PharmaCyte Biotech (PMCB) Risk Analysis

Section 3(a)(1)(A) of the 1940 Act defines an "investment company" as any issuer that is or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the 1940 Act defines "investment company" to mean any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer's total assets. Such investment companies are required to register and meet other requirements promulgated under the 1940 Act. Our purchases of securities of other companies, including pursuant to the Femasys Transaction and the MyMD Transaction (each as defined below), could give rise to a determination that we are or were an investment company subject to registration under the 1940 Act. Such a determination could have a material adverse effect on our business operations, projected revenues and earnings, and growth prospects. We believe that we are not an investment company, and we have conducted and intend to continue to conduct our operations so that we will not be deemed to be an investment company. However, if we were deemed to be an investment company under the 1940 Act, our future activities may be restricted, including: - restrictions on the nature of our investments; and - restrictions on the issuance of securities, each of which may make it difficult for us to conduct our business and raise working capital. In addition, we may have imposed upon us burdensome requirements, including: - registration as an investment company with the Commission;- adoption of a specific form of corporate structure different from our current operating structure; and - reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to. Compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to operate our business, and make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.

We own securities of other public companies, including the Notes, the MYMD Preferred Shares, the Femasys Warrants and the MyMD Warrants. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Femasys Transaction" and "– MyMD Transaction" for more information regarding these securities. Defined terms used in this risk factor are defined in such section. The Notes are convertible at a conversion price of $1.18 per share. To the extent we convert the Notes when the market price of the Femasys Shares is lower than the conversion price, we may realize a loss equal to the difference between the conversion price and the market price. Femasys may require us to convert our Notes into Femasys Shares if the closing price of the Femasys Shares exceeds $2.36 per share for 10 consecutive trading days and the daily dollar trading volume of the Femasys Shares exceeds one million dollars ($1,000,000) per day during the same period and certain equity conditions described in the Notes are satisfied. If we are forced to mandatorily convert the Notes, we may realize additional loss. The MyMD Preferred Shares are convertible at a conversion price of $1.816 per share. To the extent we convert the MyMD Preferred Shares when the market price of the MyMD Common Shares is lower than the conversion price, we may realize a loss equal to the difference between the conversion price and the market price. The Series A Warrants are exercisable at an exercise price of $1.18 per share, and the Series B Warrants are exercisable at an exercise price of $1.475. There can be no assurance that the Femasys Warrants will be in the money when exercisable, and as such they may expire worthless. The MyMD Warrants are exercisable at an exercise price of $1.816 per share. There can be no assurance that the MyMD Warrants will be in the money when exercisable, and as such they may expire worthless.

In order to remain listed on Nasdaq, we will be required to meet the continued listing requirements of Nasdaq or any other U.S. or nationally recognized stock exchange to which we may apply and be approved for listing. We may be unable to satisfy these continued listing requirements, and there is no guarantee that our common stock will remain listed on Nasdaq or any other U.S. or nationally recognized stock exchange. If, after listing, our common stock is delisted from Nasdaq or any other U.S. or nationally recognized stock exchange, we could face significant material adverse consequences, including: - a limited availability of market quotations for our common stock;         - reduced liquidity with respect to the market for our common stock;         - a determination that our common stock is a "penny stock," which will require brokers trading in our common stock to adhere to different rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;         - a limited amount of news and analyst coverage; and         - decreased ability to issue additional shares of our common stock or obtain additional financing in the future.

In order to raise additional capital, we may in the future offer additional common stock or other securities convertible into or exchangeable for our common stock at prices lower than that paid by existing investors. Investors purchasing shares or other securities in the future could have rights superior to existing shareholders. The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by existing investors.

As of August 8, 2024, there were 925,164 shares of common stock issuable under outstanding options, 18,570,847 shares of common stock issuable upon exercise of outstanding warrants at various exercise prices and 3,765,105 shares of common stock reserved for issuance upon conversion of the Preferred Shares. To the extent that holders of existing options or warrants sell the shares of common stock issued upon the exercise of warrants, the market price of our common stock may decrease due to the additional selling pressure in the market. The risk of dilution from issuances of shares of common stock underlying existing options and warrants may cause shareholders to sell their common stock, which could further decline in the market price.

If not converted, we are required to redeem some or all of the outstanding shares of Series B Preferred Shares for cash under certain circumstances. These obligations could have important consequences on our business. In particular, they could: - limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate;         - increase our vulnerability to general adverse economic and industry conditions; and         - place us at a competitive disadvantage compared to our competitors. No assurances can be given that we will be successful in making the required payments to the holders of the Series B Preferred Shares or that we will be able to comply with the financial or other covenants contained in the Certificate of Designations. If we are unable to make the required cash payments or otherwise comply with the Certificate of Designations: - dividends will accrue on the Series B Preferred Shares at 15% per annum;         - the holders of the Series B Preferred Shares could foreclose against our assets; and/or         - we could be forced into bankruptcy or liquidation.

The Certificate of Designations contains a number of affirmative and negative covenants regarding matters such as the payment of dividends, maintenance of our properties and assets, transactions with affiliates, and our ability to issue other indebtedness. Our ability to comply with these covenants may be adversely affected by events beyond our control, and we cannot assure you that we can maintain compliance with these covenants. The financial covenants could limit our ability to make needed expenditures or otherwise conduct necessary or desirable business activities.

Because of the price volatility in our shares, we have observed since its inception, investors in our common stock may not be able to sell their shares when they desire to do so at a price the investors desire to attain. During the year ended April 30, 2024, shares of our common stock were quoted and traded at a high of $3.23 per share and a low of $1.92 per share. The inability to sell securities in a rapidly declining market may substantially increase the risk of loss because the price of our common stock may suffer greater declines due to the historical price volatility of our shares. Certain factors, some of which are beyond our control, which may cause our share price to fluctuate significantly include, but are not limited to, the following: - Variations in our quarterly operating results;         - Loss of a key relationship or failure to complete significant product candidate milestones timely or at all;         - Additions or departures of key personnel; and         - Fluctuations in the stock market price and volume. In addition, in recent years the stock market in general, and the over-the-counter markets in particular, have experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the performance of the underlying company. These market and industry factors may materially and adversely affect our share price, regardless of our performance or whether we meet our business objectives. In the past, class action litigation often has been brought against companies following periods of volatility in the market price of those companies' common stock. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion of management attention and resources, which could have a material adverse effect on us and the trading price of our common stock.