The following discussion and analysis of the results of operations and financial
condition of 180 Life Sciences Corp. as of and for the years ended December 31,
2020 and 2019 should be read in conjunction with our consolidated financial
statements and the notes to those consolidated financial statements that are
included elsewhere in this Annual Report. This Management's Discussion and
Analysis of Financial Condition and Results of Operations contains statements
that are forward-looking. See "Cautionary Statement Regarding Forward-Looking
Information" above. Actual results could differ materially because of the
factors discussed in "Risk Factors" elsewhere in this Annual Report, and other
factors that we may not know.



Organization of MD&A
Our Management's Discussion and Analysis of Financial Condition and Results of
Operations (the "MD&A") is provided in addition to the accompanying consolidated
financial statements and notes to assist readers in understanding our results of
operations, financial condition, and cash flows. MD&A is organized as follows:

? Business Overview and Recent Events

? Results of Operations. An analysis of our financial results comparing the

twelve months ended December 31, 2020 and 2019.

? Liquidity and Capital Resources. An analysis of changes in our balance sheets

and cash flows and discussion of our financial condition.

? Critical Accounting Policies. Accounting estimates that we believe are

important to understanding the assumptions and judgments incorporated in our


   reported financial results and forecasts.




                                       77

Business Overview and Recent Events





On November 6, 2020 ("Closing Date"), the previously announced Business
Combination was consummated following a special meeting of stockholders, where
the stockholders of KBL considered and approved, among other matters, a proposal
to adopt the Business Combination Agreement. Pursuant to the Business
Combination Agreement, KBL Merger Sub merged with 180, with 180 continuing as
the surviving entity and becoming a wholly-owned subsidiary of KBL. As part of
the Business Combination, KBL issued 17,500,000 shares of common stock and
equivalents to the stockholders of 180, in exchange for all of the outstanding
capital stock of 180. The Business Combination became effective November 6, 2020
and 180 filed a Certificate of Amendment of its Certificate of Incorporation in
Delaware to change its name to 180 Life Corp., and KBL changed its name to
180
Life Sciences Corp.
This MD&A and the related financial statements for the year ended December 31,
2020 primarily covers the historical operations of 180 to the Closing Date
(November 6, 2020) and then the combined operations of the two entities from the
Closing Date to December 31, 2020. The Business Combination was accounted for as
a reverse recapitalization with the assets and liabilities of KBL being
consolidated commencing with the Closing Date. Thus, the results of operations
for the year ended December 31, 2020, only include the combined results after
the Closing Date. See Note 5 - Business Combination to the accompanying
Consolidated Financial Statements included at the end of this Annual Report

on
Form 10-K.




This MD&A and the related financial statements for the year ended December 31,
2019, primarily covers the historical operations of Katexco to the date of
combination on July 16, 2019 and then for the combined operations of the three
operating entities from the Closing Date to December 31, 2020. The
Reorganization was accounted for as a reverse merger with the assets and
liabilities of CBR Pharma and 180 LP valued and recorded as of the Closing Date
under purchase accounting. Thus, the results of operations for the year ended
December 31, 2020, only include the combined results after the Closing Date. See
Note 4 - Reorganization and Recapitalization to the accompanying Consolidated
Financial Statements included at the end of this Annual Report on Form 10-K.



Following the Closing of the Business Combination, we transitioned our
operations to those of 180, which is a clinical stage biotechnology company
headquartered in Palo Alto, California, focused on the development of
therapeutics for unmet medical needs in chronic pain, inflammation, fibrosis and
other inflammatory diseases, where anti-TNF therapy will provide a clear benefit
to patients, by employing innovative research, and, where appropriate,
combination therapy. We have three product development platforms:

? fibrosis and anti-tumor necrosis factor ("TNF");

? drugs which are derivatives of cannabidiol ("CBD"); and

? alpha 7 nicotinic acetylcholine receptor ("?7nAChR").






