ETBI Eastgate Biotech Corporation (CE)

Item 1. Business.

Corporate History

Eastgate Biotech Corp., a Nevada corporation, was organized on September 8, 1999 under the name of Eastgate Acquisitions Corporation for the purpose to engage in investigating prospective business opportunities with the intent to acquire or merge with one or more businesses. In March 2002, we changed our corporate name to Talavera’s Fine Furniture in anticipation of making an acquisition. However, the acquisition was not finalized and in November 2006, we changed our name back to Eastgate Acquisitions. In October 2007, the name was changed to Eastgate Acquisitions Corporation and we continued our search for business opportunities. In November 2014, we amended our Restated Articles of Incorporation to change our name to "Eastgate Biotech Corp." from "Eastgate Acquisitions Corporation".

On May 22, 2012, we finalized the Patent Acquisition Agreement (“ Acquisition Agreement ”) to acquire certain products, formulas, processes, proprietary technology and/or patents and patent applications related to pharmaceutical, nutraceutical, food supplements and consumer health products (collectively referred to as the “ Acquired Products ”).

In anticipation of the Acquisition Agreement, on March 6, 2012 we effected a forward stock split of our issued and outstanding shares of common stock on a 7.75 shares for one share basis. Prior to the forward stock split, we had 1.5 million shares of common stock issued and outstanding, which increased to 11,625,000 shares following the split. All further references herein to our common stock will be on a post-split basis.

In exchange for the Acquired Products and technology, we issued at the closing to the seller, Anna Gluskin and/or her assigns, 10 million shares of Eastgate’s authorized, but previously unissued common stock, post-split. The closing of the Acquisition Agreement was initially contingent upon realizing financing of $300,000, which was subsequently reduced to $50,000. At the closing of the Acquisition Agreement Anna Gluskin was appointed our Chief Executive Officer and to our Board of Directors.

In addition to the 10 million shares of common stock issued to the seller, the Acquisition Agreement provided for the issuance of 10 million shares of common stock to other persons in consideration for services rendered and/or monies advanced to Eastgate. Those shares were issued to TGT Investment Management Inc., an entity owned by our current President, for expenses paid prior to the Acquisition Agreement for product development and for services to the company and in connection with finalizing the Acquisition Agreement.

Upon closing the Acquisition Agreement, we have become engaged in developing, formulating and ultimately commercializing innovative pharmaceutical, nutraceutical, food supplements and consumer health products. Our goal is to apply novel technologies in order to improve the efficacy of the Acquired Products, based on natural or well-established compounds. It is our intention to complete formulation of the Acquired Products and to ultimately market commercialized products and compounds. We have also been focused on developing innovative pipeline products that address chronic diseases such as diabetes with the clear intent of partnering with global partners to meet unmet needs in emerging Markets. We are a development stage company in the early phase of research and there is no assurance that we will be able to successfully formulate and commercialize any future products.

Our principal executive offices are presently located at 2203-65 Harbour Square, Toronto, Ontario, Canada M5J 2L4 and our telephone number is (647) 692-0652.

Business Activities

We are primarily engaged in the development of novel formulations of natural compounds and pharmaceutical products. We intend to accomplish this by developing our proprietary self-emulsifying drug delivery systems, predominantly forming nanoemulsions. Although we have not finalized any pharmaceuticals products and are in the early stages of research, our goal is to be able to develop patentable and Trade Secret formulations of pharmaceutical, nutraceutical dietary supplements and consumer health products. We recently started marketing and distribution and have limited sales for some of our nutraceuticals products.

Our self-emulsifying drug delivery technology includes two different approaches that we believe could ultimately improve solubility of poorly soluble compounds and provide new methods of delivery. These perceived approaches consist of (i) a self-nanoemulsifying vehicles for oral or topical use, and (ii) a technological approach intended to improve solubility of incorporated compounds. We expect that our technologies can be applied to products based on natural compounds and well-established pharmaceuticals with known biological activities.

In developing our proposed products, we intend to use modern delivery technologies. Some examples are:

We are presently applying our technology only to known pharmaceutical compounds that have been previously approved by the Food and Drug Administration (“ FDA ”). Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act permits a company to apply for FDA approval of a New Drug Application (“ NDA ”) without conducting the full complement of safety and efficacy trials. An applicant under Section 505(b)(2) may use the original filer’s information and rely on published studies to demonstrate the safety and effectiveness of the new drug based on a known compound. Because we intend to apply our technology only to previously approved pharmaceutical compounds, we believe that Section 505(b)(2) could possibly be available to us. If we are permitted to use Section 505(b)(2), it would likely decrease requirements for preclinical investigations and clinical testing and accelerate the overall approval time for our products, although there can be no assurance of this.

Some of our proposed products under development are based on existing natural compounds. Many of these proposed products are made of essential oils and plant extracts. Our proposed products comprise excipients listed in the FDA “Inactive Ingredients Guide” that we believe are safe and approved for human consumption. Additionally, we believe that these proposed products can be manufactured using common equipment. We anticipate that we will be able to apply self-emulsifying technologies for development of a variety of pharmaceuticals and natural products for different applications.

In October 2012, our CEO, Anna Gluskin, contributed to the company the corporate entity Eastgate Pharmaceuticals Inc., a Province of Ontario, Canada corporation, of which Ms. Gluskin was the sole shareholder, officer and director. Thus, Eastgate Pharmaceuticals became and will operate as our wholly owned subsidiary. Initially, we deposited into Eastgate Pharmaceuticals the $100,000 proceeds from a demand promissory note for use by the company. We anticipate that we may conduct many of our future operations in Canada through the subsidiary.

Glossary of Terms

To better understand the information discussed herein, we are including the following description of some of the terms used herein.

Bioavailability. A measurement of the rate and extent to which a drug is absorbed into the blood stream. An increase of bioavailability of 50% may allow for a decrease in the necessary dosage of the drug by 1.5 times, subsequently diminishing the side effects.

Bioadhesion. A property of a substance to adhere to body tissues and remain there for an extended period of time.

Chylomicrons . Chylomicrons are lipoprotein particles formed from digested food lipids, created by the absorptive cells of the small intestine. They transport required lipids to the liver, spleen, cardiac and skeletal muscle tissue, where their content is unloaded by the activity of the enzymes. Chylomicrons have a diameter of 75 to 1,200 nanometers (“ nm ”). They are released into lymphatic vessels in the small intestine and are then secreted into the bloodstream.

Emulsion. A mixture of two liquids that are normally not miscible (unblendable). In oil-in-water emulsion, for example, liquid oil is dispersed in the water with help of surfactant.

Excipient . Generally an inert or inactive material used as a carrier for an active ingredient or drug.

Hydrophobic compounds. Compounds that are repelled by water and are usually insoluble in water. Examples of hydrophobic compounds include oils, fats, waxes and greasy substances. The word hydrophobic is constructed of two Greek words: hydro – water, and phobic– fear, which means something with a fear of water.

Homogeneous vehicle of water miscible non-irritating polar solvents and pharmaceutically acceptable surfactants. Relates to efficient vehicle for enhanced local and transdermal delivery of hydrophobic poorly soluble compounds.

