UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-KCURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 18, 2014

Citius Pharmaceuticals, Inc.(Exact name of registrant as specified in its charter)

Nevada 333-170781 27-3425913

(State or Other Jurisdictionof Incorporation) (Commission

File Number) (I.R.S. EmployerIdentification Number)

63 Great Road, Maynard, MA 01754

(Address of principal executive offices) (zip code)

(978) 938-0338 (Registrant's telephone number, including area code)

Copies to:Gregory Sichenzia, Esq.

Arthur Marcus, Esq.Sichenzia Ross Friedman Ference LLP

61 BroadwayNew York, New York 10006

Phone: (212) 930-9700Fax: (212) 930-9725

Trail One, Inc., 1208 Gaither Road, Rockville, Maryland 20850

(Former name and address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any ofthe following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement. On September 12, 2014 (the “Closing Date”), Trail One, Inc., a Nevada corporation (the “Company”), entered into a Share Exchange andReorganization Agreement, dated as of September 12, 2014 (the “Exchange Agreement”), among the Company, Citius Pharmaceuticals, LLC, aMassachusetts limited liability company (“Citius”), and the beneficial holders of the membership interests of Citius identified in the Agreement(the “Citius Stockholders”). Pursuant to the Exchange Agreement, (i) the Company issued 21,625,219 shares of common stock (the “Parent Shares”) to the CitiusStockholders. The aggregate of 21,625,219 shares of common stock of the Company issued to the Citius Stockholders represents approximately72.0% of the outstanding shares of common stock of the Company following the closing of the Exchange Agreement (the “ReverseAcquisition”) and the Private Offering defined and described below. The Company’s existing shareholders before the Reverse Acquisition andthe Private Offering shall own an aggregate of 5,000,000 of the Company’s shares or 16.7% of the outstanding shares of common stock of theCompany following the closing of the Exchange Agreement. In connection with the Exchange Agreement, on the Closing Date, the Company entered into and closed a series of subscription agreements withfive accredited investors (the “Investors”), pursuant to which the Company sold an aggregate of 3,400,067 Units for a purchase price of $0.60 perUnit, each Unit consisting of one share of common stock and one five-year warrant (the “Investor Warrants”) to purchase one share of commonstock at an exercise price of $0.60, (the “Private Offering”). As of the first closing, we have raised aggregate gross proceeds of $2,040,000 (the“First Closing”). The exercise price of the Investor Warrants will be subject to adjustment, for up to one year, in the event that we sell commonstock at a price lower than the exercise price, subject to certain exceptions. The Investor Warrants will be redeemable by the Company at a priceof $0.001 per Investor Warrant at any time subject to the conditions that (i) the Company’s Common Stock has traded for twenty (20)consecutive trading days with a closing price of at least $1.50 per share with an average trading volume of 50,000 shares per day and (ii) theCompany provides 20 trading days prior notice of the redemption and the closing price of the Common Stock is not less than $1.17 for morethan any 3 days during such notice period and (iii) the underlying shares of Common Stock are registered. Merriman Capital Inc. acted as exclusive placement agent (“Placement Agent”) in connection with the Private Offering. The Placement Agentwas paid a commission of ten percent (10%) and a non-accountable expense allowance of three percent (3%) of the funds raised from Investorsin the Private Offering. In addition, the Company issued to the Placement Agent and their designees five-year warrants (the “Placement AgentUnit Warrants”) to purchase such number of Units equal to 20% of the number of Units sold in the Private Offering at an exercise price equal to$0.60 per Unit. The Placement Agent Unit Warrants are exercisable on a cash or cashless basis with respect to purchase of the Units, and will beexercisable only for cash with respect to any warrants received as part of the Units. In addition, the Placement Agent was issued warrants topurchase 1,000,000 shares of Common Stock exercisable for cash at $0.60 per share for investment banking services provided in connection withthe transaction (the “Placement Agent Share Warrants”). The Placement Agent or their designees also own an aggregate of 1,777,294 shares ofCompany’s common stock. The shares of Company common stock owned by the Placement Agent or their designees are subject to a six-monthlockup. The Placement Agent may, while the Placement Agent Unit Warrants are outstanding, appoint one person to the Company’s Board ofDirectors, and designate one person who may attend meetings of the Company’s Board of Directors as an observer. In connection with the Private Offering, the Company entered into a Registration Rights Agreement pursuant to which the Company is requiredto file a registration statement, registering for resale all shares of Common Stock (i) included in the Units; and (ii) issuable upon exercise of theInvestor Warrants. The Company has agreed to use its reasonable efforts to cause the Registration Statement to be filed no later than 60 daysafter September 12, 2014, the date the Private Offering was completed (the “Filing Deadline”), and to have the Registration Statement declaredeffective within 180 days of the Filing Deadline. Any holders of the shares of Common Stock removed from the Registration Statement as aresult of a Section 415 comment from the SEC shall be included in a subsequent registration statement the Company will file no later than sixmonths after the prior registration statement (or such other period as permitted by SEC rules). The Company intends for this issuance to be exempt from registration in reliance upon an exemption from registration afforded under Section4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), for transactions by an issuer not involving a public offering, orRegulation D promulgated thereunder.

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Prior to the Exchange Agreement, in addition to the foregoing, the Company and its shareholders approved amendments to the Articles ofIncorporation to:

(i) authorize the creation of 10,000,000 shares of blank-check preferred stock;

(ii) effect a reverse stock split at an exchange ratio of approximately 0.625 for every share issued and outstanding before the execution ofthe Exchange Agreement reducing the Company's shares from 18,000,000 to 11,250,000; and

(iii) change the Company’s name from Trail One, Inc. to Citius Pharmaceuticals, Inc.

After the aforementioned reverse stock split, certain shareholders cancelled 6,250,000 shares prior to the Reverse Acquisition. Prior to theReverse Acquisition, Mohammad Omar Rahman was the Company’s Chief Executive Officer, President, Chief Operating Officer and theCompany’s sole director. Effective upon the Company’s meeting its information obligations under the Securities Exchange Act of 1934, asamended (the “Exchange Act”), Mohammad Omar Rahman will resign and Leonard Mazur will be appointed as Chief Executive Officer,President, Chief Operating Officer and sole director of the Company. The Company expects that its Board of Directors will consist of fourmembers. Item 2.01 Completion of Acquisition or Disposition of Assets. Information in response to this Item 2.01 is keyed to the Item numbers of Form 10. Item 1. Description of Business. The Company was formed in the state of Nevada on September 9, 2010. Prior to the Reverse Acquisition, the Company’s business plan was tomanufacture TOCNC Tags, which are personalized/customized license plates for customers who want one of a kind luxury car jewelry touniquely define them and to offer a sense of identification privacy at public events such as car shows, photo shoots, auto clubs, and other publicvenues. The Company is no longer pursuing this line of business. Effective on the Closing Date, pursuant to the Exchange Agreement, Citius became a wholly-owned subsidiary of the Company. The acquisitionof Citius is treated as a Reverse Acquisition, and the business of Citius, as described below, became the business of the Company. References to “we,” “us,” “our” and similar words refer to the Company and Citius. References to “Trail One” refer to the Company and itsbusiness prior to the Reverse Acquisition. Summary Citius is a specialty pharmaceutical company dedicated to the development and commercialization of therapeutic products for large andgrowing markets using innovative, patented or proprietary formulations and modified drug delivery technology. We seek new and expandedindications for previously approved pharmaceutical products as a means to achieving leading market positions or potential market exclusivity.We seek to achieve these objectives by utilizing the U.S. Food and Drug Administration’s, or FDA’s, 505(b)(2) pathway for our new drugapprovals. We believe this pathway is comparatively faster, lower risk and less expensive than the FDA’s traditional new drug approvalpathway. In addition, we focus on obtaining intellectual property protection with the objective of listing relevant patents in the FDA OrangeBook in order to limit generic competition. By using previously approved drugs with substantial safety and efficacy data, we seek to reduce the risks associated with pharmaceuticalproduct development. We have already successfully employed this strategy to obtain FDA approval for Suprenza, our approved and marketedproduct for the treatment of obesity. We also plan to utilize this strategy to seek approval for other new drug product candidates for obesity. Wealso have a development candidate entering Phase 2 trials for the treatment of hemorrhoids. We believe the markets for obesity and hemorrhoidtreatments are both large and underserved by innovative, efficacious and cost-effective new products. The U.S. Centers for Disease Control, orCDC, estimates that more than 35% of U.S. adult men and women, or approximately 78 million U.S. adults, were obese in 2009-2010. Inaddition, it is estimated that hemorrhoids affect nearly 5% of the U.S. population, with approximately 10 million persons annually reporting tobe suffering from the symptoms of hemorrhoidal disease. Our executive offices are located at 63 Great Road, Maynard, MA 01754, and our telephone number at such address is (978) 938-0338.

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RISK FACTORS Risks related to our Business and our Industry

Citius has a history of operating losses and expects to incur losses for the foreseeable future. We may never generate revenues or, ifwe are able to generate revenues, achieve profitability. Citius was formed as a limited liability company in 2007. Citius has only a limited operating history. Our ability to become profitable dependsupon our ability to generate revenues from sales of our product candidates. Citius has been focused on product development, and Citius has notgenerated any revenues to date. Citius has incurred losses in each year of our operations, and we expect to continue to incur operating losses forthe foreseeable future. These operating losses are likely to continue to adversely affect our working capital, total assets and shareholders’ equity.The process of developing our products requires significant clinical, development and laboratory testing and clinical trials. In addition,commercialization of our product candidates will require that we obtain necessary regulatory approvals and establish sales, marketing andmanufacturing capabilities, either through internal hiring or through contractual relationships with others. We expect to incur substantial lossesfor the foreseeable future as a result of anticipated increases in our research and development costs, including costs associated with conductingpreclinical testing and clinical trials, and regulatory compliance activities. Citius has incurred operating losses of $1,288,003 and $1,049,425 forthe fiscal years ended December 31, 2013 and 2012, respectively, and incurred an operating loss of $125,159 for the six months ended June 30,2014. At December 31, 2013 and 2012, Citius had an accumulated members’ deficit of $2,901,754 and $1,613,751, respectively. At June 30,2014, Citius had an accumulated members’ deficit of $2,976,913. Citius’ net cash used in operations during the years ended December 31, 2013and 2012 was $1,095,266 and $917,798, respectively and $80,947 for the six months ended June 30, 2014. Our ability to generate revenues and achieve profitability will depend on numerous factors, including success in:

· developing and testing product candidates;· receiving regulatory approvals;· commercializing our products;· manufacturing of commercial quantities of our product candidates at acceptable cost levels; and· establishing a favorable competitive position.

Many of these factors will depend on circumstances beyond our control. We cannot assure you that we will ever have another product approvedby the FDA, that we will successfully bring any product to market or, if so, that we will ever become profitable. Our auditors have issued a “going concern” audit opinion. Our independent registered accountants have indicated, in their report on our December 31, 2013 financial statements, that there is substantialdoubt about our ability to continue as a going concern. A “going concern” opinion indicates that the financial statements have been preparedassuming we will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability andclassification of assets, or the amounts and classification of liabilities that may result if we do not continue as a going concern. Therefore, youshould not rely on our consolidated balance sheet as an indication of the amount of proceeds that would be available to satisfy claims ofcreditors, and potentially be available for distribution to shareholders, in the event of liquidation. We may need to secure additional financing. We anticipate that we will incur operating losses for the foreseeable future. If we receive only the proceeds from the First Closing of the PrivateOffering, our development programs will be materially curtailed. In such event, we expect that we will only be able to conduct a very limitedclinical evaluation of our hydrocortisone/lidocaine program. Since this study will involve only a small number of patients, we may not getmeaningful and productive data or we may get misleading results.

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The amount and timing of our future funding requirements will depend on many factors, including, but not limited to:

· the rate of progress and cost of our trials and other product development programs for our product candidates;· the costs and timing of obtaining licenses for additional product candidates or acquiring other complementary technologies;· the timing of any regulatory approvals of our product candidates;· the costs of establishing sales, marketing and distribution capabilities; and· the status, terms and timing of any collaborative, licensing, co-promotion or other arrangements.

We will need to access the capital markets in the future for additional capital for research and development and for operations. Traditionally,pharmaceutical companies have funded their research and development expenditures through raising capital in the equity markets. Declines anduncertainties in these markets over the past several years have severely restricted raising new capital and have affected companies’ ability tocontinue to expand or fund existing research and development efforts. If these economic conditions continue or become worse, our future cost ofequity or debt capital and access to the capital markets could be adversely affected. If we are not successful in securing additional financing, wemay be required to delay significantly, reduce the scope of or eliminate one or more of our research or development programs, downsize ourgeneral and administrative infrastructure, or seek alternative measures to avoid insolvency, including arrangements with collaborative partners orothers that may require us to relinquish rights to certain of our technologies, product candidates or products. We are an early-stage company with an unproven business strategy and may never achieve commercialization of our therapeutic products orprofitability. Our strategy of using collaborative partners to assist us in the development of our therapeutic products is unproven. Our success will dependupon our ability to enter into additional collaboration agreements on favorable terms and to select an appropriate commercialization strategy foreach potential therapeutic product we and our collaborators choose to pursue. If we are not successful in implementing our strategy tocommercialize our potential therapeutic products, we may never achieve, maintain or increase profitability. Our ability to successfullycommercialize any of our products or product candidates will depend, among other things, on our ability to:

· successfully complete our clinical trials;· produce, through a validated process, sufficiently large quantities of our drug compound(s) to permit successful commercialization;· receive marketing approvals from the FDA and similar foreign regulatory authorities;· establish commercial manufacturing arrangements with third-party manufacturers;· build and maintain strong sales, distribution and marketing capabilities sufficient to launch commercial sales of the drug(s) or establish

collaborations with third parties for such commercialization;· secure acceptance of the drug(s) from physicians, health care payers, patients and the medical community; and· manage our spending as costs and expenses increase due to clinical trials, regulatory approvals and commercialization.

