv-Jaffa, Israel, on this 28
th
day of June, 2022.
Raphael Pharmaceutical Inc.
By
/s/ Shlomo Pilo
Shlomo Pilo
Chief Executive Officer
Pursuant to the requirements
of the Securities Act, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated.
Signature
Title
Date
/s/ Professor Joseph Press, M.D.
Chairman of the Board of Directors
June 28, 2022
Professor Joseph Press, M.D.
/s/ Shlomo Pilo
Chief Executive Officer
June 28, 2022
Shlomo Pilo
(Principal Executive Officer) and Director
/s/ Guy Ofir
Chief Financial Officer
June 28, 2022
Guy Ofir
(Principal Financial Officer) and Director
/s/ Igal Louria Hayon
Chief Technology Officer and Director
June 28, 2022
Igal Louria Hayon
/s/ Yehuda Eliya
Director
June 28, 2022
Yehuda Eliya
II-6