We have several future product candidates in development, including one product
candidate in a Phase 2b clinical trial in the United Kingdom for Dupuytren's
disease, a condition that affects the development of fibrous connective tissue
in the palm of the hand. 180 was founded by several world-leading scientists in
the biotechnology and pharmaceutical sectors.



We intend to invest resources to successfully complete the clinical programs
that are underway, discover new drug candidates, and develop new molecules to
build up on its existing pipeline to address unmet clinical needs. The product
candidates are designed via a platform comprised of defined unit operations and
technologies. This work is performed in a research and development environment
that evaluates and assesses variability in each step of the process in order to
define the most reliable production conditions.



We may rely on third-party CMOs and other third parties for the manufacturing
and processing of the product candidates in the future. We believe the use of
contract manufacturing and testing for the first clinical product candidates is
cost-effective and has allowed us to rapidly prepare for clinical trials in
accordance with its development plans. We expect that third-party manufacturers
will be capable of providing and processing sufficient quantities of these
product candidates to meet anticipated clinical trial demands.



                                       78



COVID-19 Pandemic



In December 2019, a new strain of the coronavirus (COVID-19) was reported in
Mainland China and during the first quarter of 2020 the virus had spread to over
150 countries, resulting in a global pandemic. This COVID-19 pandemic and the
public health responses to contain it have resulted in global recessionary
conditions, which did not exist at December 31, 2019. Among other effects,
government-mandated closures, stay-at-home orders and other related measures
have significantly impacted global economic activity and business investment in
general. A continuation or worsening of the levels of market disruption and
volatility seen in the recent past could have an adverse effect on our ability
to access capital, and on our business, results of operations and financial
condition. We have been closely monitoring the developments and have taken
active measures to protect the health of our employees, their families, and our
communities. The ultimate impact on the 2021 fiscal year and beyond will depend
heavily on the duration of the COVID-19 pandemic and public health responses,
including government-mandated closures, stay-at-home orders and social
distancing mandates, as well as the substance and pace of macroeconomic
recovery, all of which are uncertain and difficult to predict considering the
rapidly evolving landscape of the COVID-19 pandemic and the public health
responses to contain it. As of December 31, 2020, COVID-19 has delayed and
paused patient follow ups in one of our clinical trials to the end of 2021,
additionally COVID-19 has delayed the initiation of certain clinical trials.



Close of Business Combination



On November 6, 2020 (the "Closing Date"), the Company consummated the previously
announced Business Combination following a special meeting of stockholders held
on November 5, 2020, where the stockholders of the Company considered and
approved, among other matters, a proposal to adopt the Business Combination
Agreement (as amended, the "Business Combination Agreement"), dated as of July
25, 2019. Pursuant to the Business Combination Agreement, among other things, a
subsidiary of the Company merged with and into 180, with 180 continuing as the
surviving entity and a wholly-owned subsidiary of the Company (the "Merger").
The Merger became effective on November 6, 2020. The Business Combination was
accounted for as a reverse recapitalization of 180. All of 180's capital stock
outstanding immediately prior to the merger was exchanged for (i) 15,736,348
shares of 180LS common stock, (ii) 2 shares of Class C and Class K Special
Voting Shares exchangeable into 1,763,652 shares of 180LS common stock which are
presented as outstanding in the accompanying Statement of Changes in
Stockholders' Equity (Deficiency) due to the reverse recapitalization. The
Company's 6,928,645 outstanding shares of common stock are presented as being
issued on the date of the Business Combination.



Financing



On February 19, 2021, the Company entered into a Securities Purchase Agreement
with a number of institutional investors (the "Purchasers") pursuant to which
the Company agreed to sell to the Purchasers an aggregate of 2,564,000 shares
(the "Shares") of the Company's common stock and warrants to purchase up to an
aggregate of 2,564,000 shares of the Company's common stock (the "Warrants"), at
a combined purchase price of $4.55 per Share and accompanying Warrant (the
"Offering"). Aggregate gross proceeds from the Offering were approximately $11.7
million, prior to deducting placement agent fees and estimated offering expenses
payable by the Company. Net proceeds to the Company from the Offering, after
deducting the placement agent fees and offering expenses payable by the Company,
were approximately $10.8 million. The Offering closed on February 23, 2021.