There are no guarantees that we will be successful in completing these tasks. If we are unable to successfully complete these tasks, we may notbe able to commercialize the next generation of Suprenza products or any of our product candidates in a timely manner, or at all, in which casewe may be unable to generate sufficient revenues to sustain and grow our business. In addition, if we experience unanticipated delays orproblems, our development costs could substantially increase and our business, financial condition and results of operations will be adverselyaffected. We face significant risks in our product candidate development efforts. Our business depends on the successful development and commercialization of our product candidates. We are not permitted to market any ofour product candidates in the United States until we receive approval of an NDA from the FDA, or in any foreign jurisdiction until we receivethe requisite approvals from such jurisdiction. The process of developing new drugs and/or therapeutic products is inherently complex,unpredictable, time-consuming, expensive and uncertain. We must make long-term investments and commit significant resources beforeknowing whether our development programs will result in drugs that will receive regulatory approval and achieve market acceptance. Productcandidates that appear to be promising at all stages of development may not reach the market for a number of reasons that may not be predictablebased on results and data of the clinical program. Product candidates may be found ineffective or may cause harmful side effects during clinicaltrials, may take longer to progress through clinical trials than had been anticipated, may not be able to achieve the pre-defined clinical endpointsdue to statistical anomalies even though clinical benefit may have been achieved, may fail to receive necessary regulatory approvals, may proveimpracticable to manufacture in commercial quantities at reasonable cost and with acceptable quality, or may fail to achieve market acceptance.

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We have received FDA approval for our first product Suprenza. However, we cannot predict whether or when we will obtain regulatory approvalto commercialize our product candidates that are under development and will be further developed using the proceeds of the Private Offering andwe cannot, therefore, predict the timing of any future revenues from these product candidates, if any. The FDA has substantial discretion in thedrug approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. For example, the FDA:

· could determine that we cannot rely on Section 505(b)(2) for any of our product candidates;· could determine that the information provided by us was inadequate, contained clinical deficiencies or otherwise failed to demonstrate

the safety and effectiveness of any of our product candidates for any indication;· may not find the data from clinical trials sufficient to support the submission of an NDA or to obtain marketing approval in the United

States, including any findings that the clinical and other benefits of our product candidates outweigh their safety risks;· may disagree with our trial design or our interpretation of data from preclinical studies or clinical trials, or may change the

requirements for approval even after it has reviewed and commented on the design for our trials;· may determine that we have identified the wrong reference listed drug or drugs or that approval of our Section 505(b)(2) application

for any of our product candidates is blocked by patent or non-patent exclusivity of the reference listed drug or drugs;· may identify deficiencies in the manufacturing processes or facilities of third-party manufacturers with which we enter into

agreements for the manufacturing of our product candidates;· may approve our product candidates for fewer or more limited indications than we request, or may grant approval contingent on the

performance of costly post-approval clinical trials;· may change its approval policies or adopt new regulations; or· may not approve the labeling claims that we believe are necessary or desirable for the successful commercialization of our product

candidates. Any failure to obtain regulatory approval of our product candidates would significantly limit our ability to generate revenues, and any failure toobtain such approval for all of the indications and labeling claims we deem desirable could reduce our potential revenues. The results of pre-clinical studies and completed clinical trials are not necessarily predictive of future results, and our current productcandidates may not have favorable results in later studies or trials. Pre-clinical studies and Phase 1 and Phase 2 clinical trials are not primarily designed to test the efficacy of a product candidate in the generalpopulation, but rather to test initial safety, to study pharmacokinetics and pharmacodynamics, to study limited efficacy in a small number ofstudy patients in a selected disease population, and to identify and attempt to understand the product candidate's side effects at various doses anddosing schedules. Success in pre-clinical studies or completed clinical trials does not ensure that later studies or trials, including continuing pre-clinical studies and large-scale clinical trials, will be successful nor does it necessarily predict future results. Favorable results in early studies ortrials may not be repeated in later studies or trials, and product candidates in later stage trials may fail to show acceptable safety and efficacydespite having progressed through earlier trials. In addition, the placebo rate in larger studies may be higher than expected. We may be required to demonstrate through large, long-term outcome trials that our product candidates are safe and effective for use in a broadpopulation prior to obtaining regulatory approval.

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There is typically a high rate of attrition from the failure of product candidates proceeding through clinical trials. In addition, certain subjects inour clinical trials may respond positively to placebo treatment – these subjects are commonly known as “placebo responders” – making it moredifficult to demonstrate efficacy of the test drug compared to placebo. This effect is likely to be observed in the treatment of obesity andhemorrhoids. If any of our product candidates fail to demonstrate sufficient safety and efficacy in any clinical trial, we will experiencepotentially significant delays in, or may decide to abandon development of that product candidate. If we abandon or are delayed in ourdevelopment efforts related to any of our product candidates, we may not be able to generate any revenues, continue our operations and clinicalstudies, or become profitable. Our reputation in the industry and in the investment community would likely be significantly damaged. It maynot be possible for us to raise funds in the public or private markets, and our stock price would likely decrease significantly. If we are unable to file for approval under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act or if we are required to generateadditional data related to safety and efficacy in order to obtain approval under Section 505(b)(2), we may be unable to meet our anticipateddevelopment and commercialization timelines. Our current plans for filing additional NDAs for our product candidates include efforts to minimize the data we will be required to generate inorder to obtain marketing approval for our additional product candidates and therefore possibly obtain a shortened review period for theapplications. The timeline for filing and review of our NDAs is based on our plan to submit those NDAs under Section 505(b)(2) of the FederalFood, Drug and Cosmetic Act, wherein we will rely in part on data in the public domain or elsewhere. Depending on the data that may berequired by the FDA for approval, some of the data may be related to products already approved by the FDA. If the data relied upon is related toproducts already approved by the FDA and covered by third-party patents we would be required to certify that we do not infringe the listedpatents or that such patents are invalid or unenforceable. As a result of the certification, the third party would have 45 days from notification ofour certification to initiate an action against us. In the event that an action is brought in response to such a certification, the approval of our NDAcould be subject to a stay of up to 30 months or more while we defend against such a suit. Approval of our product candidates under Section505(b)(2) may therefore be delayed until patent exclusivity expires or until we successfully challenge the applicability of those patents to ourproduct candidates. Alternatively, we may elect to generate sufficient additional clinical data so that we no longer rely on data which triggers apotential stay of the approval of our product candidates. Even if no exclusivity periods apply to our applications under Section 505(b)(2), theFDA has broad discretion to require us to generate additional data on the safety and efficacy of our product candidates to supplement third-partydata on which we may be permitted to rely. In either event, we could be required, before obtaining marketing approval for any of our productcandidates, to conduct substantial new research and development activities beyond those we currently plan to engage in order to obtain approvalof our product candidates. Such additional new research and development activities would be costly and time consuming. We may not be able to obtain shortened review of our applications, and the FDA may not agree that our products qualify for marketing approval.If we are required to generate additional data to support approval, we may be unable to meet our anticipated development and commercializationtimelines, may be unable to generate the additional data at a reasonable cost, or at all, and may be unable to obtain marketing approval of ourproduct candidates. In addition, notwithstanding the approval of many products by the FDA pursuant to Section 505(b)(2), over the last fewyears, some pharmaceutical companies and others have objected to the FDA's interpretation of Section 505(b)(2). If the FDA changes itsinterpretation of Section 505(b)(2), or if the FDA's interpretation is successfully challenged in court, this could delay or even prevent the FDAfrom approving any Section 505(b)(2) application that we submit.

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Even if we receive regulatory approval to commercialize our product candidates, our ability to generate revenues from any resultingdrugs will be subject to a variety of risks, many of which are out of our control. Even if our product candidates obtain regulatory approval, those drugs may not gain market acceptance among physicians, patients, healthcarepayers or the medical community. The indication may be limited to a subset of the population or we may implement a distribution system andpatient access program that is limited. Coverage and reimbursement of our product candidates by third-party payers, including governmentpayers, generally is also necessary for optimal commercial success. We believe that the degree of market acceptance and our ability to generaterevenues from such drugs will depend on a number of factors, including:

· timing of market introduction of competitive drugs;· prevalence and severity of any side effects;· results of any post-approval studies of the drug;· potential or perceived advantages or disadvantages over alternative treatments including generics;· the relative convenience and ease of administration and dosing schedule;· strength of sales, marketing and distribution support;· price of any future drugs, if approved, both in absolute terms and relative to alternative treatments;· the effectiveness of our or any future collaborators' sales and marketing strategies;· the effect of current and future healthcare laws on our product candidates;· availability of coverage and reimbursement from government and other third-party payers;· patient access programs that require patients to provide certain information prior to receiving new and refill prescriptions;· requirements for prescribing physicians to complete certain educational programs for prescribing drugs;· the willingness of patients to pay out of pocket in the absence of government or third-party coverage; and· product labeling or product insert requirements of the FDA or other regulatory authorities.

If approved, our product candidates may fail to achieve market acceptance or generate significant revenue to achieve or sustain profitability. Inaddition, our efforts to educate the medical community and third-party payers on the benefits of our product candidates may require significantresources and may never be successful. Even if approved for marketing by applicable regulatory bodies, we will not be able to create a market for any of our products if we fail toestablish marketing, sales and distribution capabilities, or fail to enter into arrangements with third parties. Our strategy with our product candidates is to outsource to third parties, all or most aspects of the product development process, as well asmarketing, sales and distribution activities. Currently, we do not have any sales, marketing or distribution capabilities. In order to generate salesof any product candidates that receive regulatory approval, we must either acquire or develop an internal marketing and sales force with technicalexpertise and with supporting distribution capabilities or make arrangements with third parties to perform these services for us. The acquisitionor development of a sales and distribution infrastructure would require substantial resources, which may divert the attention of our managementand key personnel and defer our product development efforts. To the extent that we enter into marketing and sales arrangements with othercompanies, our revenues will depend on the efforts of others. These efforts may not be successful. If we fail to develop sales, marketing anddistribution channels, or enter into arrangements with third parties, we will experience delays in product sales and incur increased costs. Our agreement with Prenzamax may result in a conflict of interest In November 2011, we entered into an exclusive license agreement with Prenzamax LLC, pursuant to which we granted Prenzamax a license forsales of Suprenza in the U.S. Prenzamax’s performance of this agreement is guaranteed by Akrimax LLC. The co-founder and vice Chairman ofAkrimax is Leonard Mazur who is our President, Chief Executive Officer and Chief Operating Officer. In connection with the licenseagreement, Prenzamax will be solely responsible for the pricing of Suprenza and will have the option to participate in the future developmentprogram of Suprenza. There may be a conflict of interest in what may be beneficial to the Company and to Prenzamax. There can be noassurance that Prenzamax will choose the option that best suits the Company.

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The markets in which we operate are highly competitive and we may be unable to compete successfully against new entrants or establishedcompanies. Competition in the pharmaceutical and medical products industries is intense and is characterized by costly and extensive research efforts andrapid technological progress. We are aware of several pharmaceutical companies also actively engaged in the development of therapies for thesame conditions we are targeting. Many of these companies have substantially greater research and development capabilities as well assubstantially greater marketing, financial and human resources than we do. In addition, many of these companies have significantly greaterexperience than us in undertaking pre-clinical testing, human clinical trials and other regulatory approval procedures. Our competitors maydevelop technologies and products that are more effective than those we are currently marketing or researching and developing. Suchdevelopments could render our products, if approved, less competitive or possibly obsolete. We are also competing with respect to marketingcapabilities and manufacturing efficiency, areas in which we have limited experience. Mergers, acquisitions, joint ventures and similar eventsmay also significantly increase the competition. New developments, including the development of other drug technologies and methods ofpreventing the incidence of disease, occur in the pharmaceutical and medical technology industries at a rapid pace. These developments mayrender our products and product candidates obsolete or noncompetitive. Compared to us, many of our potential competitors have substantiallygreater:

· research and development resources, including personnel and technology;· regulatory experience;· product candidate development and clinical trial experience;· experience and expertise in exploitation of intellectual property rights; and· access to strategic partners and capital resources.

As a result of these factors, our competitors may obtain regulatory approval of their products more rapidly than we can or may obtain patentprotection or other intellectual property rights that limit our ability to develop or commercialize our product candidates. Our competitors mayalso develop drugs or surgical approaches that are more effective, more useful and less costly than ours and may also be more successful inmanufacturing and marketing their products. In addition, our competitors may be more effective than us in commercializing their products and asa result, our business and prospects might be materially harmed. Physicians and patients might not accept and use any of our products for which regulatory approval is obtained. Even if the FDA approves one of our product candidates, other than Suprenza which is already approved, physicians and patients might notaccept and use it. Acceptance and use of our products will depend upon a number of factors, including:

· perceptions by members of the health care community, including physicians, about the· safety and effectiveness of our product;· cost-effectiveness of our product relative to competing product or therapies;· availability of reimbursement for our product from government or other healthcare payers; and· effective marketing and distribution efforts by us and our licensees and distributors, if any.

If our current product candidates are approved, we expect their sales to generate substantially all of our revenues for the foreseeable future, andas a result, the failure of these products to find market acceptance would harm our business and would require us to seek additional financing.

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Our product candidate for the treatment of hemorrhoids is a combination product consisting of two drugs, hydrocortisone and lidocaine, thathave each been separately approved by the FDA for other indications and which are commercially available and marketed by othercompanies. Our approval under 505(b)(2) does not preclude physicians, pharmacists and patients from obtaining individual drug productsand titrating the dosage of these drug products as close to our approved dose as possible. Hydrocortisone creams are available from strengths ranging from 0.5% to 2.5% and lidocaine creams are also available in strengths up to 5%.From our market analysis and discussions with a limited number of physicians, we know that patients sometimes obtain two separate creamproducts and co-administer them as prescribed, giving them a combination treatment which could be very similar to what we intend to study andseek approval for. As a branded, FDA-approved product with safety and efficacy data, we intend to price our product substantially higher thanthe generically available individual creams. We will then have to convince third-party payers and pharmacy benefit managers of the advantagesof our product and justify our premium pricing. We may encounter resistance from these entities and will then be dependent on patients’willingness to pay the premium and not seek alternatives. In addition, pharmacists often suggest lower cost prescription treatment alternatives toboth physicians and patients. Our 505(b)(2) approval and the market exclusivity we may receive will not guarantee that such alternatives will notexist, that substitution will not occur, or that there will be immediate acceptance to our pricing by payer formularies. We expect the sameresistance with regard to our phentermine product where several cheaper generics are already commercially available and physicians haveextensive experience in prescribing these products. Our ability to generate product revenues will be diminished if our products sell for inadequate prices or patients are unable to obtainadequate levels of reimbursement. Our ability to commercialize our products, alone or with collaborators, will depend in part on the extent to which reimbursement will beavailable from:

· government and health administration authorities;· private health maintenance organizations and health insurers; and· other healthcare payers.