In situ. Describes the process happening in the moment of combining of two different phases or components. Nanoemulsion forms “in situ” after combining of SNEDDS (defined below) and water media without use of any special equipment or application of additional force.

Micelles and polymer-lipid micelles. A micelle is an aggregate of surfactant molecules, having polar heads and non-polar tails. A typical micelle in aqueous solution forms an aggregate with the hydrophilic "head" regions in contact with while the hydrophobic tails form the micelle core. The driving force for spontaneous micelle formation is the hydrophobic interaction. Combination of some surfactants, lipidic components and polymeric molecules leads to formation of “polymer-lipid mixed micelles.” These mixed micelles demonstrate high drug loading and improved stability

Nanoemulsion. Nanoemulsion is thermodynamically stable emulsion where two immiscible liquids (water and oil phases) are mixed to form a biphasic system by means of an appropriate surfactants. Nanoemulsion droplet sizes fall typically in the narrow range of 10-200 nm and show narrow size distributions. The use of nanoemulsions as drug carriers show promise for the future of cosmetics, diagnostics, drug therapies, and biotechnology.

Nanoemulsification and self-nanoemulsifying drug delivery system (SNEDDS). Self-microemulsifying drug delivery (SMEDDS) or self-nanoemulsifying drug delivery sysstems (SNEDDS) are homogenous mixtures of natural or synthetic oils, surfactants and, sometimes, one or more biologically active compounds. During combining of self-emulsifying composition with aqueous media, such as saliva, blood, gastrointestinal (GI) fluid and other, a fine oil-in-water (o/w) emulsion with average droplets size smaller than 300 nm, usually in range 10-100 nm forms immediately (“ in situ” nanoemulsification). Fine oil droplets are absorbed rapidly transmucosally, transdermally or in the gastro-intestinal tract. In contrast to traditional submicron emulsions, SNEDDS are physically stable formulations that are easy to manufacture. Additionally, SNEDDS may improve the rate and extent of drug absorption and pharmacokinetics parameters of lipophilic drugs.

Surfactants. A surfactant is a compound that stabilizes mixtures of oil and water by reducing the surface tension at the interface between the oil and water phases. Because water and oil do not dissolve in each other, a surfactant has to be added to the mixture to keep droplets from merging and separating into layers.

Product Overview

Our goal is to work towards development of novel patentable and Trade Secret formulations of pharmaceutical and natural products. The following depicts those products we plan to develop. However, we are in the early stages of research and there is no assurance that we will be able to finalize and market any commercially viable products.

Pharmaceutical Products in developmen t

Natural products and dietary supplements in development

Business Strategy

Our primary business strategy capitalizes on the growing interest in the following areas:

1. Developing innovative therapeutic products. Our goal is to discover, develop and commercialize innovative therapeutic products into novel dosage forms using our delivery technologies by incorporating existing, poorly soluble compounds having known biological activity and well established safety profiles.

2. Development of novel natural products and dietary supplements. We believe that people are increasingly interested in alternative approaches to health care. We intend to apply our technological approaches to developing natural health products and dietary supplements.

Technology and Products

Our research is focused on establishing that our technology can improve solubility of poorly soluble drugs. Our technologies are in the early stage of development. Numerous studies will have to be conducted to support our current hypothesis about our technologies. To date, we have done a limited amount of work with our proposed products and do not have sufficient knowledge as to whether any will be successful or our technologies validated. We are partially relying on the research data that was published in scientific journals. There are no assurances that third party findings will be replicated by our own research in the future. Our proposed products, based on our technology, will have to be supported by our own extensive research that will take a long time and significant resources to accomplish. Some of the relevant findings published in scientific literature used as a basis for our technology and the proposed products are presented below.

There are several scientific reviews describing the use of self-emulsifying formulations for improvement of solubility and bioavailability of poorly soluble compounds. Referencing a review by He C-X. et al, (2010), at least 40% of new pharmacologically active chemical entities identified by high-throughput screening have a problem with water solubility. Poor water solubility correlates with numerous issues such as impaired bioavailability and increased cost of drug products. Oral administration of poorly water-soluble drugs can result in low drug dissolution rate and poor absorption in the gastrointestinal tract, whereas intravenous administration of such compounds accompanied by adverse effects and toxic reactions as a result of the precipitation and aggregation of poorly soluble drugs. Therefore, efforts have been made to improve the solubility of the drug candidates. The usual formulation strategy is the conversion of a drug into a salt form by pH adjustment, if possible. If the drug is intrinsically insoluble, there are still various strategies available, such as the use of co-solvents, inclusion complexes, nanosuspensions, micelles, liposomes, polymeric nanoparticles, micro- and nanoemulsions or solid dispersions. ¹

________________

¹ He C-X, et.al., (2010) “ Microemulsions as drug delivery systems to improve the solubility and the bioavailability of poorly water-soluble drugs ” Expert Opinion. Drug Delivery. 7(4) pp. 445-460.

Kohli K. et al. (2010) describes self-emulsifying drug delivery systems as a vital tool in solving low bioavailability issues of poorly soluble drugs. Hydrophobic drugs can be dissolved in these systems, designed for oral administration. When such system is released in the lumen of the gastrointestinal tract, it disperses to form a fine micro- or nanoemulsion with the aid of gastrointestinal fluid. This leads to in situ solubilization of drug that can subsequently be absorbed dominantly via the lymphatic pathway, bypassing the hepatic first-pass effect. This article presents a scientific body of various published reports on diverse types of self-emulsifying formulations with emphasis on their formulation, characterization and in vitro analysis, with examples of currently marketed preparations. ²

Chen H. et al., (2011) in the article “ Nanonization strategies for poorly water-soluble drugs ”, discusses the use of nanoemulsions for successful oral, topical and ophthalmic application. ³

Our nanoemulsion based delivery platform, when fully developed and approved, can be applicable in several types of dosage forms:

1. Liquid formulations for oral administration . Self-nanoemulsifying delivery system applicable for lorazepam oral spray, liquid forms of vitamin D3, nanoemulsion of essential oils (E-drops Nano). We believe the technology could eliminate product loss due to adhesion to glass walls or surfaces.

2. Topical formulations containing polar solvents. This approach is intended to improve solubility of poorly soluble compounds and may prevent drug precipitation. For example, solubility of Ketoconazole in the proposed delivery system exceeds 50 mg/ml, while drug solubility in pure alcohol is only 20 mg/ml. After addition of water or saline to our Ketoconazole formulation, the microscopic examination showed no signs of precipitation or crystallization of the drug for at least 24 hours. We plan to use this technology in our proposed topical antifungal composition of Ketoconazole.

3. Oral solid dosage forms . Self-microemulsifying compositions for incorporation of poorly soluble compounds, including plant extracts and natural components along with different lipids or essential oils, into gelatin capsules. The capsule dissolves in the stomach and releases a fine emulsion with biologically active components incorporated in small oil droplets. This approach can be used for delivery of a combination of Banaba extract and alpha-Lipoic acid (Glucora™). The mean droplet size of Glucora formulation after dissolution in simulated gastric fluid was found to be about 108 nm.