Maxim Group LLC (the "Placement Agent") acted as exclusive placement agent in
connection with the Offering pursuant to an Engagement Letter between the
Company and the Placement Agent dated January 26, 2021 (as amended on February
18, 2021). Pursuant to the Engagement Letter, the Placement Agent received a
commission equal to seven percent (7%) of the aggregate gross proceeds of the
Offering, or $816,634.



Conversion of Bridge Notes



On March 8, 2021, the holders of the Company's convertible bridge notes, which
were issued in December 27, 2019 and January 3, 2020 to various purchasers,
converted an aggregate of $432,384, which included accrued interest of $66,633
owed under such convertible bridge notes, into an aggregate of 158,383 shares of
common stock pursuant to the terms of such notes, as amended, at a conversion
price of $2.73 per share.



Convertible Debt Conversions



From November 27, 2020 to February 5, 2021, the holders of the Company's
convertible promissory notes converted an aggregate of $4,782,107 owed under
such convertible notes into an aggregate of 1,986,751 shares of common stock,
pursuant to the terms of such notes, as amended, at conversion prices of between
$2.00 and $3.29 per share.



Preferred Stock



On November 6, 2020, the Company issued Series A convertible preferred stock for
gross proceeds of $3,000,000. From November 27, 2020 to December 18, 2020, the
holders of the Series A convertible preferred stock converted an aggregate
conversion amount of $3,666,667 into an aggregate of 1,619,144 shares of common
stock, pursuant to the terms of the agreement, as amended, at conversion prices
of between $2.24 and $2.31 per share.



                                       79




We claim an exemption from registration pursuant to Section 4(a)(2) and/or Rule
506 of Regulation D of the Securities Act, for such issuances described above,
since the foregoing issuances did not involve a public offering, the recipients
were (a) "accredited investors"; and/or (b) had access to similar documentation
and information as would be required in a Registration Statement under the
Securities Act. The securities were offered without any general solicitation by
us or our representatives. The securities are subject to transfer restrictions,
and the certificates evidencing the securities contain an appropriate legend
stating that such securities have not been registered under the Securities Act
and may not be offered or sold absent registration or pursuant to an exemption
therefrom and such securities may not be offered or sold in the United States
absent registration or an exemption from registration under the Securities Act
and any applicable state securities laws.



We claim an exemption from registration provided by Section 3(a)(9) of the
Securities Act, for such note conversions, as the securities were exchanged by
us with our existing security holders in transactions where no commission or
other remuneration was paid or given directly or indirectly for soliciting

such
exchange.



See Note 18 - Subsequent Events to the audited financial statements included at
the end of this Report for a more detailed discussion of these matters and other
events subsequent to December 31, 2020.

Significant Financial Statement Components





Research and Development




To date, 180's research and development expenses have related primarily to
discovery efforts and preclinical and clinical development of its three product
platforms: fibrosis and anti-TNF; drugs which are derivatives of CBD, and
?7nAChR. Research and development expenses consist primarily of costs associated
with those three product platforms, which include:

? expenses incurred under agreements with 180's collaboration partners and

third-party contract organizations, investigative clinical trial sites that

conduct research and development activities on its behalf, and consultants;

? costs related to production of clinical materials, including fees paid to


   contract manufacturers;

? laboratory and vendor expenses related to the execution of preclinical and


   clinical trials;

? employee-related expenses, which include salaries, benefits and stock-based


   compensation; and

? facilities and other expenses, which include expenses for rent and maintenance


   of facilities, depreciation and amortization expense and other supplies.