Significant uncertainty exists as to the reimbursement status of newly approved healthcare products. Healthcare payers, including Medicare, arechallenging the prices charged for medical products and services. Government and other healthcare payers increasingly attempt to containhealthcare costs by limiting both coverage and the level of reimbursement for drugs. Even if our product candidates are approved by the FDA,insurance coverage might not be available, and reimbursement levels might be inadequate, to cover our products. If government and otherhealthcare payers do not provide adequate coverage and reimbursement levels for our products, once approved, market acceptance of suchproducts could be reduced. Proposals to modify the current health care system in the U.S. to improve access to health care and control its costsare continually being considered by the federal and state governments. In March 2010, the U.S. Congress passed landmark healthcare legislation.We cannot predict what impact on federal reimbursement policies this legislation will have in general or on our business specifically. Membersof the U.S. Congress and some state legislatures are seeking to overturn at least portions of the legislation and we expect they will continue toreview and assess this legislation and possibly alternative health care reform proposals. We cannot predict whether new proposals will be madeor adopted, when they may be adopted or what impact they may have on us if they are adopted. Health administration authorities in countries other than the U.S. may not provide reimbursement for our products at rates sufficient for us toachieve profitability, or at all. Like the U.S., these countries have considered health care reform proposals and could materially alter theirgovernment-sponsored health care programs by reducing reimbursement rates. Any reduction in reimbursement rates under Medicare or foreignhealth care programs could negatively affect the pricing of our products. If we are not able to charge a sufficient amount for our products, thenour margins and our profitability will be adversely affected.

We rely exclusively on third parties to formulate and manufacture our product candidates. We do not have and do not intend to establish our own manufacturing facilities. Consequently, we lack the physical plant to formulate andmanufacture our own product candidates, which are currently being manufactured entirely by a commercial third party. If any additional productcandidate we might develop or acquire in the future receives FDA approval, we will rely on one or more third-party contractors to manufactureour products. If, for any reason, we become unable to rely on our current source or any future source to manufacture our product candidates,either for clinical trials or, for commercial quantities, then we would need to identify and contract with additional or replacement third-partymanufacturers to manufacture compounds for preclinical, clinical and commercial purposes. We might not be successful in identifying additionalor replacement third-party manufacturers, or in negotiating acceptable terms with any that we do identify. If we are unable to secure andmaintain third-party manufacturing capacity, the development and sales of our products and our financial performance might be materiallyaffected.

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In addition, before any of our collaborators can begin to commercially manufacture our product candidates, each must obtain regulatory approvalof the manufacturing facility and process. Manufacturing of drugs for clinical and commercial purposes must comply with the FDA’s CurrentGood Manufacturing Practices, or cGMP, and applicable non-U.S. regulatory requirements. The cGMP requirements govern quality control anddocumentation policies and procedures. Complying with cGMP and non-U.S. regulatory requirements will require that we expend time, money,and effort in production, recordkeeping, and quality control to assure that the product meets applicable specifications and other requirements.Our contracted manufacturing facilities must also pass a pre-approval inspection prior to FDA approval. Failure to pass a pre- approval inspectionmight significantly delay FDA approval of our products. If any of our collaborators fails to comply with these requirements, we would be subjectto possible regulatory action which could limit the jurisdictions in which we are permitted to sell our products. As a result, our business, financialcondition, and results of operations might be materially harmed. Our reliance on a limited number of third-party manufacturers exposes us to the following risks:

· We might be unable to identify manufacturers for commercial supply on acceptable terms or at all because the number of potentialmanufacturers is limited and the FDA must approve any replacement contractor. This approval would generally require complianceinspections. In addition, a new manufacturer would have to be educated in, or develop substantially equivalent processes for,production of our products after receipt of FDA approval, if any;

· Our third-party manufacturers might be unable to formulate and manufacture our drugs in the volume and of the quality required to

meet our clinical and commercial needs, if any;

· Our contract manufacturers might not perform as agreed or might not remain in the contract manufacturing business for the timerequired to supply our clinical trials or to successfully produce, store and distribute our products;

· Currently, our contract manufacturer is foreign, which increases the risk of shipping delays and adds the risk of import restrictions;

· Drug manufacturers are subject to ongoing periodic unannounced inspection by the FDA and corresponding state agencies to ensure

strict compliance with cGMP and other government regulations and corresponding foreign standards. We do not have complete controlover third-party manufacturers’ compliance with these regulations and standards;

· If any third-party manufacturer makes improvements in the manufacturing process for our products, we might not own, or might have

to share, the intellectual property rights to the innovation with our licensors;

· Operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations,including a bankruptcy of the manufacturer or supplier, and

· We might compete with other companies for access to these manufacturers’ facilities and might be subject to manufacturing delays if

the manufacturers give other clients higher priority than us. Each of these risks could delay our clinical trials or the approval, if any, of our product candidates by the FDA or the commercialization of ourproduct candidates and could result in higher costs or deprive us of potential product revenues. As a result, our business, financial condition, andresults of operations might be materially harmed.

We will be dependent on third-party contract research organizations to conduct all of our future human studies. We will be dependent on third-party research organizations to conduct all of our human studies with respect to pharmaceutical products that wemay develop in the future. If we are unable to obtain any necessary testing services on acceptable terms, we may not complete our productdevelopment efforts in a timely manner. If we rely on third parties for human studies, we may lose some control over these activities and becometoo dependent upon these parties. These third parties may not complete testing activities on schedule or when we so request. We may not be ableto secure and maintain suitable research organizations to conduct our human studies. We are responsible for confirming that each of our clinicaltrials is conducted in accordance with our general plan and protocol. Moreover, the FDA and foreign regulatory agencies require us to complywith regulations and standards, commonly referred to as good clinical practices, for conducting, recording and reporting the results of clinicaltrials to assure that data and reported results are credible and accurate and that the trial participants are adequately protected. Our reliance onthird parties does not relieve us of these responsibilities and requirements. If these third parties do not successfully carry out their contractualduties or regulatory obligations or meet expected deadlines, if the third parties need to be replaced or if the quality or accuracy of the data theyobtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our preclinicaldevelopment activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approvalfor our future product candidates.

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Any termination or breach by or conflict with our strategic partners or licensees could harm our business. If we or any of our collaborators or licensees fail to renew or terminate any of our collaboration or license agreements or if either party fails tosatisfy its obligations under any of our collaboration or license agreements or complete them in a timely manner, we could lose significantsources of revenue, which could result in volatility in our future revenue. In addition, our agreements with our collaborators and licensees mayhave provisions that give rise to disputes regarding the rights and obligations of the parties. These and other possible disagreements could lead totermination of the agreement or delays in collaborative research, development, supply or commercialization of certain products, or could requireor result in litigation or arbitration. Any such conflicts with our collaborators could reduce our ability to obtain future collaboration agreementsand could have a negative impact on our relationship with existing collaborators, adversely affecting our business and revenues. Finally, any ofour collaborations or license agreements may prove to be unsuccessful. If we are unable to retain or hire additional qualified personnel, our ability to grow our business might be harmed. As of the date of this Form 8-K, we have one (1) employee and (4) consultants to carry out our business plan. While we believe this will provideus with sufficient staffing for our current development efforts, we will need to hire or contract with additional qualified personnel with expertisein preclinical testing, clinical research and testing, government regulation, formulation and manufacturing and sales and marketing in connectionwith the continued development, regulatory approval and commercialization of our product candidates. We compete for qualified individualswith numerous pharmaceutical and biopharmaceutical companies, universities and other research institutions. Competition for these individuals isintense, and we cannot be certain that our search for such personnel will be successful. Attracting and retaining qualified personnel will becritical to our success. In addition, we may be unable to attract and retain those qualified officers, directors and members of board committees required to provide foreffective management because of the rules and regulations that govern publicly held companies, including, but not limited to, certifications byprincipal executive officers. The enactment of the Sarbanes-Oxley Act has resulted in the issuance of a series of related rules and regulations andthe strengthening of existing rules and regulations by the SEC, as well as the adoption of new and more stringent rules by the stock exchanges.The perceived increased personal risk associated with these changes may deter qualified individuals from accepting roles as directors andexecutive officers. Further, some of these changes heighten the requirements for board or committee membership, particularly with respect to anindividual’s independence from the corporation and level of experience in finance and accounting matters. The Company may have difficultyattracting and retaining directors with the requisite qualifications. If we are unable to attract and retain qualified officers and directors, themanagement of our business and our ability to obtain or retain listing of the shares of Company Common Stock on any stock exchange orquotation platform other than OTC Markets or the OTCBB where the Company’s shares are currently quoted (assuming we elect to seek and aresuccessful in obtaining such listing) could be adversely affected. We will need to increase the size of our organization, and we may experience difficulties in managing growth. We will need to manage our anticipated growth and increased operational activity. Our personnel, systems and facilities currently in place maynot be adequate to support this future growth. Our need to effectively execute our growth strategy will require that we:

· manage our regulatory approval trials effectively;· manage our internal development efforts effectively while complying with our contractual obligations to licensors, licensees,

contractors, collaborators and other third parties;· develop internal sales and marketing capabilities or establish collaborations with third parties with such capabilities;· commercialize our product candidates;· improve our operational, financial and management controls, reporting systems and procedures; and· attract and motivate sufficient numbers of talented employees.

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This future growth could place a strain on our administrative and operational infrastructure and may require our management to divert adisproportionate amount of its attention away from our day-to-day activities. We may not be able to effectively manage the expansion of ouroperations or recruit and train additional qualified personnel, which may result in weaknesses in our infrastructure, and give rise to operationalmistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. We may not be able to makeimprovements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existingsystems and controls. If our management is unable to effectively manage our expected growth, our expenses may increase more than expected,our ability to generate or increase our revenues could be reduced and we may not be able to implement our business strategy. Our future financialperformance and our ability to compete effectively will depend, in part, on our ability to effectively manage any future growth. Risks Related to Our Regulatory and Legal Environment We are subject to extensive and costly government regulation. Product candidates and approved products such as ours are subject to extensive and rigorous domestic government regulation includingregulation by the FDA, the Centers for Medicare and Medicaid Services, other divisions of the U.S. Department of Health and Human Services,the U.S. Department of Justice, state and local governments, and their respective foreign equivalents. The FDA regulates the research,development, preclinical and clinical testing, manufacture, safety, effectiveness, record keeping, reporting, labeling, storage, approval,advertising, promotion, sale, distribution, import, and export of pharmaceutical products. The FDA regulates small molecule chemical entities,whether administered orally, topically or by injection, as drugs, subject to an NDA, under the Federal Food, Drug, and Cosmetic Act. If productcandidates and approved products such as ours are marketed abroad, they will also be subject to extensive regulation by foreign governments,whether or not they have obtained FDA approval. Such foreign regulation might be equally or more demanding than corresponding U.S.regulation. Government regulation substantially increases the cost and risk of researching, developing, manufacturing, and selling our products.The regulatory review and approval process, which includes preclinical testing and clinical trials of each product candidate, is lengthy,expensive, and uncertain. Our collaborators or we must obtain and maintain regulatory authorization to conduct clinical trials and approval foreach product we intend to market, and the manufacturing facilities used for the products must be inspected and meet legal requirements. Securingregulatory approval requires submitting extensive preclinical and clinical data and other supporting information for each proposed therapeuticindication in order to establish the product’s safety and efficacy for each intended use. The development and approval process might take manyyears, requires substantial resources, and might never lead to the approval of a product. Even if we are able to obtain regulatory approval for aparticular product, the approval might limit the indicated medical uses for the product, limit our ability to promote, sell, and distribute theproduct, require that we conduct costly post-marketing surveillance, and/or require that we conduct ongoing post-marketing studies. Materialchanges to an approved product, such as, for example, manufacturing changes or revised labeling, might require further regulatory review andapproval. Once obtained, any approvals might be withdrawn, including, for example, if there is a later discovery of previously unknownproblems with the product, such as a previously unknown safety issue. If we, our collaborators, or our contract manufacturers fail to comply with applicable regulatory requirements at any stage during the regulatoryprocess, such noncompliance could result in, among other things, delays in the approval of applications or supplements to approved applications;refusal of a regulatory authority, including the FDA, to review pending market approval applications or supplements to approved applications;warning letters; fines; import and export restrictions; product recalls or seizures; injunctions; total or partial suspension of production; civilpenalties; withdrawals of previously approved marketing applications or licenses; recommendations by the FDA or other regulatory authoritiesagainst governmental contracts; and/or criminal prosecutions. We might not obtain the necessary U.S. regulatory approvals to commercialize any additional product candidates. We have received FDA approval for the sale of our first product, Suprenza. We cannot assure you that we will receive the approvals necessaryto commercialize for sale any additional product candidates, or any additional product candidate we acquire or develop in the future. We willneed FDA approval to commercialize our additional product candidates in the U.S. In order to obtain FDA approval of any additional productcandidate, we must submit to the FDA an NDA demonstrating that the product candidate is safe for humans and effective for its intended use.This demonstration requires significant research, pre-clinical studies, and clinical trials. Satisfaction of the FDA’s regulatory requirementstypically takes many years, depends upon the type, complexity and novelty of the product candidate and requires substantial resources forresearch, development and testing. We cannot predict whether our research and clinical approaches will result in additional drugs that the FDAconsiders safe for humans and effective for their indicated uses. The FDA has substantial discretion in the product approval process and mightrequire us to conduct additional pre-clinical and clinical testing, perform post-marketing studies or otherwise limit or impose conditions on anyadditional approvals we obtain. The approval process might also be delayed by changes in government regulation, future legislation oradministrative action or changes in FDA policy that occur prior to or during our regulatory review. Delays in obtaining regulatory approvalsmight:

· delay commercialization of, and our ability to derive product revenues from, our additional product candidates;· impose costly procedures on us; and· diminish any competitive advantages that we might otherwise enjoy.