Proposed Products

Pharmaceutical prescriptions

Intraoral (sublingual) insulin tablet (EGP-1214)

The proposed intraoral insulin tablet will be designed for the treatment of early stages of Type 2 diabetes as well as for pre-diabetes. EGP-1214 is a compressed tablet containing human recombinant insulin and designed for sublingual administration for transmucosal delivery of the peptide for blood glucose management.

Current research has shown that the administration of insulin at earlier stages of Type 2 diabetes mellitus has positive effects and is now beginning to be included in the standard treatment regimens. Providing additional exogenous insulin to Type 2 diabetes patients may slow down the rate of pancreas deterioration and improve glycemic control. The gland can respite and the disease progress may decelerate. While the benefits can be significant, some patients are hesitant to introduce injections into their daily routine. The addition of non-injectable insulin to the anti-diabetes treatment regimen should decrease the reluctance of diabetics to start the early insulin treatment and might have significant benefits in terms of progression of the disease.

_______________

² Kohli K. et al., (2010) “ Self-emulsifying drug delivery systems: an approach to enhance oral bioavailability ”. Drug Discovery Today 15 (21/22) pp. 958-965.

³ Chen H. et al., (2011) in the article “ Nanonization strategies for poorly water-soluble drugs ” Drug Discovery Today 16, (7/8) pp. 354-360.

We expect that when fully developed and tested, the intraoral insulin tablet may provide a fast and effective insulin administration for patients in need with pre-diabetes and early stages of Type 2 diabetes.

When fully developed, it may be the first intraoral insulin medicine. In addition to improved quality of life for the people with diabetes, we anticipate increased patient compliance and lower incidence of hypoglycemic events due to lower biopotency when compared to existing treatment with injectable insulin.

We are presently in the research phase of developing the formulation of EGP-1214. There is no assurance that the product will be able to reach proposed results and efficacy or be commercially viable.

Lorazepam oral spray for emergency treatment of acute seizures

Control of prolonged acute severe seizures (Cluster Seizures, Status Epilepticus) usually requires hospitalization and emergency treatment by means of intravenous anticonvulsant drugs. Lorazepam is an approved benzodiazepine drug with known anticonvulsant activity and relatively low level of side effects. Administration of anticonvulsants by routes more convenient than intravenous injection (for example buccal or nasal), has been actively studied, but to the best of our knowledge, to date no buccal or nasal medications have been approved in North America. Accordingly, we believe there is an unmet need for a convenient, fast acting treatment of the acute seizures, particularly in out-of-hospital settings, which does not require parenteral administration.

Our proposed Lorazepam oral spray for transmucosal delivery is based on the proprietary waterless self-nanoemulsifying formula, which is designed to prevent precipitation of the active ingredient after contact with saliva. Although in the early stages of research, we believe that the spray, when developed, could provide fast onset of action and enhance drug absorption through the oral mucosa. Our experiments in animals have shown fast onset (3-5 minutes) and effective anti-convulsant action of Lorazepam spray, comparable with parenterally administered Lorazepam injectable solution in the same dose.

We expect that when fully developed and tested, the oral spray formulation of Lorazepam will be capable of providing a fast and effective treatment of acute seizures in the hospital, in outpatient settings or in the home. This novel form of the anticonvulsant would be a convenient alternative to injectable Lorazepam for efficient control of epilepsy emergencies.

Lorazepam oral spray is still in the research stage and our goal is to develop it with the following features:

Commercialization potential and development

Management believes that the large number of annual incidence of epileptic seizures and acute repetitive seizures in the United States creates a potential for Lorazepam spray. Currently, patients with prolonged acute seizures must be transported to a hospital and treated with intravenous infusion of Lorazepam or Diazepam. Due to delay of transportation and late beginning of the treatment, acute seizures can last for extended period, causing brain damage, disability and possibly death. We expect that Lorazepam oral spray, if finalized and made available, could ultimately be used in out-of-hospital settings shortly after a seizure begins.

If initial investigations in animals and optimization of the formulation of transmucosal Lorazepam are successful, the spray could be manufactured for toxicological, safety and pharmacokinetics investigations. Analytical development, product optimization and stability program for the selected dosage form will be carried out in accordance with good laboratory practice (GLP) and good manufacturing practice (GMP) requirements.

Required safety pharmacology and toxicology programs will be conducted using the final formulation in accordance with current regulations. Size and duration of toxicology and safety pharmacology program and clinical development program will be established after meeting with health regulators.

The estimated duration of product development is 24 to 36 months for pre-clinical studies, including toxicology and safety pharmacology in accordance with Canadian requirements, with an estimated cost of approximately $6.0 million. Clinical trials can start within three years after the start of the project. Because the proposed product is based on a long approved and well-known drug with good safety profile, and the proposed dosage is in the approved dosage range, we believe that a shortened clinical development could possibly be sufficient for marketing approval in Canada. We estimate the cost of the clinical trials program in Canada to be approximately $13 million. We also believe that Lorazepam oral spray in the U.S. may satisfy development program requirements outlined in Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act. However, there is no assurance that we will be able to use the shortened approval process in Canada or that Section 505(b)(2) will be available in the U.S.

We are presently in the research phase of developing formulation of Lorazepam Oral Spray. There is no assurance that the product will be able to reach proposed results and efficacy or be commercially viable.

2% Ketoconazole antifungal ointment

Ketoconazole is a synthetic drug used to treat fungal infections. Structurally, Ketoconazole belongs to an Imidazole class of antifungal compounds. Topical preparations of Ketoconazole are used to treat superficial fungal infections of the skin or nails.

We are developing what we believe to be a novel topical formulation of 2% Ketoconazole ointment. Ketoconazole is a drug with very low solubility, but it completely dissolves in a proprietary vehicle in the form of the water washable ointment. Solubility of Ketoconazole in the vehicle for proposed delivery system exceeds 50 mg/ml, while drug solubility in pure alcohol is only 20 mg/ml. After addition of water or saline to our Ketoconazole formulation the microscopic examination showed no signs of precipitation or crystallization of the drug for at least 24 hours. The novel solubilizing formulation prevents Ketoconazole from precipitation on contact with body tissues and a combination of polar solvents retain the drug in an active dissolved state.

Commercialization potential and development

2% Ketoconazole gel (Xolegel® 2%) is intended for the topical treatment of seborrheic dermatitis and has a retail price of approximately $300 for a 60 gram tube. The efficacy of this alcohol based formulation in treatment of superficial fungal infections is found to be about 25% % (XOLEGEL™ GEL, 2%, FDA prescription information). We plan to test the ability of our proposed formulation of Ketoconazole, when developed, to demonstrate antifungal activity for susceptible topical fungal strains.

Due to the well-known active pharmaceutical ingredient and inactive components used in our formulation of Ketoconazole, we believe 2% Ketoconazole ointment may satisfy development program requirements outlined in Section 505(b)(2) of Federal Food, Drug and Cosmetic Act. We estimate that product development cost in Canada will be approximately $4.5 million for pre-clinical studies, including toxicology and safety pharmacology and will take from 18 to 24 months. Clinical trials can start within 28 to 32 months after commencing the project and will cost approximately $10.0 million to $12.0 million. We have not commenced any preclinical investigations in animals or optimization of the formulation for this product.