We expense all research and development costs in the periods in which they are
incurred. We accrue for costs incurred as services are provided by monitoring
the status of each project and the invoices received from its external service
providers. We adjust our accrual as actual costs become known. When contingent
milestone payments are owed to third parties under research and development
arrangements or license agreements, the milestone payment obligations are
expensed when the milestone results are achieved.



Research and development activities are central to our business model. Product
candidates 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 research and development expenses will increase over the next
several years as clinical programs progress and as we seek to initiate clinical
trials of additional product candidates. It is also expected that increased
research and development expenses will be incurred as additional product
candidates are selectively identified and developed. However, it is difficult to
determine with certainty the duration and completion costs of current or future
preclinical programs and clinical trials of product candidates.



The duration, costs and timing of clinical trials and development of product
candidates will depend on a variety of factors that include, but are not limited
to, the following:



 ? per patient trial costs;




                                       80

? the number of patients that participate in the trials;

? the number of sites included in the trials;

? the countries in which the trials are conducted;

? the length of time required to enroll eligible patients;

? the number of doses that patients receive;

? the drop-out or discontinuation rates of patients;

? potential additional safety monitoring or other studies requested by regulatory


   agencies;

? the duration of patient follow-up;

? and the efficacy and safety profile of the product candidates.






In addition, the probability of success for each product candidate will depend
on numerous factors, including competition, manufacturing capability and
commercial viability. We will determine which programs to pursue and fund in
response to the scientific and clinical success of each product candidate, as
well as an assessment of each product candidate's commercial potential.



Because the product candidates are still in clinical and preclinical development
and the outcome of these efforts is uncertain, we cannot estimate the actual
amounts necessary to successfully complete the development and commercialization
of product candidates or whether, or when, we may achieve profitability. Due to
the early-stage nature of these programs, we do not track costs on a
project-by-project basis. As these programs become more advanced, we intend to
track the external and internal cost of each program.



General and Administrative

General and administrative expenses consist primarily of salaries and other staff-related costs, including stock-based compensation for shares of common stock issued to founders for personnel in executive, commercial, finance, accounting, legal, investor relations, facilities, business development and human resources functions and include vesting conditions.





Other significant general and administrative costs include costs relating to
facilities and overhead costs, legal fees relating to corporate and patent
matters, insurance, investor relations costs, fees for accounting and consulting
services, and other general and administrative costs. General and administrative
costs are expensed as incurred, and we accrue amounts for services provided by
third parties related to the above expenses by monitoring the status of services
provided and receiving estimates from our service providers and adjusting our
accruals as actual costs become known.



It is expected that the general and administrative expenses will increase over
the next several years to support our continued research and development
activities, potential manufacturing activities, potential commercialization of
its product candidates and the increased costs of operating as a public company.
These increases are anticipated to include increased costs related to the hiring
of additional personnel, developing commercial infrastructure, fees to outside
consultants, lawyers and accountants, and increased costs associated with being
a public company, as well as expenses related to services associated with
maintaining compliance with NASDAQ listing rules and SEC requirements, insurance
and investor relations costs.



Other Income

Other income primarily represents fees earned for research and development work performed for other companies, some of which are related parties.





                                       81



Interest Expense

Interest expense consists primarily of interest expense related to debt instruments.

Gain (Loss) on Extinguishment of Convertible Notes

Gain (loss) on extinguishment of convertible notes represents the shortfall (excess) of the reacquisition cost of convertible notes as compared to their carrying value.

Change in Fair Value of Derivative Liabilities

Change in fair value of derivative liabilities represents the non-cash change in fair value of derivative liabilities during the reporting period.

Change in Fair Value of Accrued Issuable Equity

Change in fair value of accrued issuable equity represents the non-cash change in fair value of accrued equity prior to its formal issuance.