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Even if we comply with all FDA requests, the FDA might ultimately reject one or more of our NDAs. We cannot be sure that we will ever obtainregulatory clearance for any additional product candidates. Failure to obtain FDA approval of our additional product candidates will severelyundermine our business by leaving us without additional saleable products, and therefore without any potential additional sources of revenues,until another product candidate could be developed or obtained. There is no guarantee that we will ever be able to develop or acquire anotherproduct candidate. Following regulatory approval of any additional product candidates, we will be subject to ongoing regulatory obligations and restrictions,which may result in significant expense and limit our ability to commercialize our additional potential drugs. If one of our additional product candidates is approved by the FDA or by another regulatory authority for a territory outside of the U.S., we willbe required to comply with extensive regulations for product manufacturing, labeling, packaging, adverse event reporting, storage, distribution,advertising, promotion and record keeping. Regulatory approvals may also be subject to significant limitations on the indicated uses or marketingof the product candidates or to whom and how we may distribute our products. Even if U.S. regulatory approval is obtained, the FDA may stillimpose significant restrictions on a drug's indicated uses or marketing or impose ongoing requirements for potentially costly post-approvalstudies. For example, the label ultimately approved for our products, if any, may include restrictions on use, including restrictions based on levelof obesity and duration of treatment. If so, we may be subject to ongoing regulatory obligations and restrictions, which may result in significantexpense and limit our ability to commercialize our products. The FDA could also require a registry to track the patients utilizing the drug orimplement a Risk Evaluation and Mitigation Strategy, or REMS, that could restrict access to the drug, reduce our revenues and/or increase ourcosts. Potentially costly post-marketing clinical studies may be required as a condition of approval to further substantiate safety or efficacy, or toinvestigate specific issues of interest to the regulatory authority. Manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatoryauthorities for compliance with current good manufacturing practices, or cGMP, regulations, which include requirements relating to qualitycontrol and quality assurance as well as the corresponding maintenance of records and documentation. Further, regulatory agencies must approvethese manufacturing facilities before they can be used to manufacture our future approved drugs, if any, and these facilities are subject toongoing regulatory inspections. In addition, regulatory agencies subject a drug, its manufacturer and the manufacturer's facilities to continualreview and inspections. The subsequent discovery of previously unknown problems with a drug, including adverse events of unanticipatedseverity or frequency, or problems with the facility where the drug is manufactured, may result in restrictions on the marketing of that drug, up toand including withdrawal of the drug from the market. If the manufacturing facilities of our suppliers fail to comply with applicable regulatoryrequirements, it could result in regulatory action and additional costs to us. Failure to comply with applicable FDA and other regulatoryrequirements may, either before or after product approval, if any, subject our company to administrative or judicially imposed sanctions,including:

· issuance of Form 483 notices, warning letters and adverse publicity by the FDA or other regulatory agencies;· imposition of fines and other civil penalties due to product liability or other issues;· criminal prosecutions;· injunctions, suspensions or revocations of regulatory approvals;· suspension of any ongoing clinical trials;· total or partial suspension of manufacturing;· delays in commercialization;· refusal by the FDA to approve pending applications or supplements to approved applications filed by us or our collaborators;· refusals to permit drugs to be imported into or exported from the U.S.;· restrictions on operations, including costly new manufacturing requirements; and· product recalls or seizures.

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We have an agreement with Alpex Pharma SA to supply our Suprenza tablets. The Alpex manufacturing sites have been inspected by the U.S.(FDA) and corresponding EU authorities. If Alpex is unable to maintain ongoing FDA or local or foreign regulatory compliance, or manufactureSuprenza tablets in sufficient quantities to meet projected demand, the approval, the commercial launch, and future sales of Suprenza will beadversely effected, which in turn could have a detrimental impact on our financial results. In addition, the law or regulatory policies governing pharmaceuticals may change. New statutory requirements may be enacted or additionalregulations may be enacted that could prevent or delay regulatory approval of our product candidates. Contract Manufacturing Organizations, orCMOs, and their vendors or suppliers may also face changes in regulatory requirements from governmental agencies in the U.S. and othercountries. We cannot predict the likelihood, nature, extent or effects of government regulation that may arise from future legislation oradministrative action, either in the U.S. or elsewhere. If we are not able to maintain regulatory compliance, we might not be permitted to marketany future approved products and our business could suffer. We could be forced to pay substantial damage awards if product liability claims that may be brought against us are successful. The use of any of our product candidates in clinical trials, and the sale of any approved products, may expose us to liability claims and financiallosses resulting from the use or sale of our products. We have obtained limited product liability insurance coverage for our clinical trials of $2million per occurrence and in the aggregate, subject to a deductible of $50,000 per occurrence. There can be no assurance that our existinginsurance coverage will extend to our other products in the future. Any product liability insurance coverage may not be sufficient to satisfy allliabilities resulting from product liability claims. A successful claim may prevent us from obtaining adequate product liability insurance in thefuture on commercially desirable items, if at all. Even if a claim is not successful, defending such a claim would be time consuming andexpensive, may damage our reputation in the marketplace, and would likely divert management’s attention. Risks Related to our Intellectual Property Our Suprenza tablets could face generic competition before the patent protecting them expires on July 23, 2018. On May 17, 2013, we received notification from Zydus that Zydus had submitted Abbreviated New Drug Application No. 204663 to the FDAseeking approval to engage in the commercial manufacture, use or sale of generic versions of the 15 mg and 30 mg dosages of our Suprenza®tablets. The notification informed us that Zydus was seeking to manufacture and sell its generic product prior to the expiration of U.S. Patent No.6,149,938 (the “938 patent”) which is listed in the Orange Book and covers Suprenza®, and that the Zydus ANDA contained a certification thatits proposed generic product does not infringe the ‘938 patent (“Paragraph IV Certification”). On June 19, 2013, we received a separatenotification from Zydus that it was also pursuing approval for the 37.5 mg dosage of Suprenza® under the same-numbered ANDA, with aseparate Paragraph IV Certification. In response, within 45 days of receiving the first notification from Zydus, we and our partners (AlpexPharma, S.A. and Prenzamax, LLC), filed suit against Zydus and its parent Cadila Healthcare Limited (d/b/a Zydus Cadila) in Federal DistrictCourt in Delaware and New Jersey for infringement of the ‘938 patent pursuant, pursuant to the Hatch-Waxman statutory regime. We promptlynotified the FDA of the initiation of this lawsuit and, pursuant to the statute, Zydus’s ANDA for a generic version of Suprenza® cannot beapproved by the FDA for 30 months from our receipt of Zydus’ Paragraph IV notice letters while this lawsuit proceeds.

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Although we are confident in the strength of our legal position that the defendants in this action are infringing a valid and enforceable UnitedStates patent through the development, manufacture and commercialization of their generic phentermine hydrochloride orally disintegratingtablets, there is risk inherent in civil litigation. It is possible, therefore, that the defendants prevail in either a determination that they do notinfringe the ‘938 patent or that this patent is invalid or otherwise unenforceable. Such outcomes, though unlikely, carry the risk of underminingthe market for Suprenza® as well as threatening the loss of an important intellectual property asset. Depending upon the court’s schedule and thepace kept by the parties in the litigation, such outcomes could occur prior to the expiration of the 30-month stay of the FDA’s approval of theZydus ANDA. Aside from risks in outcome, there are a number of aspects of intellectual property litigation that may have an impact on the Company,including:

· high litigation costs;· distractions and other business interruptions due to litigation-related responsibilities such as discovery, depositions, court appearances,

trial, etc.;· media coverage and other marketing-oriented influences relating to the progress of the litigation; and· general uncertainty pending district court outcome and exhaustion of all appeals.

Recently, Akrimax has initiated discussions with Zydus management to seek a resolution of this dispute. These discussions are at a very earlystage but Zydus has indicated that a negotiated settlement should be explored. No terms have been agreed to and the companies are evaluatinggeneral concepts of a framework for settlement. It is customary in the specialty pharmaceuticals industry to enter into such settlementagreements. However, we cannot give any assurance that we will reach such a settlement or if we do that it will be on terms favorable to us.Increasingly, such settlements are scrutinized by the US Federal Trade Commission (FTC) to ensure that they are not anti-competitive. Weintend to model our possible settlement on terms that are commonly agreed to in such cases and generally accepted by the FTC. If we are unable to reach such a settlement we fully intend to defend our intellectual property. The litigation is likely to take a long time, is likelyto be expensive and the outcome is uncertain. Our business depends on protecting our intellectual property. If we and our strategic manufacturing partner, Alpex, do not obtain protection for our respective intellectual property rights, our competitorsmight be able to take advantage of our research and development efforts to develop competing drugs. Our success, competitive position andfuture revenues, if any, depend in part on our ability and the abilities of our licensors to obtain and maintain patent protection for our products,methods, processes and other technologies, to preserve our trade secrets, to prevent third parties from infringing on our proprietary rights and tooperate without infringing the proprietary rights of third parties. To date, we exclusively license one patent from Alpex. We also have theexclusive right to one pending patent from Alpex. We anticipate filing additional patent applications both in the U.S. and in other countries, asappropriate. However, the patent process is subject to numerous risks and uncertainties, and there can be no assurance that we will be successfulin protecting our products by obtaining and defending patents. These risks and uncertainties include the following:

· Our patent rights might be challenged, invalidated, or circumvented, or otherwise might· not provide any competitive advantage;· Our competitors, many of which have substantially greater resources than we do and many of which might make significant

investments in competing technologies, might seek, or might already have obtained, patents that will limit, interfere with, or eliminateour ability to make, use, and sell our potential products either in the U.S. or in international markets;

· As a matter of public policy regarding worldwide health concerns, there might be significant pressure on the U.S. government andother international governmental bodies to limit the scope of patent protection both inside and outside the U.S. for disease treatmentsthat prove successful; and

· Countries other than the U.S. might have less restrictive patent laws than those upheld by U.S. courts, allowing foreign competitorsthe ability to exploit these laws to create, develop, and market competing products.

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In addition, the U.S. Patent and Trademark Office and patent offices in other jurisdictions have often required that patent applications concerningpharmaceutical and/or biotechnology-related inventions be limited or narrowed substantially to cover only the specific innovations exemplifiedin the patent application, thereby limiting the scope of protection against competitive challenges. Thus, even if we or our licensors are able toobtain patents, the patents might be substantially narrower than anticipated. In addition to patents, we also rely on trade secrets and proprietary know-how. Although we take measures to protect this information by enteringinto confidentiality and inventions agreements with our employees, scientific advisors, consultants, and collaborators, we cannot provide anyassurances that these agreements will not be breached, that we will be able to protect ourselves from the harmful effects of disclosure if they arebreached, or that our trade secrets will not otherwise become known or be independently discovered by competitors. If any of these eventsoccurs, or we otherwise lose protection for our trade secrets or proprietary know-how, the value of this information may be greatly reduced. Patent and other intellectual property protection is crucial to the success of our business and prospects, and there is a substantial risk that suchprotections will prove inadequate. Our business and prospects will be harmed if these protections prove insufficient. We rely on trade secret protections through confidentiality agreements with our employees, customers and other parties, and the breach ofthese agreements could adversely affect our business and prospects. We rely on trade secrets, which we seek to protect, in part, through confidentiality and non-disclosure agreements with our employees,collaborators, supplies, and other parties. There can be no assurance that these agreements will not be breached, that we would have adequateremedies for any such breach or that our trade secrets will not otherwise become known to or independently developed by our competitors. Wemight be involved from time to time in litigation to determine the enforceability, scope and validity of our proprietary rights. Any such litigationcould result in substantial cost and divert management’s attention from our operations. If we infringe the rights of third parties we might have to forgo selling our future products, pay damages, or defend against litigation. If our product candidates, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantialcosts and we might have to:

· obtain licenses, which might not be available on commercially reasonable terms, if at all;· abandon an infringing product candidate;· redesign our products or processes to avoid infringement;· stop using the subject matter claimed in the patents held by others;· pay damages, and/or· defend litigation or administrative proceedings which might be costly whether we win or lose, and which could result in a substantial

diversion of our financial and management resources. Any of these events could substantially harm our earnings, financial condition and operations. Risks Related to Our Common Stock, Liquidity Risks and Reverse Acquisition Our securities will be deemed to be “Penny Stock" and subject to specific rules governing their sale. The SEC has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to Company, as any equitysecurity that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unlessexempt, the rules require that a broker or dealer approve a person’s account for transactions in penny stocks, and the broker or dealer receive fromthe investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

As an issuer of “penny stock”, the protection provided by the federal securities laws relating to forward looking statements does notapply to us. Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under thefederal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harborprotection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or wasmisleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such anaction could hurt our financial condition.

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In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investmentexperience objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and theperson has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to thepenny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination, and that thebroker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult forshareholders to dispose of the Company’s Common Stock if and when such shares are eligible for sale and may cause a decline in the marketvalue of its stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about thecommissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remediesavailable to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent priceinformation for the penny stock held in the account and information on the limited market in penny stocks.

We anticipate that there will not be an active public market for the Common Stock in the near term and you may have to hold yourCommon Stock and Investor Warrants for an indefinite period of time. There is not an active public or other trading market for the Common Stock and we cannot assure you that any market will develop or besustained. Because our Common Stock is expected to be thinly traded, you cannot expect to be able to liquidate your investment in case of anemergency or if you otherwise desire to do so. It may be difficult to for you to resell a large number of your securities in the Company in a shortperiod of time or at or above their purchase price.

Because we are becoming public by means of a reverse acquisition we may not be able to attract the attention of brokerage firms. Additional risks may exist since we became public through the Reverse Acquisition . Securities analysts of brokerage firms may not providecoverage of us since there is little incentive to brokerage firms to recommend the purchase of our Common Stock. No assurance can be giventhat brokerage firms will want to conduct any offerings on our behalf.

Compliance with the reporting requirements of federal securities laws can be expensive. The Company is a public reporting company in the United States, and accordingly, subject to the information and reporting requirements of theExchange Act and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act. The costs of preparing and filingannual and quarterly reports and other information with the SEC and furnishing audited reports to stockholders will cause its expenses to behigher than they would be if Citius remained privately-held. In addition, the Company will incur substantial expenses in connection with thepreparation of the Registration Statement and related documents with respect to the registration of resale of the Common Stock sold in thePrivate Offering.

If the Company fails to maintain an effective system of internal controls, it may not be able to accurately report its financial resultsor detect fraud. Consequently, shareholders could lose confidence in the Company’s financial reporting and this may decrease the tradingprice of its stock. The Company must maintain effective internal controls to provide reliable financial reports and to be able to detect fraud. The Company hasbeen assessing its internal controls to identify areas that need improvement. It is in the process of implementing changes to internal controls, buthas not yet completed implementing these changes. Failure to implement these changes to the Company’s internal controls or any others that itidentifies as necessary to maintain an effective system of internal controls could harm its operating results and cause shareholders to loseconfidence in the Company’s reported financial information. Any such loss of confidence would have a negative effect on the trading price ofthe Company’s stock.