We are presently in the research phase of developing topical formulation of 2% Ketoconazole ointment. There is no assurance that the product will be able to reach proposed results and efficacy.

Metformin Chewable Tablets (Taste Masked)

Metformin is a widely prescribed drug for treatment of type 2 diabetes. It is available in the United States and Canada by prescription in tablets of 500, 850 and 1000 mg and recommended dose can reach 3000 mg per day. Metformin use is often associated with stomach disturbances such as diarrhea, nausea/vomiting, flatulence, asthenia, indigestion and abdominal discomfort. The big Metformin tablet is difficult to swallow and the unpleasant taste prevents patients from chewing the tablets.

Our proposed novel taste-masked composition of Metformin is intended to be chewed or administered sublingually as lozenges. We believe this method of administration may be more convenient for patients with difficulties in swallowing. Our investigation has demonstrated good taste-masking properties of tablets, prepared using our proprietary composition and process.

Our goal for this proposed product is to develop a patentable tablet formulation and process for which the tablet can be manufactured using standard pharmaceutical equipment. All ingredients are USP/NF or pharmaceutical grade and listed in FDA Inactive Ingredients Guide and Canadian List of Acceptable Non-Medicinal Ingredients.

Because Metformin is a well-known drug, we believe that Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act requirements may be applicable. We have not yet approached any agency regarding the Metformin product and estimate approximately 24 months and $2.0 million to complete formulation development of our proposed Metformin tablets. We have not commenced any preclinical investigations in animals or optimization of the formulation for this product.

We are presently in the research phase of developing a chewable Metformin tablet. There is no assurance that the product will be able to reach proposed results and efficacy.

Natural health products

E-drops Nano – nanoemulsion of essential oils combination for oral administration

An innovative combination of essential oils for maintaining urinary system in healthy conditions was discovered by Dr. Enes Hasanagic, who originated a mixture of several essential oils, given orally. E-drops developed by Dr. Hasanagic have become popular in Central and Eastern Europe.

The primary limitation for wide use of this product is a strong astringent taste and some stomach irritation resulting is consumer dissatisfaction. Using a proprietary technology, we have developed a process that can incorporate the essential oils into a self-nanoemulsifying composition, which forms nanoemulsion when added to water. We believe the resulting nanoemulsion has a more pleasing taste and reduces the loss of active components due to adhesion to walls of the cup. We have determined that droplet size of the formed emulsion is around 100 to 200 nm. The main active ingredient of the E-drops Nano is Juniper extract in form of steam distilled essential oil. According to CFR 21, Juniper essential oil is a Generally Recognized As Safe (“ GRAS ”) material (CFR 21 part 582.20) and mentioned as a component of digestive aid products (CFR 21, § 310.545 part (8)(ii) of FDA HHS). The properties of Juniper extract are described in scientific literature as a diuretic, carminative and digestive aid. ⁴ E-drops Nano has received a Natural Product Number from Health Canada (NPN 80030783).

PURALEN ^TM - essential oils combination for oral administration

PURALEN is a combination of essential oils, similar to E-drops. PURALEN forms a relatively coarse emulsion upon contact with water (5-100 micrometers as estimated by microsopical examination). PURALEN contains Juniper essential oil. According to CFR 21, Juniper essential oil is a GRAS material (CFR 21 part 582.20) and mentioned as a component of digestive aid products (CFR 21, § 310.545 part (8)(ii) of FDA HHS).

_________________

⁴ Juniper is included in Health Canada monograph http://webprod.hc-sc.gc.ca/nhpid-bdipsn/monoReq.do?id=123&> (internet link) and other compendial sources:

US PDR for Herbal Medicines (Ed. 1, Medical Economics Company 1999, pp. 918-919)

The Complete Commission E Monographs - Therapeutic Guide to Herbal Medicines Boston 1999, pp. 218-220

British Herbal Compendium, vol. 2 British Herbal Medicine Association, Bournemouth, UK 2006 pp. 237-241

USA – Title 21 in Code of Federal Regulations revision 2000 Part 182.20

Glucora ^TM - soft gelatin capsules with Banaba extract in self-emulsifying formulation for oral administration

We believe that natural products could be a helpful additive to diet and exercise. Several medicinal plants have been studied for potential carbohydrate regulating activity including Lagerstroemia speciosa (Banaba), Eriobotrya japonica (Loquat), Ternstroemia gymnanthera (Japanese Cleyera) and others. One of the bioactive substances found in these plants is Corosolic acid, a sterol type molecule. A study reported in 2006 by Japanese researchers showed that Corosolic acid significantly affects glucose transport across cell membranes. A distinctive feature of Corosolic acid is not only the stimulation of glucose transport, but also possible suppresses the growth of the fat cells. ⁵ It has been shown in animals that extracts of Lagersrtroemia speciosa activate glucose transport to adipocytes, similar to insulin. ⁶

Animal and human studies as well as in vitro investigations indicate that Banaba leaf extracts demonstrate glucose regulating properties. ⁷ Based on the studies conducted to date, no adverse effects have been reported in animals using either Corosolic acid or standardized Banaba extracts, nor have adverse events been observed or reported in controlled human clinical studies. ⁸

We are developing the Glucora ^TM capsules based on self-nanoemulsifying formulation containing Banaba leaf extract and alpha-Lipoic acid. We are presently in the research phase of developing Glucora ^TM with the goal of eventually formulating a marketable capsule. There is no guarantee that the product will be able to reach proposed results and efficacy.

URBAN POWER ^TM : Ursolic acid and Banaba extract combination in soft gelatin capsule – for oral administration

URBAN POWER ^TM soft gelatin capsules will contain a combination of Banaba extract (18% Corosolic acid), pure Ursolic acid extracted from Sage and alpha-Lipoic acid. URBAN POWER™ will be based on a proprietary delivery system.

Ursolic acid is a natural compound, present in apple peels and many edible plants. Animal experiments have shown that ursolic acid reduced adiposity and blood glucose in non-obese mice and also reduces total body weight, white fat, glucose intolerance and hepatic steatosis in high fat-fed mice. ⁹

We are presently in the research phase of developing Urban Power with the goal of eventually formulating a marketable capsule. There is no assurance that the product will be able to reach proposed results and efficacy.

Other Proposed Products

In addition to the above product candidates, we believe that our technologies can be applied to additional products that could potentially compete with similar products already on the market. Using our existing technologies, we are developing with a goal of commercializing three new products:

None of the company’s natural health products contain any new ingredients. All ingredients used in our natural health products are on the list of approved ingredients with the regulatory bodies. The FDA does not require any notification or registration for natural health products or dietary supplements.

_______________

⁵ M. Fukushima et al. / Diabetes Research and Clinical Practice, August 2006, 73(2), pg. 174-177.

⁶ T. Hayashi, et al., “ Ellagitannins from Lagerstroemia speciosa as activators of glucose transport in fat cells ”, Planta Med. 2002 v.68 pp. 173–175.

⁷ G. Klein et al. / Antidiabetes and Anti-obesity Activity of Lagerstroemia speciosa, Evidence- Based Complementary and Alternative Medicines, 2007; 4(4), pp. 401–407.