CONSOLIDATED RESULTS OF OPERATIONS

Consolidated Results of Operations





For the Year Ended December 31, 2020 Compared to the Year Ended December 31,
2019



                                                                          For the Years Ended
                                                                             December 31,
                                                                        2020              2019
Operating Expenses:
Research and development                                            $   2,217,371     $   1,981,299

Research and development - related parties                                 75,633            54,020
General and administrative                                              3,169,260         5,607,808
General and administrative - related parties                              185,848           286,745
Modification of stock award - related party                                     -        12,959,360
Rental income - related parties                                                 -           (25,946 )
Total Operating Expenses                                                5,648,112        20,863,286
Loss From Operations

(5,648,112 ) (20,863,286 )



Other (Expense) Income:
Gain (loss) on sale and disposal of property and equipment                (37,174 )           1,714
Other income                                                               15,334                 -
Other income - related parties                                            240,000           552,329
Interest income                                                                 -             3,727
Interest expense                                                       (1,002,424 )        (162,066 )
Interest expense - related parties                                        (84,550 )         (23,074 )
Loss on extinguishment of convertible notes payable, net               (2,580,655 )        (703,188 )
Change in fair value of derivative liabilities                         (1,816,309 )               -
Change in fair value of accrued issuable equity                             9,405          (327,879 )
Change in fair value of accrued issuable equity - related parties               -        (3,881,819 )
Total Other Expense, Net

(5,256,373 ) (4,540,256 )



Loss Before Income Taxes                                              (10,904,485 )     (25,403,542 )
Income tax benefit                                                        

20,427             9,496
Net Loss                                                            $ (10,884,058 )   $ (25,394,046 )




                                       82



Research and Development



During the year ended December 31, 2020, we incurred research and development
expenses of $2,217,371 compared to $1,981,299 incurred for the year ended
December 30, 2019, representing an increase of $236,072 or 12%. The increase
includes a $1,374,000 decrease in research and development expenses related to
the temporary pausing of drug discovery services in 2020 provided by Evotec
International GmbH in connection with a research and development agreement, a
decrease in research and development expenses related to a reclassification of
$109,000 in connection with 2018 tax credits and $327,000 in connection with
estimated 2020 tax credits, partially offset by research and development
agreements amended and entered into with Yissum during 2020 related to the
formulation of cannabinoid metal salts and the evaluation of potential drugs in
inflammation and pain of $855,000, an increase of $1,058,000 related to stock
compensation paid to Yissum Research Development Company, an increase of
$192,000 due to two new research and development agreements that were entered
into that relate to fibrosis and treatment of inflammation and respiratory
viruses, and $58,212 due to a decrease of miscellaneous research and development
expenses.

Research and Development - Related Parties





During the year ended December 31, 2020, we incurred research and development
expenses - related parties of $75,633, representing twelve months of expenses in
connection with the Company's consulting fees for clinical research versus six
months of expense (approximately $54,000) recognized during 2019.



General and Administrative



During the year ended December 31, 2020, we incurred general and administrative
expenses of $3,169,260 compared to $5,607,808 incurred for the year ended
December 30, 2019, representing a decrease of $2,438,548 or 43%. The decrease is
attributable to a swing from bad debt expense to bad debt recoveries in the
amount of approximately $2,400,000, a decrease in travel expenses of
approximately $394,000 due to COVID-19 travel restrictions, a decrease in
professional and consulting fees of $196,000 primarily attributable to increased
merger and reorganization fees in 2019, partially offset by an increase in
compensation of approximately $212,000 for services provided by directors,
officers or greater than 10% stockholders, and an increase of $145,000 related
to new patents, in connection with amounts paid to Stanford University of
$33,000 for anti-inflammatory and therapeutic technology, amounts paid to our IP
counsels of $54,000 related to patent filings and patent application filings,
and amounts paid to a legal firm for $70,000 related to treatment research.

General and Administrative - Related Parties


During the year ended December 31, 2020, we incurred general administrative
expenses - related parties of $185,848 compared to $286,745 incurred for the
year ended December 31, 2019, representing a decrease of $100,897, or 35%. The
decrease is primarily related to a decrease in rent expense resulting from the
termination of an operating lease in the fourth quarter of 2019 and a decrease
in bad debt expenses during 2020.

