Liquidity

The Company has

not

generated any revenues from product sales and has funded operations primarily from the proceeds of private placements of its membership units (prior to the Merger), convertible notes and convertible preferred stock. Substantial additional financing will be required by the Company to continue to fund its research and development activities.

assurance can be given that any such financing will be available when needed or that the Company’s research and development efforts will be successful.

The Company regularly explores alternative means of financing its operations and seeks funding through various sources, including public and private securities offerings, collaborative arrangements with

third

parties and other strategic alliances and business transactions. In

March 2017,

the Company completed a

$25.0

million private placement of its securities by offering units consisting of

one

share of the Company's Series A convertible preferred stock and a warrant to purchase

one

share of common stock for each share of Series A convertible preferred stock purchased in the offering. The Company sold

12,376,329

units and received approximately

$22.1

million in aggregate net cash proceeds from the private placement, after deducting commissions and other expenses of approximately

$2.9

million. In addition, the Company granted to its placement agent in the offering warrants to purchase an aggregate

1,179,558

shares of common stock as compensation for its services.

As disclosed in the Company's definitive proxy statement (the “Proxy Statement”) filed with the Securities and Exchange Commission (“SEC”) on

May 1, 2017,

the Company intends to offer up to

$20.0

million of shares of our Series B convertible preferred stock,

$0.001

par value per share (“Series B Preferred Stock”), at an offering price of

$2.10

per share with each share of Series B Preferred Stock being initially convertible into

one

share of the Company's common stock, subject to adjustment. For each share of Series B Preferred Stock purchased in the offering, the investor shall receive a

-year warrant to purchase

one

share of common stock with an exercise price equal to

$2.31.

The offering was approved by the Company's stockholders on

June 15, 2017.

There is

assurance that the Company will successfully close an offering at such terms due to the current trading prices of the Company's common stock.

The Company currently does

not

have any commitments to obtain additional funds and

may

be unable to obtain sufficient funding in the future on acceptable terms, if at all. On

May 26, 2017,

the Company received a written notice from NASDAQ indicating the Company was

not

in compliance with Nasdaq Listing Rule

5550

(b)(

) because the market value of the Company’s listed securities had been below

$35.0

million for the previous

consecutive business days. NASDAQ also noted that as of such date the Company also did

not

meet the alternative requirements under Nasdaq Listing Rule

5550

(b)(

), due to the Company's failure to maintain stockholders' equity of at least

$2.5

million, or Nasdaq Listing Rule

5550

(b)(

), due to the Company's failure to generate net income from continuing operations during its last fiscal year or during

two

of its last

three

fiscal years.

The Company has

180

calendar days from the date of the notice, or until

November 20, 2017,

to regain compliance with the minimum market value of listed securities requirement or the minimum stockholders’ equity requirement. In the event the Company is unable to regain compliance, it could adversely affect the Company’s ability to obtain future funding. If the Company cannot obtain the necessary funding, it will need to delay, scale back or eliminate some or all of its research and development programs, enter into collaborations with

third

parties to commercialize potential products or technologies that it might otherwise seek to develop or commercialize independently, consider other various strategic alternatives, including a merger or sale of the Company, or cease operations. If the Company engages in collaborations, it

may

receive lower consideration upon commercialization of such products than if it had

not

entered into such arrangements or if it entered into such arrangements at later stages in the product development process.

The Company has prepared its financial statements assuming that it will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses since inception and it expects to generate losses from operations for the foreseeable future primarily due to research and development costs for its potential product candidates, which raises substantial doubt about the Company’s ability to continue as a going concern. Various internal and external factors will affect whether and when the Company’s product candidates become approved drugs and the extent of their market share. The regulatory approval and market acceptance of the Company’s proposed future products (if any), length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations. The Company believes its cash and cash equivalents and certificate of deposit at

June

30,

2017

are sufficient to fund operations through

March 2018.