Prominex Provides Further Update on Its Activities in Medical Marijuana and Hemp Industries - Seite 2

• the significant infrastructural requirements of attaining and maintaining a licence (such as an indoor growing facility with physical barriers, visual monitoring, recording devices, intrusion detection, air filtration systems, as well as other important controls around distribution and access);
• a facility meeting the rigorous licensing requirements of Health Canada must be available for inspection by Health Canada before any license can be granted;
• once a license is issued, a holder of a producer license must comply with a number of ongoing requirements, including (i) physical security and storage measures, (ii) good production practices, and (iii) proper packaging, labelling and shipping practices;
• in order to obtain and maintain a license, a licensee must ensure that it complies with the terms of its other permits and ancillary licenses such as the import or export permit from the Minister of Health; and
• ensure that all of its management and designated personnel have passed the security clearance provided for under MMPR.

Failure to comply with the requirements of the license or any failure to maintain this license would have a material adverse impact on the business, financial condition and operating results of the Company or any company that it may invest in or acquire. In addition, there can be no guarantee that Health Canada will extend or renew the License or, if it is extended or renewed, that it will be extended or renewed on the same or similar terms. The business, financial condition and results of the operation of the Company would be materially adversely affected should Health Canada not extend or renew the License or should it renew the License on different terms.

Regulatory Risks

The activities of the Company are subject to regulations by governmental authorities, particularly Health Canada. Achievement of the business objectives are contingent, in part, upon compliance with regulatory requirements enacted by these governmental authorities and obtaining all regulatory approvals, where necessary, for the sale of its products. The Company or any company that it may invest in or acquire cannot predict the time required to secure all appropriate regulatory approvals for its products, or the extent of testing and documentation that may be required by governmental authorities. Any delays in obtaining, or failure to obtain regulatory approvals would significantly delay the development of markets and products and could have a material adverse effect on the business, results of operations and financial condition of the Company or any company that it may invest in or acquire.