Modification of Stock Award - Related Parties





During the year ended December 31, 2019, we incurred $12,959,360 of expenses
related to the modification of a stock award as a result of the Company's waiver
of its right of redemption for contingently redeemable shares that had been
issued to a consultant to a subsidiary acquired in connection with the
Reorganization. There was no stock award modification expense during the year
ended December 31, 2020.

Rental Income - Related Parties





During the year ended December 31, 2019, we recognized $25,946 of rental income
from related parties in connection with the month-to-month subleases with
various companies that share common officers and directors with the Company. The
subleases terminated at the end of 2019. We did not recognize any sublease
income during the year ended December 31, 2020.



                                       83

Other (Expense) Income, Net


During the year ended December 31, 2020, we incurred other expenses, net of
$5,256,373 compared to $4,540,256 for the year ended December 31, 2019,
representing an increase in other expenses of $716,117 or 16%. The increase was
primarily due to an increase in the loss on extinguishment of convertible notes
payable, net of $1,877,467, an increase of $1,816,309 in the change in fair
value of derivative liabilities assumed at the Business Combination, and an
increase of $840,358 in interest expense related to additional promissory note
issuances in 2020, a decrease in other income - related parties of $312,329
earned pursuant to a research and development agreement, offset by a decrease in
the aggregate amount of $4,219,103 in the change in fair value of accrued
issuable equity and accrued issuable equity - related parties. During the year
ended December 31, 2020, there was a loss on sale of property and equipment of
$37,174 compared to a gain of $1,714 during the year ended December 31, 2019.
The loss during the years ended December 31, 2020 was related to the disposal of
office furniture and fixtures. The gain during the year ended December 31, 2019
was related to the sale of office furniture and fixtures to a company that
shares common officers and directors with the Company.

Liquidity and Capital Resources

As of December 31, 2020 and 2019, we had cash balances of $2,108,544 and $83,397, respectively, and working capital deficits of $17,406,356 and $8,892,515, respectively.





For the years ended December 31, 2020 and 2019, cash used in operating
activities was $3,871,961 and $3,318,654, respectively. Our cash used in
operations for the year ended December 31, 2020 was primarily attributable to
our net loss of $10,884,058, adjusted for non-cash expenses in the aggregate
amount of $4,679,931, as well as $2,332,166 of net cash provided by changes in
the levels of operating assets and liabilities. Our cash used in operations for
the year ended December 31, 2019 was primarily attributable to our net loss of
$25,394,046, adjusted for non-cash expenses in the aggregate amount of
$19,038,761, as well as $3,036,631 of net cash provided by changes in the levels
of operating assets and liabilities.



For the years ended December 31, 2020 and 2019, cash provided by (used in)
investing activities was $14,490,724 and ($708,149), respectively. Cash provided
by investing activities during the year ended December 31, 2020 consisted of
$10,280,739 of cash released from a trust account in connection with the
Business Combination, $3,006,235 of cash acquired in the reverse
recapitalization and $1,203,750 of proceeds received from the collection of
notes receivable. Cash used in investing activities during the year ended
December 31, 2019 consisted of $649,825 of cash used for the purchase of a note
receivable, $144,402 of cash used for the acquisition of intangible assets,
partially offset by $86,078 of cash acquired in connection with the
Reorganization.



For the years ended December 31, 2020 and 2019, cash (used in) provided by
financing activities was ($8,733,927) and $3,942,348, respectively. Cash used in
financing activities during the year ended December 31, 2020 was due to payment
of common stock redemptions in the amount of ($9,006,493), repayments made to
related parties in the amount of ($201,859), and the repayment of loans in the
amount of ($72,843), partially offset by sources of cash from the net proceeds
from the sale of common stock in the amount of $72,500 and proceeds from loans
and convertible notes in the amount of $474,768. The net cash provided by
financing activities during the year ended December 30, 2019 was comprised of
$1,257,045 proceeds from the sale and subscriptions for common stock, and
$2,685,303 cash proceeds from the issuance of loans and convertible notes.