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The price of the Common Stock may become volatile, which could lead to losses by shareholders and costly securities litigation. The trading price of the Common Stock is likely to be highly volatile and could fluctuate in response to factors such as:

· actual or anticipated variations in the Company’s operating results;· announcements of developments by the Company or its competitors;· the completion and/or results of the Company’s clinical trials;· regulatory actions regarding the Company’s products· announcements by the Company or its competitors of significant acquisitions, strategic partnerships, joint ventures or capital

commitments;· adoption of new accounting standards affecting the Company’s industry;· additions or departures of key personnel;· introduction of new products by the Company or its competitors;· sales of the Company’s Common Stock or other securities in the open market; and· other events or factors, many of which are beyond the Company’s control.

The stock market is subject to significant price and volume fluctuations. In the past, following periods of volatility in the market price of acompany’s securities, securities class action litigation has often been initiated against such a company. Litigation initiated against the Company,whether or not successful, could result in substantial costs and diversion of its management’s attention and resources, which could harm theCompany’s business and financial condition.

You may experience dilution of your ownership interests because of the future issuance of additional shares of the Common Stock. In the future, the Company may issue additional authorized but previously unissued equity securities, resulting in the dilution of the ownershipinterests of its present stockholders. The Company is currently authorized to issue an aggregate of 90,000,000 shares of Common Stock, and10,000,000 shares of preferred stock. After giving effect to the sale of the Private Offering and the Reverse Acquisition , there are 30,025,286shares of Common Stock outstanding, 3,400,067 shares underlying the Investor Warrants, 680,013 shares issuable upon the exercise of thePlacement Agent Unit Warrants, 680,013 shares issuable upon the exercise of the warrants underlying the Placement Agent Units, 1,000,000shares underlying the Placement Agent Share Warrants issued in connection with investment banking services and 3,300,000 shares underlyingthe options to be granted to our President and CEO, Leonard Mazur. The Company may also issue additional shares of its Common Stock orother securities that are convertible into or exercisable for Common Stock in connection with hiring or retaining employees, future acquisitions,future sales of its securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares ofCommon Stock may create downward pressure on the trading price of the Common Stock. There can be no assurance that the Company will notbe required to issue additional shares, warrants or other convertible securities in the future in conjunction with any capital raising efforts,including at a price (or exercise prices) below the price at which shares of the Common Stock is currently quoted on OTC Markets and the OTCBulletin Board.

The Common Stock is controlled by insiders. The Company’s current and former officers and directors beneficially own approximately 50.4% of our outstanding shares of Common Stockafter the closing of the Reverse Acquisition and the Private Offering. Such concentrated control of the Company may adversely affect the priceof the Common Stock. If you acquire Common Stock, you may have no effective voice in the management of the Company. Sales by insiders oraffiliates of the Company, along with any other market transactions, could affect the market price of the Common Stock.

We do not intend to pay dividends for the foreseeable future. We have paid no dividends on our Common Stock to date and it is not anticipated that any dividends will be paid to holders of our CommonStock in the foreseeable future. While our future dividend policy will be based on the operating results and capital needs of the business, it iscurrently anticipated that any earnings will be retained to finance our future expansion and for the implementation of our business plan. The lackof a dividend can further affect the market value of our stock, and could significantly affect the value of any investment in our Company.

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Our Certificate of Incorporation allows for the board of directors to create new series of preferred stock without further approval bystockholders, which could adversely affect the rights of the holders of the Common Stock. The Company’s Board of Directors will have the authority to fix and determine the relative rights and preferences of preferred stock. TheCompany’s Board of Directors will have the authority to issue up to 10,000,000 shares of preferred stock without further stockholder approval.As a result, the Company’s Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders the preferredright to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of Common Stock andthe right to the redemption of the shares, together with a premium, prior to the redemption of the Common Stock. In addition, the Company’sBoard of Directors could authorize the issuance of a series of preferred stock that has greater voting power than the Common Stock or that isconvertible into our Common Stock, which could decrease the relative voting power of the Common Stock or result in dilution to our existingstockholders.

If and when a Registration Statement becomes effective, there will be a significant number of shares of Common Stock eligible forsale, which could depress the market price of such shares. Following the effective date of the Registration Statement required to be filed by the Registration Rights Agreement, a large number of shares ofCommon Stock will be available for sale in the public market, which could harm the market price of the stock. Further, shares may be offeredfrom time to time in the open market pursuant to Rule 144, and these sales may have a depressive effect as well.

We have broad discretion on how we use the proceeds we received in the Private Offering. Our management has broad discretion on how to use and spend any proceeds we received from the Private Offering and may use the proceeds inways that differ from the proposed uses discussed in this filing. Our stockholders may not agree with our decision on how to use such proceeds.If we fail to spend the proceeds effectively, our business and financial condition could be harmed and we may need to seek additional financingsooner than expected.

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Applicable regulatory requirements, including those contained in and issued under the Sarbanes-Oxley Act of 2002, may make itdifficult for the Company to retain or attract qualified officers and directors, which could adversely affect the management of its business andits ability to obtain or retain listing of its common stock. The Company may be unable to attract and retain those qualified officers, directors and members of board committees required to provide foreffective management because of the rules and regulations that govern publicly held companies, including, but not limited to, certifications byprincipal executive officers. The enactment of the Sarbanes-Oxley Act has resulted in the issuance of a series of related rules and regulations andthe strengthening of existing rules and regulations by the SEC, as well as the adoption of new and more stringent rules by the stock exchanges.The perceived increased personal risk associated with these changes may deter qualified individuals from accepting roles as directors andexecutive officers. Further, some of these changes heighten the requirements for board or committee membership, particularly with respect to an individual’sindependence from the corporation and level of experience in finance and accounting matters. The Company may have difficulty attracting andretaining directors with the requisite qualifications. If the Company is unable to attract and retain qualified officers and directors, themanagement of its business and its ability to obtain or retain listing of our shares of common stock on any stock exchange (assuming theCompany elects to seek and are successful in obtaining such listing) could be adversely affected.

FORWARD-LOOKING STATEMENTS Statements in this current report on Form 8-K may be “forward-looking statements.” Forward-looking statements include, but are not limited to,statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or otherfuture events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, onassumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptionsthat are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted inthe forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in thisreport, including the risks described under “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” in this report and in other documents which we file with the Securities and Exchange Commission. In addition, such statementscould be affected by risks and uncertainties related to:

· our ability to raise funds for general corporate purposes and operations, including our clinical trials;· the commercial feasibility and success of our technology;· our ability to recruit qualified management and technical personnel;· the success of our clinical trials;· our ability to obtain and maintain required regulatory approvals for our products; and· the other factors discussed in the “Risk Factors” section and elsewhere in this report.

Any forward-looking statements speak only as of the date on which they are made, and except as may be required under applicable securitieslaws, we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this currentreport.

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Business Citius Pharmaceuticals, LLC, founded in 2007, is a specialty pharmaceutical company dedicated to the development and commercialization oftherapeutic products for large and growing markets using innovative patented or proprietary formulations and modified drug delivery technology.Our founders have founded several successful pharmaceutical and life-sciences companies and are focusing on developing innovative treatmentsfor obesity and gastrointestinal disease. Our products offer new and expanded indications for previously approved pharmaceutical products as ameans to achieving leading market positions or potential market exclusivity. We seek to achieve these objectives by utilizing the U.S. Food andDrug Administration’s, or FDA’s, 505(b)(2) pathway for our new drug approvals. We believe this pathway is comparatively faster, lower riskand less expensive than the FDA’s traditional new drug approval pathway. In addition, we focus on obtaining intellectual property protectionwith the objective of listing relevant patents in the FDA Orange Book in order to limit generic competition. Our first product, Suprenza, wasexclusively developed and licensed to us and is based on patented technology. By using previously approved drugs with substantial safety and efficacy data, we seek to reduce the risks associated with pharmaceutical productdevelopment. We have already successfully employed this strategy to obtain FDA approval for Suprenza, which contains the active drugphentermine, a widely used appetite suppressant which is safe and efficacious in the treatment of obesity. We also plan to utilize this strategy toseek approval for other new drug product candidates for obesity. We also have a development candidate entering Phase 2 for the treatment ofhemorrhoids based on combination of hydrocortisone, an anti-inflammatory drug and lidocaine, a topical anesthetic. We believe the markets forobesity and hemorrhoid treatments are both large and underserved by innovative, efficacious and cost-effective new products. The U.S. Centersfor Disease Control, or CDC, estimates that more than 35% of U.S. adult men and women, or approximately 78 million U.S. adults, were obesein 2009-2010. In addition, it is estimated that hemorrhoids affect nearly 5% of the U.S. population, with approximately 10 million personsannually reporting to be suffering from the symptoms of hemorrhoidal disease. We were formed as a Massachusetts limited liability company on January 23, 2007. Our Strategy Our goal is to build a successful pharmaceutical company through the development and commercialization of low-risk, innovative, efficaciousand cost-effective products that address compelling market opportunities. We will seek to achieve this goal by:

· Identifying new drug product candidates that are typically prescribed by a relatively small number of specialist physicians and cantherefore be successfully commercialized by a small, specialty sales force;

· Obtaining licenses for the most relevant and advanced technologies to provide our new product candidates with superior product

characteristics and intellectual property protection;

· Outsourcing formulation development and manufacturing in order to reduce our required capital investment;

· Leveraging our in-house clinical and regulatory expertise to more rapidly advance the development of product candidates in ourpipeline;

· Establishing strategic relationships with marketing partners to maximize sales potential for our products that require significant

commercial support; and

· Managing our business in a financially disciplined and cost-conscious manner. The FDA’s 505(b)(2) New Drug Application Approval Pathway The FDA’s 505(b)(2) New Drug Application, or NDA, approval pathway can be utilized for a wide range of products, especially for those thatrepresent a limited change from a previously approved drug. Further, there are compelling commercial benefits, such as the availability of threeyears of market exclusivity, to employing a 505(b)(2) regulatory strategy. Depending on the extent of the changes to the previously approveddrug and the type of clinical data included in the NDA, the FDA may also grant pediatric exclusivity and orphan drug status. The 505(b)(2)approval pathway was designed by the FDA to encourage innovation while eliminating costly and time-consuming duplicative clinical studies.

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The following are examples of changes to approved drugs which would be appropriate to submit as 505(b)(2) applications:

· Changes in dosage form, strength, route of administration, formulation, dosing regimen, or indication;· A new combination product where the active ingredients have been previously approved;· Changes to an active ingredient (e.g., different salt, ester complex, chelate, etc.);· New Chemical Entity, or NCE, when studies have been conducted by other sponsors and published information is pertinent to the

application (e.g., a pro-drug or active metabolite of an approved drug);· Change from a prescription, or Rx, indication to an over-the-counter, or OTC, indication;· Change to an OTC monograph drug (e.g., non-monograph indication, new dosage form); and· Drugs with naturally derived or recombinant (i.e., biological) active ingredients where additional limited clinical data is necessary to show

the ingredient is the same as the ingredient in the reference drug. For some products, FDA’s Reference Listed Drug, or RLD, can be relied upon for most of the safety and efficacy information; however,products that were approved with no or limited clinical trials and efficacy studies, and more importantly, those non FDA-approved prescriptionproducts that rely on the FDA’s Drug Efficacy Study Implementation, or DESI, route to market are subject to various additional pre-clinical,clinical and safety studies. Our Marketed Product and New Product Candidates Product Indication Current Status Patent Expiry; Patent Number Suprenza ODT (phentermine orallydisintegrating tablet)

Obesity Marketed July 23, 2018; 6,149,938

Additional Suprenza Program Obesity Phase 2 ready TBD Hydrocortisone-Lidocaine Cream Hemorrhoids Phase 2 ready TBD

Licensing agreement with Prenzamax LLC In November 2011, we granted an exclusive license for sales and marketing of Suprenza to Prenzamax LLC, a specialty pharmaceutical companyfocused on providing innovative and advanced ethical prescription medications which have differential and therapeutically meaningfuladvantages to health care professionals and their patients. Prenzamax is an affiliate of Akrimax and was formed for the specific purpose ofmanaging the Citius and Suprenza agreement. Akrimax, founded in 2008, is a privately-held pharmaceutical company with sales in excess of $75 million annually, acquires, develops andmarkets advanced ethical prescription medications. The management team at Akrimax has extensive industry experience in identifying anddeveloping innovative therapies to help health care professionals improve the lives of their patients. Akrimax has experienced rapid growth insales due to its attractive product line, highly experienced management team, dedicated sales force and innovative marketing techniques.Akrimax has launched several successful branded generic products which are marketed to physicians by a highly trained sales force of over 40sales representatives. In order to bring the best treatments to patients, Akrimax continuously evaluates opportunities to partner with otherorganizations that strive to improve patient care. With a proven track record of brand growth and success at Akrimax, it seeks and evaluatesopportunities to in-license and/or acquire products in a variety of therapeutic areas including:

· Late stage (phase III and pending approval) and/or approved products not yet launched· Unpromoted or underpromoted marketed products· Strategic co-promotion/cross promotion product· Company acquisitions

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Akrimax and Prenzamax are majority owned by common investors and are therefore considered affiliates. Both Prenzamax and Akrimax havejointly agreed to the terms of performance on the agreement. Any reference to Prenzamax in this discussion also refers to Akrimax and viceversa. Terms of the license In November 2011, Citius granted Prenzamax an exclusive, royalty-bearing, transferable license, under Citius intellectual property solely to useand sell Suprenza in the United States and to manufacture or have Suprenza manufactured by third parties for subsequent sale. Prenzamax and itsaffiliates have the right to sublicense any of the rights granted in this agreement to contract manufacturers, distributors, co-promotion partners,contract sales organizations and other service providers assisting Prenzamax in the commercialization of Suprenza. If Prenzamax or its affiliatesgrants any such sublicense to a co-promotion partner, it will remain an active participant in the promotion and marketing of the products, and willensure that the economic return to Citius under this Agreement is the same as if Prenzamax was promoting the product without such co-promotion partner. Under the terms of the license, Prenzamax purchases Suprenza from our manufacturer, Alpex SA and is responsible for arranging the importsand customs requirements. Once the product is in the US it is delivered to Prenzamax’s third party logistics provider for warehousing, orderprocessing and shipping to the end customers. Prenzamax is responsible for all payments for manufacturing, warehousing and distribution costs. Prenzamax is also solely responsible for the selling and marketing costs associated with Suprenza. These costs include preparation of sellingmaterial, brochures and electronic media and advertising and promotion including providing samples of products to physicians and patients. Amajor cost component is sales force salaries, training and travel expenses. Prenzamax has approximately 50 field sales professionals who call oncardiologists, endocrinologists, primary care physicians and bariatric or weight loss management physicians. None of the sales people areexclusive to any product or physician specialty but are cross trained to sell all of Akrimax’s products. Akrimax prepares estimates of time andcosts incurred in selling Suprenza and allocates those costs to calculate the Product EBITDA. Product EBITDA is defined as Sales less the costof goods sales and marketing expenses and regulatory expenses. Prenzamax Sales and Marketing Plans Prenzamax sales and marketing process involves several of the following activities.