⁸ The Review of Natural Products, Wolfers Kluwer Health, Inc., 2004, “Banaba”.

⁹ Kunkel SD, et al. (2012) " Ursolic Acid Increases Skeletal Muscle and Brown Fat and Decreases Diet-Induced Obesity, Glucose Intolerance and Fatty Liver Disease ". PLoS ONE 7(6): e39332. doi:10.1371/journal.pone.0039332, Pages 2-3.

Government Regulation - Pharmaceutical products

Our research and development activities and the future manufacturing and marketing of our pharmaceutical products are subject to extensive regulation by the FDA in the United States, Health Canada in Canada and comparable designated regulatory authorities in other countries. Among other things, extensive regulations require us to satisfy numerous conditions before we can bring products to market. These regulations are not unique to us and they apply to all competitors in our industry.

The following discussion summarizes the principal features of food and drug regulation in the United States and other countries as they affect our business.

United States

All aspects of our research, development and foreseeable commercial activities relating to pharmaceutical products are subject to extensive regulation by the FDA and other regulatory authorities in the United States. United States federal and state statutes and regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion of pharmaceutical products. The regulatory approval process, including clinical trials, usually takes several years and requires the expenditure of substantial resources.

The steps required before a pharmaceutical product may be marketed in the United States include:

Preclinical Development

Preclinical development includes laboratory evaluation of product chemistry and formulation, as well as animal studies to assess the efficacy and potential safety of the product. Preclinical safety tests must be conducted by laboratories that comply with government regulations regarding Good Laboratory Practice, or GLP regulations. We plan to conduct and submit the results of preclinical development to the FDA as part of our Investigational New Drug Application (“ IND ”) prior to commencing clinical trials. We may be required to conduct extensive toxicology studies as part of preclinical development.

The results of these evaluations and tests are then submitted to the FDA, together with manufacturing information, analytical data, and protocols for clinical studies, in an IND, to receive an approval from the FDA that the clinical studies proposed under the IND are allowed to proceed.

Clinical trials

Based on preclinical testing, an IND is filed with the FDA to begin human testing of the drug. The IND becomes effective, if not rejected by the FDA, within 30 days. The IND must indicate the results of previous experiments, how, where and by whom the new studies will be conducted, the chemical structure of the compound, the possible mechanism of action, any toxic effects of the compound found in the animal studies and how the product is manufactured. All clinical trials must be conducted in accordance with good clinical practice (“ GCP ”), regulations. In addition, an Institutional Review Board (“ IRB ”), generally comprised of physicians at the hospital or clinic where the proposed studies will be conducted, must review and approve the IND. The IRB also continues to monitor the study. We must submit progress reports detailing the results of the clinical trials to the FDA at least annually. In addition, the FDA may, at any time during the 30-day period or at any time thereafter, impose a clinical hold on proposed or ongoing clinical trials. If the FDA imposes a clinical hold, clinical trials cannot commence or recommence without FDA authorization and then only under terms authorized by the FDA. In some instances, the IND application process can result in substantial delay and expense.

Clinical trials involve the administration of a new drug to humans, under the supervision of qualified investigators using the protocol approved by the FDA and IRB, to establish the safety and efficacy of the product candidate for the intended use.

Clinical trials are typically conducted in three sequential phases (Phase I, Phase II, and Phase III), but the phases may overlap. Phase I clinical trials test the drug on healthy human subjects for safety and other aspects, but usually not effectiveness. Phase II clinical trials are conducted in a limited patient population to gather evidence about the efficacy of the drug for specific purposes, to determine dosage tolerance and optimal dosages, and to identify possible adverse effects and safety risks. When a product has shown evidence of efficacy and acceptable safety in Phase II evaluations, Phase III clinical trials are undertaken to evaluate and confirm clinical efficacy and to test for safety in an expanded patient population at several clinical trial sites in different geographical locations. Clinical trials need to be conducted in compliance with the FDA’s Good Clinical Practice requirements.

After the completion of clinical trials, if there is substantial evidence that the drug is safe and effective, a New Drug Application (“ NDA ”) is filed with the FDA. The NDA must contain all of the information on the drug gathered to that date, including data from the clinical trials. NDAs are often over 100,000 pages in length.

NDA Submission

The results of pre-clinical studies, clinical studies, and adequate data on chemistry, manufacturing and control information to ensure reproducible product quality batch after batch, are submitted to FDA in an NDA to seek approval to market and commercialize the drug product for a specified use. The FDA reviews all submitted NDAs and is governed by the Prescription Drug User Fee Act (“ PDUFA ”) regarding response time to the application, which is generally 12 months (and shorter for a priority application). It may deny a NDA if it believes that applicable regulatory criteria are not satisfied. The FDA also may require additional clarifications on the existing application or even additional testing for safety and efficacy of the drug.

In such an event, the NDA must be resubmitted with the additional information and, again, is subject to review before filing. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA. Under the Federal Food, Drug and Cosmetic Act, the FDA has 365 days in which to review the NDA and respond to the applicant. The review process is often significantly extended by FDA requests for additional information or clarification regarding information already provided in the submission. The FDA may refer the application to an appropriate advisory committee, typically a panel of clinicians, for review, evaluation and a recommendation as to whether the application should be approved.

The FDA is not bound by the recommendation of an advisory committee. If FDA evaluations of the NDA and the manufacturing facilities are favorable, the FDA may issue either an approval letter, or an approvable letter that will likely contain a number of conditions that must be met in order to secure final approval of the NDA. When and if those conditions have been met to the FDA’s satisfaction, the FDA will issue an approval letter, authorizing commercial marketing of the drug for certain indications. If the FDA’s evaluation of the NDA submission or manufacturing facilities is not favorable, the FDA may refuse to approve the NDA or issue a not approvable letter.

If the FDA approves the NDA, the drug becomes available for physicians to prescribe. Periodic reports must be submitted to the FDA, including descriptions of any adverse reactions reported. The FDA may request additional post marketing studies, or Phase IV studies, to evaluate long-term effects of the approved drug.

Section 505(b)(2)

An application under section 505(b)(2) of Federal Food, Drug and Cosmetic Act contains full safety and effectiveness reports, but allows at least some of the information required for approval to come from studies not conducted by or for the applicant. This application can only be used for drugs that are similar or equivalent to the ones already approved by the FDA in an NDA for another company. The applicant does not need to get permission from the original filer to use their information and it allows the applicant to rely on studies published in the scientific literature to demonstrate the safety and effectiveness of new drug. The 505(b)(2) application is intended to encourage sponsors to develop innovative medicines using currently available products by significantly reducing the time and money to bring new application of an old drug to market. There is no assurance that any of our proposed products will satisfy the requirements for Section 505(b)(2) approval, or that we will be successful in completing the shortened approval process for any product. If we are unable to use the 505(b)(2) process, we will experience a significant increase in development expenses and approval time will be considerably longer. This could ultimately preclude the marketing of our proposed products, which could have a serious negative affect to our business plan and potential for future revenues.