Our product candidates may never achieve commercialization and we anticipate
that we will continue to incur losses for the foreseeable future. We expect that
our research and development expenses, general and administrative expenses, and
capital expenditures will continue to increase. As a result, until such time, if
ever, as we are able to generate substantial product revenue, we expect to
finance our cash needs through a combination of equity offerings, debt
financings or other capital sources, including potentially collaborations,
licenses and other similar arrangements. Our primary uses of capital are, and we
expect will continue to be, compensation and related expenses, third-party
clinical research and development services, costs relating to the build-out of
our headquarters and manufacturing facility, license payments or milestone
obligations that may arise, laboratory and related supplies, clinical costs,
manufacturing costs, legal and other regulatory expenses and general overhead
costs.



Further, our operating plans may change, and we may need additional funds to
meet operational needs and capital requirements for clinical trials and other
research and development activities. We currently have no credit facility or
committed sources of capital. Because of the numerous risks and uncertainties
associated with the development and commercialization of our product candidates,
we are unable to estimate the amounts of increased capital outlays and operating
expenditures associated with our current and anticipated product development
programs.



                                       84




We have not yet achieved profitability and expect to continue to incur cash
outflows from operations. It is expected that our research and development and
general and administrative expenses will continue to increase and, as a result,
we will eventually need to raise additional capital to fund our operations. If
we are unable to obtain adequate funds on reasonable terms, we may be required
to significantly curtail or discontinue operations or obtain funds by entering
into financing agreements on unattractive terms. Our operating needs include the
planned costs to operate our business, including amounts required to fund
working capital and capital expenditures. The conditions outlined above indicate
that there is substantial doubt about our ability to continue as a going concern
within one year after the financial statement issuance date.



Our consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America ("U.S.
GAAP"), which contemplate continuation of the Company as a going concern and the
realization of assets and satisfaction of liabilities in the normal course of
business. The carrying amounts of assets and liabilities presented in the
consolidated financial statements do not necessarily purport to represent
realizable or settlement values. The condensed consolidated financial statements
do not include any adjustment that might result from the outcome of this
uncertainty.



Recent Funding Transactions

February 2021 Private Purchase


On February 19, 2021, we entered into a Securities Purchase Agreement (the
"Purchase Agreement") with the purchasers identified on the signature pages
thereto (the "Purchasers") pursuant to which the Company agreed to sell to the
Purchasers an aggregate of 2,564,000 shares (the "Shares") of common stock and
warrants to purchase up to an aggregate of 2,564,000 shares of common stock (the
"SPA Warrants"), at a combined purchase price of $4.55 per Share and
accompanying SPA Warrant (the "Offering"). Aggregate gross proceeds from the
Offering were approximately $11.7 million, prior to deducting placement agent
fees and estimated offering expenses payable by the Company. Net proceeds to the
Company from the Offering, after deducting the placement agent fees and
estimated offering expenses payable by the Company, were approximately $10.8
million. The Offering closed on February 23, 2021.



The SPA Warrants have an exercise price equal to $5.00, were immediately
exercisable and are subject to customary anti-dilution adjustments for stock
splits or dividends or other similar transactions. However, the exercise price
of the SPA Warrants will not be subject to adjustment as a result of subsequent
equity issuances at effective prices lower than the then-current exercise price.
The SPA Warrants are exercisable until February 23, 2026. The SPA Warrants are
subject to a provision prohibiting the exercise of such SPA Warrants to the
extent that, after giving effect to such exercise, the holder of such Warrant
(together with the holder's affiliates, and any other persons acting as a group
together with the holder or any of the holder's affiliates), would beneficially
own in excess of 4.99% of the outstanding common stock (which may be increased
to 9.99% on a holder by holder basis, with 61 days prior written consent of

the
applicable holder).