· Introduction of the new product, its features and advantages, indications etc. to the sales force. This is typically conducted just prior to thelaunch.

· Presentations by key opinion leaders and prescribing physicians to the sale force regarding disease management, potential concerns thatwould be encountered and how to manage them

· Internal “sales pitch” practice among sales teams with sales management inputs· Developing thorough familiarity with brochures, collateral materials, technical data and results of clinical studies· Knowledge of insurance reimbursements, product promotions, co-pay coupons and distribution channel familiarity

Once trained, members of the sales staff call on identified key physicians in their respective medical offices to develop product acceptance, withthe expectation of adoption of the medicinal drug product acceptance by the physicians and generation of related prescriptions. Normally, atrained sales person conducts 4-8 physicians meetings per day. The Prenzamax sales force is cross trained across several specialties, and isbelieved to be highly experienced and professional. Currently Prenzamax has 40 sales people and plans to increase the number by 10 in 2014. Sales increase from base levels is generally a directfunction of increasing the number of sales people and number of sales calls made per day, as well as concentrating on high prescribers-doctorswith specialized obesity medical practices. A key component of future growth expectations is for Prenzamax to sub-license Suprenza to otherspecialty pharmaceutical companies that need additional products in their portfolios to optimize their revenues. Several such companies haveapproached Prenzamax and we are actively evaluating adding at least one more partner. Typically such arrangements involve paying the partnersfor increased or incremental sales directly related to their efforts. This sublicensing is expected to result in overall increase in sales for us-Citiusand Prenzamax, lower sales and marketing costs to our “arrangement ecosystem”, increased product awareness and should contribute to ouroverall growth and profitability. At this point there can be no assurance that we will enter into any agreement or if we did that such arrangementwill result in an immediate sales increase.

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Since launching Suprenza late in the second calendar quarter of 2012, Prenzamax achieved sales of approximately $800,000 in fiscal year 2012.We believe that Suprenza will need to reach a sales level of approximately $4,000,000 annually to achieve break even. Any sales increase afterachieving breakeven has a positive leveraging effect on our profitability, as discussed immediately below. Profit sharing agreement The agreement between Citius and Prenzamax provides that Prenzamax shall pay to Citius fifty percent (50%) of the Product EBITDA generatedduring each Fiscal Quarter during the Term once losses incurred up to that time by Prenzamax have been recouped. Also, Prenzamax has agreedto reimburse Citius for its Suprenza development costs in equal quarterly installments, in addition to a profit split of approximately $115,000 overthe course of twelve (12) fiscal quarters, starting with the first quarter after profitability is achieved. Both Prenzamax and Citius are eachresponsible for fifty percent (50%) of the royalty due to Alpex after achieving profitability. Finally, both Prenzamax and Citius have agreed toequally share the cost of FDA fees and any additional studies that the FDA may request on the current formulation of Suprenza. The agreement provides that Akrimax and Prenzamax will maintain accurate and complete books of record of net sales and gross margins,consistent with sound business and accounting practices, during the most recent three (3) year period and make such books of record availablefor inspection by Citius’s designated accounting firm for the purpose of verifying payments to Citius. In the event that any such inspectionreveals an underpayment or an overpayment in the amounts that should have been paid to Citius then the underpayment amount shall be paid, orthe overpayment amount shall be returned (as applicable), within forty-five (45) days. Improvements and follow-on products We intend to improve on the Suprenza formulation and conduct additional studies to develop a superior formulation to the one currentlyemployed by Suprenza. In our agreement with Prenzamax, we have outlined a pathway to achieve this. Specifically, we will provide anopportunity to Prenzamax to participate in the costs and share in the profits of the new formulation. Following is a brief description of the processwe expect to undertake. If Citius, alone or with or through any of its affiliates or a third party, desires to develop, market or sell any improved form of product containingphentermine we will present the proposal to Prenzamax. Prenzamax will then have a period of 30 days from receipt of the proposal to notify usas to whether it is interested in participating in the performance and funding of the development work in exchange for access tocommercialization rights. This is what is commonly known as a right of first refusal (“ROFR”). If Prenzamax is not interested in participating, orif it fails to timely notify Citius of its interest, then we will be permitted to proceed with such development and commercialization withcommercial launch to be no earlier than four (4) years after the date that the proposal is submitted and Prenzamax shall have no right toparticipate in the development or commercialization of any new product and Prenzamax will have no right of access to or use of any data ormaterials generated in connection with such development work except for the right to submit such data to the Regulatory Authorities. If Prenzamax timely notifies us of its interest in participating in the development work then we will negotiate our respective roles in suchdevelopment work, including our respective commitment to provide funding for the performance of the work and our respective rights tocommercialize any product. Unless otherwise agreed to by the Parties in writing we will each bear fifty percent (50%) of the development costsfor the product and the product will be licensed on an exclusive basis to Prenzamax on the same terms and conditions (including sharing ofEBITA on a 50-50 basis) as are set forth in this Licensing Agreement. In the event that Prenzamax is not interested in the participation or we are unable to reach agreement on the terms of such participation, then wealone will be permitted to launch a follow-on product on or after the fourth (4th) anniversary of the date of the proposal and Prenzamax shall havethe right, to be exercised by written notice to Citius within three (3) months prior to such fourth (4th) anniversary date, to terminate thisAgreement, and to receive from Citius a payment equal to two (2) times the Product EBITDA for the most recent period of twelve (12) fullcalendar months ending prior to such fourth anniversary date.

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Prevalence of Obesity Obesity is a serious chronic disease condition that afflicts millions of people worldwide and often requires long-term or invasive treatment topromote and sustain weight loss. In the U.S., nationally representative survey data show that the prevalence of obesity has steadily increased overthe past 30 years. In 1980, approximately 15% of the adult population in the U.S. was obese, defined as having a Body Mass Index, or BMI,greater than 30, based on data from the National Health and Nutrition Examination Survey, or NHANES. In the most recent NHANES,conducted for the period 2009 to 2010, over 78 million U.S. adult men and women, or over 35% of all U.S. adults, were classified as obese. In aseparate study, the obesity prevalence trends from the NHANES data collected between the 1970s and 2004 were analyzed, and according to areport published in July 2008, it was estimated that by 2030, over 50% of the U.S. adult population will be obese. The growing prevalence of obesity has increasingly been recognized as a significant public health problem. Comorbidities, which are lifethreatening conditions, associated with obesity which include heart disease, diabetes, cancer, breathing problems, arthritis and reproductivecomplications. According to the U.S. Department of Health and Human Services, or HHS, obese individuals have a 50% to 100% increased riskof premature death from all causes, as compared to individuals with healthy weights, and an estimated 300,000 deaths per year in the U.S. may beassociated with obesity-related comorbidities. We believe there is a growing recognition within the medical community that obesity significantlyexacerbates many other comorbidities and that obesity and its comorbidities cause significant added cost to the health care system. We furtherbelieve that more effective treatment of obesity may become an important cornerstone in managing its comorbidities. Treatments for Obesity Treatments for obesity consist of behavioral modification, pharmaceutical therapies and surgical interventions. Behavior modifications to dietand exercise are the preferred initial treatment in obesity according to the National Institutes of Health, or NIH; however, obese patientsfrequently drop out of behavioral modification programs, which typically results in weight regain. If pharmaceutical therapies are recommended,such recommendations are generally made after behavioral modification alone has failed. Bariatric surgery, including gastric bypass and gastricbanding procedures, is employed in more extreme cases, typically for obese individuals with a BMI over 40. Surgery can be associated withsignificant side effects, potential complications including mortality, and substantial costs and recovery time. Several pharmaceutical products have been approved for treating obesity in the U.S. Approved obesity drugs are generally prescribed for short-term use, with only a select few having been approved for longer-term maintenance therapy. Several older drugs, indicated for short-termadministration, include phentermine, phendimetrazine, benzphetamine and diethylpropion. Of all the drugs used to treat obesity, phentermine isthe most widely used. It was approved by the FDA in 1959 based on published clinical studies, not the rigorous double blinded clinical trials thatare customary in modern day approvals. Despite a lack of clinical data, limited safety information included in the label, and a short-term therapylimitation, the use of phentermine has increased significantly in the past several years. This suggests that physicians are relying on the extensivesafety and efficacy experience they have when prescribing the drug. Our first product, Suprenza, is based on the generic molecule phentermine hydrochloride, a commonly used therapeutic drug for weight lossprograms. Phentermine was first introduced in the United States to counter the widespread use of amphetamines which were commonlyprescribed for weight loss, especially post pregnancy. Phentermine was found to be far less addictive than amphetamines, safe and equallyefficacious and therefore was readily accepted as a standard treatment for obesity. It is currently approved in tablet (37.5 mg) and capsule (15 and30 mg) dosage forms as a short-term adjunct (6-8 weeks) in a weight loss regimen. Phentermine is prescribed as an adjunct in weight reductionbased on exercise, behavioral modification and caloric restriction in the management of exogenous obesity. In several cases, its good safetyrecord and demonstrated effectiveness has led to longer use (10 -12 weeks) in physician-directed weight loss programs. Although not approvedfor the general pediatric population, phentermine is also being used in adolescents. We conducted limited clinical testing of our formulation ofSuprenza comparing it to the presently marketed generic formulations and we have demonstrated that Suprenza can be taken with or withoutwater and with or without food. We believe these attributes, which are not offered by the generic formulations are important distinguishingfactors making Suprenza an attractive choice.

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Currently approved anti-obesity drugs include Xenical (orlistat), marketed by Roche, the over-the-counter version, Alli, marketed byGlaxoSmithKline, phentermine, in several dosage forms and strengths which are available from several generic manufacturers, Qsymia (acombination of topiramate and phentermine HCL) marketed by VIVUS, Inc. and BELVIQ (lorcaserin HCL)marketed by Eisai Inc. Xenicalworks by inhibiting lipase, thus preventing digestion and absorption of dietary fat in the gastrointestinal tract. Meridia® (sibutramine) waspreviously marketed by Abbott Laboratories; however, in October 2010, Abbott Laboratories withdrew Meridia in the U.S. at the FDA's request.The FDA requested the withdrawal because they believed Meridia's risks were not justified compared with the modest weight loss that patientsachieved on the drug. There are several drugs in development for obesity including an investigational drug candidate, Victoza, in Phase 3 clinicaltrials being developed by Novo Nordisk A/S and several other investigational drug candidates in Phase 2 clinical trials. Amylin Pharmaceuticals,Inc. announced that they have discontinued clinical activities in an ongoing Phase 2 study examining the safety and effectiveness of theinvestigational combination therapy pramlintide/metreleptin for the treatment of obesity. Orexigen Therapeutics, Inc. submitted an NDA to the FDA for their investigational obesity drug candidate, Contrave (naltrexone sustainedrelease/bupropion sustained release), which was not approved by the FDA in early 2011 due to cardiovascular safety concerns. The FDArequested, Orexigen to conduct a cardiovascular outcomes trial for Contrave, called the Light Study. After resubmitting the NDA, which iscurrently under review, on June 11, 2014, Orexigen announced that the FDA has extended its review period and will act on the NDA onSeptember 11, 2014. The FDA has indicated that the review extension is needed to reach agreement on the post-marketing obligation related tothe previously agreed upon evaluation of cardiovascular (CV) outcomes. The NDA resubmission package includes interim safety and CVoutcomes data from the ongoing 8,900 patient Light Study. Discussions around the package insert and other post-marketing obligations areongoing. Also, in October 2012, Orexigen’s partner, Takeda Pharmaceutical Company Limited submitted an NDA with the Ministry of Health,Labour and Welfare in Japan for cetilistat for the treatment of obesity with complications. In June 2012, the FDA approved Arena Pharmaceuticals Inc.’s drug, BELVIQ, for chronic weight management in adults who are obese or areoverweight with at least one weight related comorbidity condition. BELVIQ may, in the future, be marketed outside of the United States. In July 2012, VIVUS, Inc.’s weight loss drug Qsymia was approved by the FDA, as an adjunct to a reduced-calorie diet and increased physicalactivity for chronic weight management in adult patients with an initial BMI of 30 or greater (obese), or 27 or greater (overweight) in thepresence of at least one weight-related comorbidity, such as hypertension, type 2 diabetes mellitus or high cholesterol. Qsymia incorporates lowdoses of active ingredients from two previously approved drugs, phentermine and topiramate. Due to certain adverse events observed during theclinical trials, the FDA has imposed marketing restrictions on Qsymia. Many of these drugs are, or if approved, will be marketed by pharmaceutical companies with substantially greater resources than us. There are also surgical approaches to treat severe obesity that are becoming increasingly accepted and could become competing alternatives.Two of the most well established surgical procedures are gastric bypass surgery and adjustable gastric banding, or lap bands. In February 2011,the FDA approved the use of a lap band in patients with a BMI of 30 (reduced from 35) with co-morbidities. The lowering of the BMIrequirement will make more obese patients eligible for lap band surgery. A lap band is indicated for use in adult patients who have failed moreconservative weight reduction alternatives, such as supervised diet, exercise and behavior modification programs. Patients who elect to have thissurgery must make the commitment to accept significant changes in their eating habits for the rest of their lives. The potential impact onSuprenza and/or other weight loss pharmacotherapy is unknown. In addition, other potential approaches that utilize various implantable devicesor surgical tools are in development. Some of these approaches are in late stage development and may be approved for marketing. If approved,the companies that market these drugs may have substantially greater resources than we have. In the mid-1990s, fenfluramine or dexfenfluramine were used with phentermine in a combination known as “fen-phen” which demonstratedsignificant weight loss efficacy. In 1996, before fenfluramine and dexfenfluramine were withdrawn for safety issues, fen-phen, along with otherprescribed anti-obesity pharmaceuticals, represented over 20 million total U.S. prescriptions, according to IMS Health, Inc., or IMS. We believethis history, combined with the substantial health and economic costs associated with obesity, underscores the unmet need and the potential fornovel therapeutics to dramatically grow the market for obesity therapies.