Natural Health Products

Manufacturing of natural health products for human consumption requires compliance with current GMP regulations. Health Canada Natural Health Products Directorate encourages registration of the natural health products in accordance with current regulations and obtaining a Natural Product Number (“ NPN ”). We have applied for an NPN for each of our proposed nutraceuticals formulations. Currently we have NPN number for our nanoemulsion formulation for E-drops Nano (NPN 80030783), Vitamin D3 nanoemulsion (NPN 80037273), Hand sanitizer CleanEzze (NPN 80041150), essential oil combination WartsX (NPN 80041153), vitamin complex Shield-X (NPN 80041141) and Glucora (NPN 80057426).

In the United States, FDA regulates both finished dietary supplement products and dietary ingredients under a different set of regulations than those covering "conventional" foods and drug products (prescription and Over-the-Counter). Under the Dietary Supplement Health and Education Act of 1994 (“ DSHEA ”), the dietary supplement or dietary ingredient manufacturer is responsible for ensuring that a dietary supplement or ingredient is safe before it is marketed. FDA is responsible for taking action against any unsafe dietary supplement product after it reaches the market. Generally, manufacturers do not need to register their products with FDA nor get FDA approval before producing or selling dietary supplements.

For European Union (“ EU ”) countries, Natural Health Products usually can be registered as “food supplements”. Essential oils nanoemulsion (E-drops Nano) was successfully registered as food supplement in Latvia (registration No. 10352) and placed into the EU database of registered food supplements. It simplifies and accelerates registration and approval of the product in other EU countries. We have also registered E-drops in Slovenia and Czech Republic We also have received an import license in Uzbekistan to sell E-Drops Nano in that country.

Marketing and Distribution

We plan to market our completed products through collaborative arrangements with companies that have well-established pharmaceutical and nutraceutical health products marketing and distribution capabilities, including expertise in the regulatory approval processes in their respective jurisdictions.

Currently we have several NPNs in Canada and registration as food supplement in Latvia (EU) for E-Drops Nano as well as import license for E-Drops Nano in Uzbekistan.

Nutraceuticals have become an important part of mainstream health care. We believe the market for nutraceuticals is growing. Although public awareness of nutraceuticals is increasing, only a small percentage of North Americans actually use nutraceuticals on a regular basis. Thus we believe there is a potential new market for these products for the following reasons:

Marketing Strategies

We have formulated a strategy that we believe will differentiate us as a company by:

Following this strategy, we believe we can gain access to many revenue generating channels through classic pharmaceuticals and other health care products. We further believe there are greater consumer demands, market growth potential and both real and perceived usefulness. We can increase market share by reducing market share of competitors. This strategy will capitalize on the market development to date and capture a share of markets held by existing nutraceuticals. The key benefit is that we have carefully chosen products for the pipeline with the intent to maximize the therapeutic value of their discoveries and technology. This strategy requires extensive advertising in mainstream media, including infomercial, interactive TV, direct mail, independent sales reps and educational inserts/newsletters. Product studies will support this marketing strategy. In this context, the company will pursue preliminary inquiries from favored vendors.

Management plans to explore new markets for products through strategic positioning. This future strategy will involve developing specialty catalogues, placement on retail shelves of health food stores, educational product inserts/newsletters, media appearances discussing product, and independent sales reps.

We also intend to engage multi-level marketing companies. This strategy would likely involve creating private labels for a large customer. A major component of this strategy is the effect of product identity. This channel of distribution usually requires more price mark-up than the product would tolerate. As of the date hereof, we have not entered into any agreement or understanding with any prospective marketing company.

We further intend to keep capital outlay at a minimum by licensing and/or franchising our products to a brand-name company. This strategy would add value to the product in the form of brand name loyalty, manufacturing strength, and a strong sales/service force already in place.

Marketing Plan

In moving from the start-up stage into the first growth stage, we must identify and match market segments with appropriate distribution channels. Our goal is to expand regionally, both in Canada and the U.S., based on existing markets and consumer profiles. Once we realize regional sales growth and product recognition, we plan to implement a national and international marketing strategy. At such time as we reach this level, management anticipates it will employ a major marketing communications agency.

Our marketing and sales outline is as follows:

Initially, we intend to focus on marketing our proposed natural health products and on establishing distribution networks. We intend to market products as they become ready for sale, including satisfaction of any regulatory requirements. Initially during the next twelve months, we plan to market only natural products and hope to add new natural products during the next three years. Presently, only E-drops Nano, PURALEN ^TM and Glucora ^TM are completed and ready for commercial marketing. Additional products that we believe may be marketable in the next twelve months include the following:

Our plan is to provide either a finished product or product in bulk to distributors with regulatory support in order to register the product within specific jurisdictions. In December 2012, through our wholly owned subsidiary Eastgate Pharmaceuticals Inc., we engaged Mediq Dansmark A/S to market four of our natural products, Vitamin D3, V-Cleanzz, CleanEzze and WartsX. Mediq distributes throughout Scandinavia and approximately 14 countries throughout Europe. The agreement provides that delivery of product will be made against purchase orders issued by Mediq. The company shall acknowledge Mediq’s purchase orders within ten business days after receipt, including the requested deliver date. Mediq will endeavour to place orders in minimum volume of 5,000 units per order.

In September 2014, we entered into a licensing agreement with Purine Pharma LLC. Under the licensing agreement Purine Pharma will manufacture, market and distribute our nutraceutical product line under its own private label and promote the products within the international markets within Purine Pharma already markets and distributes. The agreement also provides Eastgate the option to use Purine Pharma as a contract manufacturer for its own brand name label for its own customers. Purine Pharma pays a royalty fee to Eastgate on sales of the products.

In February 2015, through our wholly owned subsidiary Eastgate Pharmaceuticals Inc., we engaged Preferred Nutrition Inc. to distribute the company’s nutraceutical and natural consumer products across Canada. Preferred Nutrition is a Canadian premier distribution company founded in 2002 supplying to approximately 1,200 independent health food stores across Canada. Preferred Nutrition is initially distributing E-drops under its own name, and is reviewing the distribution of other Eastgate products, such as Vitamin D3 drops and Glucora.

In May 2015, we engaged PharmaCenter Ltd. to market and distribute our E-drops in Slovakia and the Czech Republic after a successful registration of the product with local health authorities. PharmaCenter Ltd. headquartered in Budapest, Hungary and has subsidiaries in Slovakia and Czech Republic. Its main focus is in the business of selling innovative oncology, urology, onco-urology, OB-GYN and orphan drugs.

In June 2015 we executed a distribution and marketing agreement with Impex Healthcare to market and distribute Glucora in Bangladesh. Impex Healthcare is based in Dhaka, Bangladesh and is engaged in the import, marketing and distribution of various innovative healthcare products.

In late 2015 we had engaged Preferred Nutrition, (www.PNO.ca) a distributor in Canada, who is marketing E-drops under their own private label, UTI drops. Preferred Nutrition had an exclusivity for the distribution of this product through healthfood stores across Canada.