In connection with the Offering, the Company also entered into a Registration
Rights Agreement, dated as of February 23, 2021, with the Purchasers (the
"Registration Rights Agreement"). Pursuant to the Registration Rights Agreement,
the Company agreed to file a registration statement with the SEC on or prior to
April 24, 2021 to register the resale of the Shares and the shares of common
stock issuable upon exercise of the SPA Warrants (the "Warrant Shares"), and to
cause such registration statement to be declared effective on or prior to June
23, 2021 (or, in the event of a "full review" by the SEC, August 22, 2021). The
Company failed to file a registration statement with the SEC by May 24, 2021,
triggering penalties equal to 3.0% of the aggregate gross proceeds of the
securities sold in the Offering for the approximately two months of delay,

which
to date has totaled $350,000.




The Company agreed in the Purchase Agreement that, until the earlier of (1)
thirty (30) days after the date on which the registration statement that is
filed pursuant to the Registration Rights Agreement to register the resale by
the Purchasers of the Shares and the Warrant Shares is declared effective by the
SEC (such date, the "Effective Date") and (2) thirty (30) days after such date
that the Shares may be sold without limitation pursuant to Rule 144 under the
Securities Act, neither the Company nor any subsidiary thereof would (i) issue,
enter into any agreement to issue or announce the issuance or proposed issuance
of any shares of common stock (or common stock equivalents) or (ii) file any
registration statement or any amendment or supplement thereto, in each case
other than (A) as contemplated pursuant to the Registration Rights Agreement and
(B) as contemplated by that certain Registration Rights Agreement, dated June
12, 2020, by and between the Company and the parties signatory thereto.



                                       85



 Each of the directors and executive officers of the Company has entered into a
lock-up agreement with the Company in connection with the Offering (each, a
"Lock-Up Agreement"). Under the Lock-Up Agreements, from the date of the lock-up
agreements until the earlier of (x) sixty (60) days after the Effective Date and
(y) November 6, 2021, the directors and executive officers will not offer, sell,
contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any
transaction which is designed to, or might reasonably be expected to, result in
the disposition (whether by actual disposition or effective economic disposition
due to cash settlement or otherwise) by the director or executive officer),
directly or indirectly, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section
16 of the Exchange Act, with respect to, any shares of common stock or
securities convertible, exchangeable or exercisable into, shares of common
stock, subject to limited exceptions. Maxim Group LLC (the "Placement Agent")
acted as exclusive placement agent in connection with the Offering pursuant to
an Engagement Letter between the Company and the Placement Agent dated January
26, 2021 (together with the amendment letter dated February 18, 2021 (such
amendment letter, the "Amendment Letter"), the "Engagement Letter"). The
Engagement Letter provides, among other things, that the Placement Agent will
receive a commission equal to seven percent (7%) of the aggregate gross proceeds
of the Offering.



The Engagement Letter and the Purchase Agreement contain customary
representations and warranties, agreements and obligations, conditions to
closing and termination provisions. The representations, warranties and
covenants contained in the Engagement Letter and the Purchase Agreement were
made only for purposes of such agreement and as of specific dates, were solely
for the benefit of the parties to the Engagement Letter and the Purchase
Agreement, and may be subject to limitations agreed upon by the contracting
parties.

Off-Balance Sheet Arrangements


There are no off-balance sheet arrangements between us and any other entity that
have, or are reasonably likely to have, a current or future effect on financial
conditions, changes in financial conditions, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.



Critical Accounting Policies

See Note 3 - Summary of Significant Accounting Policies of our consolidated financial statements included within this Annual Report for our critical accounting policies.

Recently Issued Accounting Pronouncements

See Note 3 - Summary of Significant Accounting Policies of our consolidated financial statements included within this Annual Report for a summary of recently issued and adopted accounting pronouncements.

© Edgar Online, source Glimpses