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Background on Phentermine Phentermine is approved by the FDA as an appetite suppressant to help reduce weight in obese patients when used short-term (a few weeks) andcombined with exercise, diet, and behavioral modification. Based on its extensive clinical usage and relatively low cost, phentermine isconsidered by many clinicians in the field as the first line drug therapy for obesity. It is typically prescribed for individuals who are at increasedmedical risk because of their weight, and it works by helping to release certain chemicals in the brain that control appetite. It was approved bythe FDA based on the published medical literature available prior to 1962, not on the basis of rigorous clinical safety and efficacy trials that arenow generally required. Nevertheless, the safety and efficacy of phentermine has been confirmed in at least nine clinical trials with 2026 adultpatients. In addition, its safety and efficacy in children has also been established, reported initially with a 91-patient trial in 1965 and confirmed inan 84-patient trial by another investigator in 1966. In 2004, FDA’s Agency for Healthcare Research and Quality, or AHRQ, published anEvidence Report titled “Pharmacological and Surgical Treatment of Obesity.” The AHRQ Study consisted of a pooled analysis of the abovementioned clinical trials and it determined that subjects treated with phentermine lost an average of 3.6 additional kilograms of weight comparedto placebo (95% CI, 0.6 to 6.0). In assessing the effect on maintenance of weight loss, the authors reported that patients treated with phenterminemaintained a “fairly large” weight loss compared to placebo (2.43 kg) after discontinuation of the drug. The authors also concluded thatphentermine use, in addition to lifestyle interventions, resulted in a statistically significant, but modest, increase in weight loss. In this review, noside-effect or adverse-event data were reported. For all these reasons, we identified phentermine as the preferred anorectic drug to develop forour new orally disintegrating tablets and for additional formulations to follow. Phentermine – Recent U.S. Prescription Data and Market Opportunity At its March 2012 Endocrinologic and Metabolic Drugs Advisory Committee Meeting, the FDA presented 10-year (1991-2011) U.S. anti-obesityprescription drug utilization data. The FDA’s patient count data indicated that during the last five years the number of patients receiving anti-obesity prescriptions had increased from approximately 1.9 million to just over 2.7 million patients, a total increase of approximately 43%,reflecting a compound annual growth rate, or CAGR of over 7%. Within this group, the phentermine patient count grew from approximately 1.35million patients in 2006 to approximately 2.4 million patients in 2011, an increase over 75%, reflecting a CAGR of approximately 12%. Inaddition, data presented for the prevalence rates of dispensed anti-obesity prescriptions for the five-year period ending in 2011 also showedgrowth of over 45% for the entire category with prevalence growth for phentermine approximately double that of the entire category. This dataimplies that in 2011 phentermine patients represented almost 90% of the anti-obesity prescription market, as measured by patient count orprescription prevalence, up from approximately 65 to70% in 2006. The relatively strong phentermine prescription growth has occurred despite a very low amount of promotional activity or spending. We believethat the recent news of the approvals of Qsymia and BELVIQ, as well as the current and future marketing and promotional activities for thesetwo products, will help raise the awareness of obesity therapy in general and will increase the overall market size, including the size of themarket for phentermine. We also believe that branded phentermine products with significant and well-differentiated patient and physicianadvantages, and accompanied by focused promotional activity, will benefit from the overall growth of the phentermine market. Phentermine is predominantly prescribed by bariatric physicians, meaning physicians whose practice is centered on the causes, prevention, andtreatment of obesity. The American Society of Bariatric Physicians, or ASBP, includes approximately 1,600 health care professionals asmembers, the majority of whom are family medicine, internal medicine or obstetrics and gynecology practitioners. In addition, recent WoltersKluwer data, a market research data base used in the pharmaceutical industry indicates that in 2011, over 64,000 physicians wrote prescriptionsfor phentermine; however, approximately 2%, or roughly 1300 phentermine prescribers, account for approximately 30% of the phentermineprescriptions. We believe that a branded phentermine product with important competitive features is a product ideally suited forcommercialization by a small specialty sales force. Suprenza Brand Phentermine – Orally Disintegrating Tablets for Obesity Suprenza, our first FDA-approved product, is an orally disintegrating tablet, or ODT, formulation of phentermine with several unique, patient-friendly features. We believe Suprenza has significant market potential due to these special features and due to the fact that phentermine is themost frequently prescribed drug for the treatment of obesity. We received FDA approval for two dosage strengths of Suprenza (15 and 30 mg) onJune 13, 2011, and a third strength (37.5 mg) on March 27, 2012. In addition, U.S. Patent #6,149,938 for Suprenza’s ODT formulation is listed inthe FDA Orange Book, and one additional U.S. patent for our formulation is pending. There is no generic equivalent for Suprenza and, as aresult, drug substitution is limited. We granted a license for the U.S. commercial sales of Suprenza to Prenzamax LLC in November 2011 andPrenzamax launched the 15 and 30 mg tablets nationally in April 2012 and launched the 37.5mg tablets in early 2013. Suprenza ODT wasformulated and is manufactured for us by Alpex Pharma SA of Mezzovico, Switzerland.

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Suprenza ODT Post-Marketing Studies Renal Pharmacokinetics Study In connection with our NDA, the FDA requested and we committed to conduct two post-marketing studies of Suprenza ODT. The first is tostudy the pharmacokinetic, or PK, parameters of Suprenza ODT in renal compromised subjects. Drug exposure increases can be expected inpatients with renal impairment who are treated with phentermine. However, Suprenza ODT’s pharmacokinetics has not been assessed in renalimpaired patients. Since obesity can lead to renal failure, the possibility exists that patients with at least mild or moderate renal failure may beprescribed Suprenza ODT. Therefore, it is important to assess the changes in the PK parameters of Suprenza ODT in patients with renalimpairment. The primary endpoint of this study is the pharmacokinetic assessment of Suprenza ODT in renal impaired patients and results of thisstudy will provide important new information to prescribing physicians regarding phentermine dosing and dose adjustments for these at-riskpatients. We believe that this is the first such study of phentermine in renal compromised patients and may provide us with label claims andmarketing advantages over competing phentermine products. Drug Utilization Study Phentermine is classified by the Drug Enforcement Administration, or DEA, as a Category IV controlled substance, the lowest category foraddiction and abuse, as a result of its properties as a mild stimulant. Based on this classification, the FDA has expressed some concern regardingphentermine abuse and addiction. As part of our New Drug Approval, the FDA requested and we committed to conduct a study of the annual useof Suprenza ODT for three years after product launch. The study will provide information on the distribution of age, sex, and BMI of patientstreated with Suprenza ODT, as well as the average duration of use, average size of prescription, average cumulative dose per patient,concomitant drug use and concomitant disease diagnoses. The results of this study will enable Citius to assess the potential risk of abuse ofSuprenza ODT. Citius’s Proposed Suprenza Program Despite phentermine’s significant history of safety and efficacy in its use for the treatment of obesity, there remain several issues with regard tothe currently approved and marketed phentermine formulations that create challenges for physicians and patients. We believe that the short-termtreatment limitation is challenging for physicians and patients because obesity is typically a chronic condition that is rarely resolved in just a fewweeks. Our discussions with experts on obesity and, specialist physicians in the obesity treatment field confirm that this short-term therapylimitation is problematic and that long-term and continuous phentermine therapy is optimal for maintaining weight loss. We received FDA approval for Suprenza ODT on the basis of bioequivalence studies. As a result, our approval also limits the use of Suprenza toshort-term therapy. We did not conduct additional safety or efficacy studies and, therefore, we did not receive expanded label claims and we werenot granted limited market exclusivity. We believe that by working to develop novel, proprietary phentermine formulations and testing them inrigorous clinical trials we will create new phentermine products with expanded label claims and market exclusivity that will help physicians andpatients overcome the challenges associated with existing phentermine products and meaningfully improve their obesity treatment options. Novel and Proprietary Formulations We intend to work with leading pharmaceutical development groups and innovative drug delivery technology providers to develop proprietaryand patentable formulations of phentermine in order to achieve product features that will be valuable to prescribing physicians and their patientsand to create significant intellectual property protection for our products.

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Long-Term Usage Indication We approached the FDA in 2007 and received guidelines for obtaining marketing approval of Suprenza. The FDA offered us two approvalpathways, the first of which involved conducting only bioequivalence studies and limited additional trials to study the effects of food, water, androute of administration for obtaining approval with improved label claims. The FDA also suggested a second approval pathway which includedconducting rigorous clinical trials to obtain an expanded label. Consequently, based on the feedback we received from the FDA, we intend toconduct Phase 2 and Phase 3 studies based on the FDA’s Draft Guidance for Industry – Developing Products for Weight Management, February2007, in order to receive FDA approval of a phentermine long-term usage indication. We intend to conduct our Suprenza development program as follows:

· Develop new and differentiated formulations of phentermine as compared to the currently marketed products to achieve changes in dosageform, strength, route of administration, formulation, dosing regimen, or indication;

· Conduct additional toxicity studies to provide safety data for long-term usage as required under the new FDA guidelines;· Perform Phase 2 studies to select optimum dosage strength and dosing regimen to address the possible cardio-vascular risks;· Discuss findings of Phase 2 studies with FDA and seek to obtain Special Protocol Assessment, or SPA, defining Phase 3 program

designed specifically for our phentermine formulation, dosage strength and dosing regimen and study design; and Conduct phase 3 studiesas required by the FDA to establish safety and efficacy.

Cost and timelines Phase 3 studies, even those that rely on the 505(b)(2) approval pathway, are inherently expensive and time consuming. The risk of failure todemonstrate the efficacy of phentermine still exists, as efficacy studies were not conducted at the time of its approval. We estimate that the costof our program will exceed the amount of money that we anticipate receiving through the First Closing of the Private Offering, and we do nothave any assurance that we will continue to be able to fund the program, either by ourselves or through any partnership that we may seek. Also,we believe that, based on our limited interaction with the FDA to date, this program will require a minimum of 4 years of development andclinical studies before we can submit an NDA to the FDA for approval. Market Exclusivity We believe that if we are the first to conduct phase 3 clinical trials on phentermine, we will qualify for three years of market exclusivity for ourdosage strength and formulation. In addition, we will benefit from any patent life exclusivity conferred to us by any proprietary technology wemay incorporate into our formulation. Most importantly, we will be the only phentermine product specifically proven to be efficacious andapproved for long-term use. We believe that a long-term usage indication and safety and efficacy data in an expanded phentermine label, alongwith 3 years of market exclusivity on our dosage strength and formulation plus any other patent-related exclusivity we may obtain will provideus with a meaningful advantage in achieving a significant position in the market for pharmaceutical products for the treatment of obesity. Treatments for Hemorrhoids Our next product is intended for the treatment of grade I and grade II hemorrhoids. We believe that there are no FDA-approved drug productsfor the treatment of grade I and grade II hemorrhoids. There are several OTC medications used to treat hemorrhoids including Preparation Hcream, hydrocortisone creams in various strengths up to 1%, and Anusol suppositories and medicated wipes and pads. In addition, severalcompanies manufacture and market higher, prescription strengths of hydrocortisone creams, gels, ointments and suppositories, lidocaine creamsand gels, and combination creams containing hydrocortisone and lidocaine. None of these products have undergone clinical trials or have beensubmitted to or approved by the FDA on the basis of safety and efficacy. Alaven® Pharmaceuticals LLC, now part of Meda Pharmaceuticals,Inc. manufactures and sells a combination product containing hydrocortisone and pramoxine which patients and physicians are utilizing for thetreatment of hemorrhoids. This product has also not been approved by the FDA for the indication and claims contained in the product label.

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To our knowledge, there are currently no FDA-approved drug products for the treatment of hemorrhoids. Some physicians are known toprescribe topical steroids, such as Anusol-HC, for the treatment of hemorrhoids. In addition, there are various strengths of topical combinationprescription products containing hydrocortisone along with lidocaine or pramoxine, each a topical anesthetic, that are prescribed by physiciansfor the treatment of hemorrhoids. However, none of these single-agent or combination prescription products have been clinically evaluated forsafety and efficacy and approved by the FDA for the treatment of hemorrhoids. Further, many hemorrhoid patients use OTC products as theirfirst line therapy. OTC products, such as Preparation H, contain any one of several active ingredients including glycerin, phenylephrine,pramoxine, white petrolatum, shark liver oil and/or witch hazel, for symptomatic relief. No data are available regarding the clinical efficacy ofthese OTC symptomatic treatments for hemorrhoids. There has been very limited research conducted on treatment of hemorrhoids and therefore there is very limited historical clinical trial protocolsor outcomes information available to us to design our programs. The clinical end points in our studies will be subjective responses from patientsas they perceive improvements or lack thereof in their symptoms. Such outcome trials have high variability and are also subject to site-to-sitevariability, making them more risky. Development of Hemorrhoids Drugs Hemorrhoids are a common gastrointestinal disorder, characterized by anal itching, pain, swelling, tenderness, bleeding and difficulty defecating.In the U.S., hemorrhoids affect nearly 5% of the population, with approximately 10 million persons annually admitting to having symptoms ofhemorrhoidal disease. Of these persons, approximately one third visit a physician for evaluation and treatment of their hemorrhoids. The dataalso indicate that for both sexes a peak of prevalence occurs from age 45 to 65 years with a subsequent decrease after age 65 years. Caucasianpopulations are affected significantly more frequently than African Americans, and increased prevalence rates are associated with highersocioeconomic status in men but not women. Development of hemorrhoids before age 20 is unusual. In addition, between 50% and 90% of thegeneral U.S., Canadian and European population will experience hemorrhoidal disease at least once in life. Although hemorrhoids and otheranorectal diseases are not life-threatening, individual patients can suffer from agonizing symptoms which can limit social activities and have anegative impact on the quality of life. Hemorrhoids are defined as internal or external according to their position relative to the dentate line. Classification is important for selecting theoptimal treatment for an individual patient. Accordingly, physicians use the following grading system: Grade I Hemorrhoids not prolapsed but bleeding. Grade II Hemorrhoids prolapse and reduce spontaneously with or without bleeding. Grade III Prolapsed hemorrhoids that require reduction manually. Grade IV Prolapsed and cannot be reduced including both internal and external hemorrhoids that are confluent from skin tag to inner anal canal. Topical Combination Prescription Hemorrhoid Products – Recent U.S. Prescription Data and Market Opportunity The current market for topical DESI formulations of hydrocortisone and lidocaine is highly fragmented. Several topical combination prescriptionproducts for the treatment of hemorrhoids are available containing hydrocortisone in strengths ranging from 0.5% to 3.0%, combined withlidocaine in strengths ranging from 1.0% to 3.0%. The various topical formulations include creams, ointments, gels, lotions, enemas, pads, andsuppositories. The most commonly prescribed topical combination gel, AnaMantle®, is sold as a branded generic product and contains 2.5%hydrocortisone and 3.0% lidocaine. According to IMS, over 25 million units of topical combination prescription products for hemorrhoids weresold in the U.S. during the twelve-month period ended June 2012 comprising an estimated $80 million annual market in the United States. Thereare almost no sales, marketing or promotional efforts on behalf of these products, yet they have achieved reasonable acceptance by physicianswho treat hemorrhoids. Over the past few years, sales of some of these products have declined as the FDA directed certain manufacturers tosuspend operations due to deficient manufacturing practices. As the FDA continues to tighten controls on DESI drug manufacturers, we believethat no new companies are entering the market to supply these products. We believe that the development of an FDA-approved, topical combination prescription product for the treatment of grade I and II hemorrhoidsrepresents an attractive, low-risk product opportunity with meaningful upside potential.

