Biostax (BTAX) Risk Analysis

Broker-dealer practices in connection with transactions in "Penny Stocks" are regulated by certain penny stock rules adopted by the SEC. Penny stocks generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risk associated with the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer must make a written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. The Company's securities may be subject to the penny stock rules, and investors may find it more difficult to sell their securities.

Our amended and restated articles of incorporation, as amended, authorize our board of directors, without the approval of our stockholders, to issue shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our amended and restated articles of incorporation, as amended, as shares of preferred stock in series, and to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The powers, preferences and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value. We do not currently have any class of preferred stock authorized.

The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our Company. If no securities or industry analysts commence coverage of our Company, the trading price for our stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

Provisions of our amended and restated articles of incorporation, as amended, and amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempt by our stockholders to replace or remove our current management by making it more difficult to replace or remove our board of directors.

We may from time to time issue additional shares of common stock at a discount from the current trading price of our common stock. As a result, our common stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at such a discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock or common stock.

If our existing stockholders or holders of our convertible notes, options or warrants sell, or indicate an intention to sell substantial amounts of our common stock in the public market, the trading price of our common stock could decline. The perception in the marketplace that these sales may occur could also cause the trading price of our common stock to decline. Certain holders of shares of our common stock, warrants to purchase our common stock, and shares of common stock issuable upon exercise of warrants will be entitled to rights with respect to the registration of their shares under the Securities Act. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares purchased by affiliates. In addition, our directors may, and we expect that our executive officers will establish programmed selling plans under Rule 10b5-1 of the Exchange Act, for the purpose of effecting sales of our common stock. Any sales of securities by these stockholders, or the perception that those sales may occur, including the entry into such programmed selling plans, could have a material adverse effect on the trading price of our common stock.

An active and liquid trading market for our common stock may not develop or be sustainable. Shareholders may be unable to sell shares of common stock at or above their purchase price due to fluctuations in the market price of our common stock. The market price of our common stock may fluctuate significantly in response to factors, some of which are beyond our control. Factors that could cause volatility in the market price of our common stock include, but are not limited to: - results from, and delays in, clinical trial programs relating to LDN, MENK and other drug candidates;         - announcements of regulatory approvals or disapprovals of our drug candidates including LDN and MENK or delays in any regulatory agency review or approval processes;         - failure or discontinuation of any of our research programs;         - loss of significant clients or customers;         - loss of significant strategic relationships;         - announcements relating to future collaborations or our existing collaborations;         - our failure to achieve and maintain profitability;         - changes in earnings estimates and recommendations by financial analysts;         - changes in market valuations of similar companies;         - wholesalers' buying patterns;         - addition or termination of clinical trials or funding support;         - regulatory developments affecting our drug candidates or those of our competitors;         - the Company's sales decrease internationally;         - variations in the level of expenses related to our drug candidates or future development programs;- ability to secure new government contracts and allocation of our resources to or away from performing work under government contracts;         - general economic conditions in the United States and our markets;         - acquisitions and sales of new products, technologies or business;         - market conditions in the pharmaceutical, biopharmaceutical and biotechnology sectors;         - the issuance of new or changed securities analysts' reports or recommendations regarding us, our competitors or our industry in general;         - actual and anticipated fluctuations in our quarterly operating results;         - disputes concerning our intellectual property or other proprietary rights;         - introduction of technological innovations or new products by us or our competitors;         - manufacturing issues related to our drug candidates for clinical trials or future products for commercialization;         - market acceptance of our future products;         - deviations in our operating results from the estimates of analysts;         - third party payor coverage and reimbursement policies;         - new legislation relating to the sale or pricing of pharmaceuticals;         - regulatory actions affecting us or our industry;         - product liability claims or other litigation or public concern about the safety of our drug candidates or future drugs;         - our ability to obtain and maintain necessary intellectual property licenses including, those relating to LDN, MENK and other drug candidates;         - the outcome of any future legal actions to which we are a party;         - sales of our common stock by our officers, directors or significant stockholders;         - frequent, irregular, under market, or large sales of shares of our common stock by any shareholder;         - additions or departures of key personnel; and         - external factors, including natural disasters and other crises. In addition, the stock markets in general, and the markets for pharmaceutical, biopharmaceutical and biotechnology stocks in particular, have experienced extreme volatility that has often been unrelated to the operating performance of the issuer. These broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation suits against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the attention of our management would be diverted from the operation of our business.