We intend to continue development of our proposed pharmaceutical products and carry on our research to satisfy the more stringent requisite pre-clinical and clinical requirements of the regulatory agencies. Because of the uncertainty in regards to funding and uncertainty in regards to regulatory approval, we are unable to precisely estimate when proposed pharmaceutical products will be available for sale. We currently have the development of Lorazepam Oral spray, with the development of intraoral insulin formulations as our top priorities and Metformin tablet following shortly thereafter. Because we intend to pursue co-development partners for all our pharmaceutical products to help with funding, product development priorities may change. It is not possible to indicate at this time which pharmaceutical product will be able to be available on the market first.

We are presently in discussions with other potential distributors in the United States and Canada. We also intend to introduce products using e-commerce and through our Internet website. We intend to consider other marketing and licensing opportunities with respect to our prospective pharmaceutical products once initial development milestones have been met.

Manufacturing

We intend to use third party manufacturers for our products. Currently we have a signed agreement with Nutralab Ltd. (Markham, Ontario) to manufacture several of our products, such as E-Drops Nano, PURALEN, vitamin D3, Glucora in soft gelatin capsules and URBAN POWER soft gelatin capsules. The initial batch of 9,000 bottles of E-drops Nano was successfully manufactured, packaged and labeled at Nutralab Ltd. in full compliance with GMP requirements. The agreement was assigned to us by NanoEssential Ltd. as part of the Acquired Products.

Raw Material Supplies

Excipients used in our formulations are available from numerous sources in sufficient quantities for manufacturing purposes. We believe raw materials will be available in sufficient quantities for commercial purposes when required.

We also believe future development and marketing partners under licensing and development agreements, if any, will provide, or assist in obtaining, pharmaceutical compounds that are used in products covered under such agreements.

Components used in the production of our consumer products are available from a number of potential suppliers. We have not secured commercial supply agreements with any supplier referenced below as the components are readily available in the commercial quantities.

We have selected Citrus and Allied Essences Ltd. of Lake Success, New York as a supplier of Natural essential oils, suitable for oral human consumption (FCC and USP/NF grades). American Lecithin will be the supplier of Lecithin.

Compendial high purity oils, acetylated glycerides and pharmaceutically acceptable surfactants are being supplied by Kerry Bio-Science by way of Nealanders International, Inc., Mississauga, Ontario.

Grain alcohol is supplied by Commercial Alcohols Inc., Toronto, Ontario.

OptiPure (Chemco International/Kenco group), Los Angeles, California and Sabinsa Corp., East Windsor, New Jersey, are suppliers of active natural ingredients.

Intellectual Property

Patents are a key determinant of market exclusivity for most branded pharmaceutical products. Protection for individual products or technologies extends for varying periods, in accordance with the expiration dates of patents in the various countries. The protection afforded, which may also vary from country to country, depends upon the type of patent, its scope of coverage and the availability of meaningful legal remedies in the country.

We have one US patent application for nanoemulsion for oral administration of essential oils (application # 2013/0029978 A1 Medicinal Compositions And Method For Treatment Of Urinary Tract Infections ). Several patent applications are in preparation and will be filed in 2016 or 2017 after obtaining of supporting animal experimental data, provided we have sufficient funding.

We recently expanded our new pharmaceutical product development to include biologically active peptides and proteins that will address diabetes, obesity and the metabolic syndrome. In order to protect our innovative approaches and know-how relating to this product development, our scientists in 2014 filed two provisional patent applications:

These patent applications relate specifically to intraoral insulin formulation. Our sub-micron self-emulsifying platform technology was applied for the development of alternative dosage form of known large biologically active molecules. These technological approaches have demonstrated effectiveness and resulted in the diversification of drug delivery products. As a result, the development of a sublingual insulin tablet designed for intraoral insulin absorption (not GI-tract delivery) has demonstrated substantial progress.

We will continue to file additional patent applications in order to bolster the intellectual property and know-how of the intraoral insulin tablet and platform technology.

Our two other patent applications relate to an intraoral Lorazepam Spray for treatment of acute seizures:

All four patent applications above were assigned to us pursuant to the Assignment Agreement dated October 28, 2014 for a period of five years with option to renew. The agreement also contains certain provisions for earlier termination in case of bankruptcy, nonperformance or material breach. In October of 2016 we amended the Assignment Agreement to reduce the initial term to expire on March 1, 2017. The amendment includes additional specific financial and performance milestones that, if not met, can be considered grounds for an earlier termination. To date, the Company continues to pay all maintenance fees in relation to the patents and Office Action in relation to all patents in the Assignment Agreement.

We plan to expand our patent portfolio for this indication.

We also have developed brand names and trademarks for products in all areas. We consider the overall protection of our patent, trademark and other intellectual property rights to be of material value and acts to protect these rights from infringement.

Our long-term success will substantially depend upon our ability to obtain patent protection for our technology and our ability to protect our technology from infringement, misappropriation, discovery and duplication. We cannot be sure that any future patent applications will be granted, or that any patents which we own or obtain in the future will fully protect our position.

Our patent rights and the patent rights of biotechnology and pharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. We believe that our existing technology and the patents that we hold or for which we have applied do not infringe anyone else's patent rights. We believe our patent rights will provide meaningful protection against others duplicating our proprietary technologies. We cannot be sure of this, however, because of the complexity of the legal and scientific issues that could arise in litigation over these issues.

We also rely on technological know-how, composition’s trade secrets and other unpatented proprietary information. We will seek to protect this information, in part, by confidentiality agreements with our employees, consultants, advisors and collaborators.

Competition

Our future success depends, in part, upon our ability to develop products and achieve market share at the expense of existing and more established and future products in the relevant target markets. Existing and future products, therapies, technological approaches or delivery systems will compete directly with our products that are used to treat the same medical conditions. Competing products may provide greater therapeutic benefits for a specific indication, or may offer comparable performance at a lower cost.

Management recognizes that competition in the development of novel drug delivery methods and formulations is intense. Several companies work in the field of use of colloidal delivery systems, including nano-and microemulsions. Most competitors have significantly longer operating histories, more advanced technology and greater financial resources. Additionally, most of our competitors have significantly greater experience in

Companies that we are in competition with include, but are not limited to Pfizer, Wyeth, Upsher-Smith Laboratories, Stiefel Laboratories, Merck, BMS, Boston Therapeutics, Biovail and others. We believe that we could possibly compete with these companies because we have several unique methods and novel technological approaches that could potentially allow us to reach proposed targets and develop formulations with improved properties.

Our scientific product development consultants are experienced in the field of developing novel types of delivery systems. This experience includes technical transfer and products launch and manufacturing along with patents and patent applications for multiple compositions.

Developments by competitors may render our products or technologies obsolete or non-competitive. Alternatively, competitors may challenge our patents and prevail in a court of law rendering our products unmarketable, even if they are successfully developed, tested and approved.

Intraoral (sublingual) insulin tablet

We believe that currently there are no intraoral tablets containing insulin that are approved for the blood glucose management of people with pre-diabetic conditions and/or early stages of Type 2 diabetes.

However, there exist a large number of other types of products that address blood glucose management, both approved and in the development pipeline. These include a number of injectable insulins and analogs and inhalable insulin medicine as well as numerous oral anti-diabetic drugs in form of tablets, capsules injections, designed to regulate the concentration of glucose in the blood. Our intraoral tablet, when developed, will be indirectly competing with all existing treatments.

Lorazepam spray

We believe that currently there are no approved oral sprays containing lorazepam or other benzodiazepines that could treat severe epileptic seizures and be suitable for use in non-hospital settings.

Pfizer/Wyeth markets an injectable Lorazepam branded ATIVAN® that is used to treat severe repetitive seizures (status epilepticus). It is also used before surgeries or procedures to cause drowsiness, decrease anxiety, and cause forgetfulness about the procedure or surgery. This drug may also be used to cause drowsiness in patients who need a tube and machine to help with breathing (intubated), to prevent nausea and vomiting in patients on chemotherapy, and to treat a mental/mood disorder (delirium). Lorazepam is also available in tablet form and form of oral solution to relieve anxiety and promote sleep.

Several companies are developing novel, non-injectable, fast acting medicines for treatment of acute seizures. These companies include large and medium size pharmaceutical companies, as well as universities, government agencies and other private and public research organizations. Examples include Upsher-Smith Laboratories, ViroPharma, Valeant Pharmaceuticals International, Medir Pharmaceuticals (The Netherlands). In particular, Upsher-Smith Laboratories, has successfully advanced Midazolam Intranasal Spray through several Phase I and Phase II trials, demonstrating improved control of partial and generalized seizures over placebo. In 2011, Upsher-Smith initiated a global double-blind placebo-controlled Phase III study under a special protocol assessment agreement with FDA.

Currently Diazepam rectal gel 5 mg/ml (Diastat®, Valeant Pharmaceuticals International) is the only non-injectable product, approved in the United States and Canada for treatment of cluster seizures. Due to obvious limitations and inconvenience, it is highly desirable to have an alternative non-invasive anti-seizure preparation. We believe that our proposed oral spray of Lorazepam, when fully development and marketed, could satisfy the need in emergency treatment of status epilepticus and acute seizures.

2% Ketoconazole ointment

There are a number of preparations currently on the market containing Ketoconazole, including tablets (200 mg), shampoo (1% and 2%), cream (2%), gel (2%) and foam (2%). We consider our direct competition to be 2% Ketoconazole gel from Barrier Therapeutics, Inc. / Stiefel Laboratories, Inc., marketed under the brand name Xolegel™, 2% Ketoconazole cream from JSJ Pharmaceuticals marketed under the brand name Kuric™, and 2% Ketoconazole foam marketed by Stiefel Laboratories, Inc. under the brand name Extina® Foam. Ketoconazole tablets are available in generic form and are marketed by a number of generic drug manufacturers.

Topical formulations of Ketoconazole can be used for treatment of seborrheic dermatitis. Topical Ketoconazole is used also for treating ringworm, jock itch, athlete's foot, dandruff, tinea versicolor and other skin fungal infections, susceptible to Ketoconazole. We believe that our proposed Ketoconazole formulation when fully developed and marketed, could provide efficient relief and an acceptable cure rate in the treatment of susceptible infections.

Metformin

Metformin hydrochloride oral dosage forms are manufactured by many pharmaceutical companies, such as Merck, BMS, Boston Therapeutics, Biovail, Ranbaxy, Alphapharm, Shionogi and Teva Pharmaceuticals. Recently Boston Therapeutics filed an Abbreviated New Drug Application (ANDA) with FDA for chewable dosage form of Metformin.

Existing oral dosage forms for Metformin (Glucofage®) and generics include tablets (500, 850 and 1000 mg) and oral solution 500 mg/5ml (Riomet®). We believe that there is no sublingual or chewable tablet or lozenge of Metformin available. We further believe that our proposed Metformin sublingual / chewable tablet could possibly improve patient compliance due to masking the unpleasant taste of the drug. There is no assurance that we will be able to obtain FDA approval for the proposed chewable Metformin tablet.

Research and Development

We expended $501,831 and $1,118,150 during the 2016 and 2015 fiscal years on research and development. It is our goal to conduct our research programs as necessary funds are available. The specific requirements for our various product candidates are as follows:

Pharmaceutical prescriptions

Our three proposed products above are all pharmaceutical prescription products and require the FDA approval process as discussed above. The pre-clinical process could take three years or more. We anticipate that we will proceed with the research process as funds are available. We will most likely seek approval in emerging markets first followed by the U.S. and Canada.

Natural health products

We believe that the eight proposed products above are all natural health products and do not require FDA approval as discussed above. Generally, manufacturers do not need to register their products with FDA nor get FDA approval before producing or selling dietary supplements. E-drops Nano, PURALEN ^TM and Glucora ^TM are presently available to be marketed. We anticipate that all the above products will be available to be marketed in the next 12 months, subject to funding.

Our business plan is to market only natural products in the first fiscal year and add additional new natural products each fiscal year for at least the first three years. The estimated cost of development using our self-emulsifying vehicle delivery system is approximately $200,000 to $500,000 for each product. We have completed the development of E-drops Nano, PURALEN and Glucora. Our plan is to complete the development of Vitamin D3, WartsX, CleanEzze, V-Cleanzz and Urban Power. We have not made a determination as to the next natural products that we will concentrate efforts, although future development will depend primarily on available funds.

The pharmaceutical prescription products program will commence when we are able to secure funding that is adequate to complete the more comprehensive and costly approval process required for pharmaceutical products. We currently intend to focus on developing and marketing of Lorazepam Oral spray as our top priority. Subsequently, we plan to focus on finalizing development of Metformin and Ketoconazole.

We presently do not have any firm agreement or understanding that will provide adequate funding to execute our business plan, although management continues to explore possible funding opportunities. However, we anticipate having products available for sale during 2018 that could provide some cash flow, although there is no assurance that we will realize any proceeds from sales or, that any proceeds realized will be sufficient to execute our business plan. If we are unsuccessful in raising sufficient capital, our timetable for completing development, gaining necessary regulatory approval and marketing our products would be significantly lengthened.

Employees

We currently employ 2 full time employees and 1 part time employee. Currently, our full time employees are only for administration work, until the cash flow improves, we cannot make the commitment to pay management on a regular basis. Our directors and officers are devoting their full time to the company in developing our products and business development as consultants.

Management is presently reviewing the near term possibility of engaging qualified, full-time personnel to assist in developing and marketing our products. We use non-employee consultants to assist us in formulating a research and development strategy, preparing regulatory submissions, developing protocols for clinical trials, for designing, equipping and staffing future manufacturing facilities and for business development.

Consultants and advisors usually have the right to terminate their relationships on short notice. Loss of some of these key consultants or advisors could interrupt or delay development of one or more of our products or otherwise adversely affect our business plans.

We expect to continue to need qualified scientific personnel and personnel with experience in clinical testing, government regulation and manufacturing. We may have difficulty in obtaining qualified scientific and technical personnel as there is strong competition for such personnel from other pharmaceutical and biotechnology companies, as well as universities and research institutions. Our business could be materially harmed if we are unable to recruit and retain qualified scientific, administrative and executive personnel to support our expanding activities, or if one or more members of our limited scientific and management staff were unable or unwilling to continue their association with us.

Industry Segments

We are presently a start-up company that operates in one reportable business segment: the research, development and commercialization of drug delivery systems and technologies.