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Hydrocortisone-Lidocaine Topical Combination Prescription Cream for Hemorrhoids As discussed above, we believe there are no FDA-approved prescription therapies for grade I and II hemorrhoids. Although there are numerousprescription and OTC products commonly used to treat hemorrhoids, none possess proven safety and efficacy data generated from rigorouslyconducted clinical trials. We believe that a novel topical formulation of hydrocortisone and lidocaine designed to provide anti-inflammatory andanesthetic relief and which has an FDA-approved label specifically claiming the treatment of grade I and II hemorrhoids will become animportant treatment option for physicians who want to provide their patients with a therapy that has demonstrated safety and efficacy in treatingthis uncomfortable and often recurring disease. Our Communications with the FDA Combination drugs, such as the one we propose to develop, are subject to meeting certain testing criteria that have been established by the FDA.Specifically, the FDA requires combination drugs to be tested to demonstrate the efficacy contribution of each of the drugs separately, as well asfurther prove that the combination is superior in efficacy to the individual drugs. Typically, Phase 3 clinical trials of combination drugs are four-arm studies with the placebo, the proposed combination and each drug component tested individually. This obviously increases both the cost andthe complexity of the clinical trials, making the outcomes more uncertain. In January 2011, we requested a Pre-Investigational New Drug application, or Pre-IND, meeting with the FDA and filed our briefing documentsoutlining our development plans for developing and testing a hemorrhoid hydrocortisone/lidocaine cream. Shortly thereafter, we discussed theplan with the FDA and reached agreement on the general outline of a clinical development plan. Specifically, the key features of our planinclude:

· Toxicology studies to support long-term and repeated usage of combination cream,· Phase 2 safety and dose ranging study to select optimum combination for Phase 3 study,· 4-arm Phase 3 study to satisfy the FDA’s combination rule,· Phase 1 studies to be conducted in parallel with Phase 3 study due to the extensive information already available on both hydrocortisone

and lidocaine,· Waiver request from a pediatric study based on a demonstration through the literature that this indication is primarily an adult condition,

and· Bridging studies to currently marketed products.

We believe that these guidelines are clear and provide us with a high degree of flexibility in conducting our studies. Since we are conducting ourPhase 1 studies much later in the program, we are reducing the initial cost of our program. The FDA has also offered us the opportunity toprovide additional data as it becomes available to further refine the development plan. Development Activities to Date

· Toxicological Studies – We have completed 28-day repeat dose toxicology studies as requested by the FDA to demonstrate safety. Thestudies did not show any toxic effects of either of these active drugs even at concentrations much higher that what we propose to use inour human trials. After we complete the Phase 2 studies, we will conduct additional toxicological work to support filing of our New DrugApplication.

· Drug Manufacturing – We have completed manufacturing of 7 different strengths of single active and combination drug products insufficient quantities for us to complete Phase 2 clinical studies. The investigational drug was manufactured under current GoodManufacturing Practice by IG Laboratories, Inc. and has been undergoing long-term stability studies. The drug product meets all ourspecifications and is stable.

· Investigational New Drug application, or IND, Submission to FDA – In September 2012, we submitted our IND to the FDA to initiatePhase 2 dose ranging study. We have proposed conducting this study in approximately 140 subjects. We have not received any negativecommunication on this filing and we are prepared to initiate the study.

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Market Exclusivity We believe that if we are the first company to conduct rigorous clinical trials and receive FDA approval of a topical hydrocortisone-lidocainecombination cream for the treatment of hemorrhoids, we will qualify for 3 years of market exclusivity for our dosage strength and formulation.In addition, we will also be the only product on the market specifically proven to be safe and effective for the treatment of hemorrhoids.Generally, if a company conducts clinical trials and receives FDA approval of a product for which there are similar, but non FDA-approved,prescription products on the market, the manufacturers of the unapproved but marketed products are required to withdraw them from the market.However, the FDA has significant latitude in determining how to enforce its regulatory powers in these circumstances. We have not had anycommunication with the FDA regarding this matter and cannot predict what action, if any, the FDA will take with respect to the unapprovedproducts. We believe that should our product receive an FDA approval and demonstrate, proven safety and efficacy data, and if our products obtain 3 yearsof market exclusivity based on our dosage strength and formulation, Citius is likely to have a meaningful advantage in its pursuit of achieving asignificant position in the market for topical combination prescription products for the treatment of hemorrhoids. Clinical Trial Consultants and Contract Research Organizations, or CROs For our Suprenza development program, we have engaged Kinexum LLC (“Kinexum”), of Harpers Ferry, West Virginia, a full-service,pharmaceutical regulatory and clinical trials consulting organization to assist us with our regulatory strategy and to help us manage and conductour clinical trials. Kinexum was founded and is led by G. Alexander "Zan" Fleming, M.D. Among his many distinguished accomplishments, Dr.Fleming was a medical team leader in the FDA’s Division of Metabolic and Endocrine Drug Products. As such, he was the primary medicalreviewer for three important pharmaceutical new molecular entities: lovastatin to treat high cholesterol and metformin and troglitazone to treatdiabetes. Kinexum provides us with a full suite of services and professionals and has a proven track record of helping major internationalpharmaceutical companies, public and private biotechnology companies and leading not-for-profit healthcare research and service organizationsdevelop their products. For the development of our hydrocortisone-lidocaine topical combination prescription cream for the treatment of hemorrhoids, we have engagedTherapeutics Inc., of San Diego, California, a full-service, dermatology-focused pharmaceutical development, regulatory and clinical trialsconsulting organization to assist us with our regulatory strategy and to help us manage and conduct our clinical trials. Therapeutics Inc. wasfounded and is led by Dan Piacquadio, M.D. Dr. Piacquadio established the clinical research program for the Division of Dermatology at theUniversity of California, San Diego and served as director of this facility from 1989 to 1997, during which time period it became regarded as oneof the leading academic product development groups in the United States. In addition, Dr. Piacquadio has been instrumental in the non-clinicaland clinical development phases of a variety of soft tissue augmentation products including Hylaform (Biomatrix) and played a key role indefining regulatory strategy and clinical development of the first laser-based hair removal technology pioneered by Thermolase. As a consultantto the FDA’s Generic Drug Group, he co-led the development of the current bioequivalency standards for topical steroids. Therapeutics Inc.provides us with a full suite of services and professionals and has a proven track record of helping major pharmaceutical companies and publicand private biotechnology companies develop their products. Manufacturing We do not currently have and we do not intend to set up our own manufacturing facilities. We expect to use approved contract manufacturers formanufacturing our products in all stages of development after we file for FDA approval. Each of our domestic and foreign contractmanufacturing establishments, including any contract manufacturers we may decide to use, must be listed in the New Drug Application “NDA”and must be registered with the FDA. Also, the FDA imposes substantial annual fees on manufacturers of branded products. At present we andour partner, Prenzamax, have agreed to pay these costs equally. Alpex Supply Agreement In June of 2008, we entered into a development and supply agreement with Alpex Pharma SA (“Alpex”), of Mezzovico, Switzerland. Under theagreement, Alpex developed the formulations of Suprenza and is manufacturing and supplying the product to our marketing partner, PrenzamaxLLC. In November 2011, the agreement was amended such that we now have the right to have Alpex transfer the technology to a third party formanufacture and supply of the product. Also, if Alpex fails to supply the product, we may use an alternate manufacturer for our supply of suchproducts until Alpex is able to resume production.

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The Alpex facility has been inspected by several regulatory agencies including the FDA for compliance with cGMP. Currently, Alpex is theprimary manufacturer for Suprenza and has supplied sufficient quantities to meet the demand for our products. IGI Laboratories Supply Agreement In July 2010, we entered into an agreement with IGI Laboratories, Inc. of Buena, New Jersey, a developer and manufacturer of prescriptiontopical drugs for the development of hydrocortisone and lidocaine cream formulations. IGI has expertise in developing topical products in a widerange of dosage forms, including topical solutions, creams, ointments and gels. The agreement only provides for development and supply of quantities to conduct Phase 2 studies. For our future needs, we may continue ourrelationship with IGI or we may seek a different manufacturer. Sources and Availability of Raw Materials and Clinical Supplies In general, our suppliers purchase raw materials and supplies on the open market. Substantially all such materials are obtainable from a numberof sources so that the loss of any one source of supply would not have a material adverse effect on us. However, we currently only have onesource of supply for the active pharmaceutical ingredient, or API, for phentermine hydrochloride. The loss of that supply would temporarilydelay production of Suprenza and could have a material adverse effect on our business. Compliance with Environmental Regulations If we elect to conduct product development and manufacturing, we will be subject to regulation under various federal and state laws, includingthe Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation andRecovery Act, the Controlled Substances Act and other present and potential future federal, state or local regulations. Sales and Marketing We are primarily focused on identifying medical needs and proposing product solutions that we believe offer superior benefits and additionalsafety and clinical information. Once we identify such needs and product concepts through market research, we sub-contract the drugformulation development work to companies specializing in drug development. We manage the regulatory process through product approval. Asof now, we do not market our products ourselves. We have identified several specialty pharmaceutical companies with large sales forces,experienced sales and marketing management teams, significantly larger resources than ours, and non-competing product portfolios that webelieve would make excellent sales and marketing partners for us and our existing and expected products. We intend to license our products tosuch companies for sales and marketing. In November 2011, we entered into an exclusive license agreement with Prenzamax LLC (“Prenzamax”), pursuant to which we granted toPrenzamax a license for sales of Suprenza in the U.S. Prenzamax’s performance of this agreement is guaranteed by Akrimax LLC (“Akrimax”), aspecialty pharmaceuticals sales and marketing company. Akrimax has several branded and branded-generic products that are being sold tocardiologists, endocrinologists and general practitioners. Suprenza is sold by the Akrimax sales force which consists of approximately 50 salesand marketing professionals. The exclusive license agreement provides that all of the sales and marketing expenses will be incurred and borne byPrenzamax. Both we and Prenzamax will equally share the expenses related to FDA establishment fees, product fees and post-marketing studiesand the resulting earnings will be shared equally by us and Prenzamax. The co-founder and Vice Chairman of Akrimax is Leonard Mazur, ourPresident and Chief Operating Officer, who will assume the additional position of Chief Executive Officer of the Company. See “Related PartyTransactions”.

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Our agreement with Prenzamax also provides that we will offer them the opportunity to share costs of new product development. If Prenzamaxoffers to share in our development costs, we will negotiate the terms on which such investment from Prenzamax will be accepted by us. We havenot made any decision regarding the terms we would offer Prenzamax in our future development program for Suprenza. There is no assurancethat Prenzamax will participate in the cost of our development program. Also, we do not have any limitations or conditions on our secondproduct candidate, hydrocortisone/lidocaine and we are not required to offer this product to either Prenzamax or any other third party for salesand marketing. We have not decided whether we will market our future products or elect to license their sales and marketing. We have verylimited resources and management capabilities in managing pharmaceutical sales, and we cannot offer any assurance that our decision willnecessarily result in the best possible financial return for our products. Patents and Proprietary Rights Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for our current productcandidates and any future product candidates both in the U.S. and abroad. However, patent protection may not provide us with completeprotection against competitors who seek to circumvent our patents. To help protect our proprietary know-how, which is not patentable, and forinventions for which patents may be difficult to enforce, we currently rely and will in the future rely on trade secret protection and confidentialityagreements to protect our interests. Our success depends in large part on our ability to protect our proprietary technologies, compounds and information, and to operate withoutinfringing the proprietary rights of third parties. We rely on a combination of patent, trade secret, copyright, and trademark laws, as well asconfidentiality, licensing and other agreements, to establish and protect our proprietary rights. There is no assurance that any of our patentapplications will be granted, or that any of the patents will be enforceable or will cover a drug or other commercially significant product ormethod. Because the time period from filing a patent application to the issuance, if ever, of the patent is often more than three years and because anyregulatory approval and marketing for a drug often occurs several years after the related patent application is filed, the resulting marketexclusivity afforded by any patent on our drug candidates and technologies will likely be substantially less than 20 years. In the United States,the European Union and some other jurisdictions, patent term extensions are available for certain delays in either patent office proceedings ormarketing and regulatory approval processes. However, due to the specific requirements for obtaining these extensions, there is no assurance thatour patents will be granted extensions even if we encounter significant delays in patent office proceedings or marketing and regulatory approval. In addition to patent protection, we rely on trade secrets, proprietary know-how, and continuing technological advances to develop and maintainour competitive position. To maintain the confidentiality of our trade secrets and proprietary information, all of our employees are required toenter into and adhere to an employee confidentiality and invention assignment agreement, laboratory notebook policy, and invention disclosureprocedures as a condition of employment. Additionally, our employee confidentiality and invention assignment agreements require that ouremployees not bring to us, or use without proper authorization, any third-party proprietary technology. We also require our consultants andcollaborators that have access to proprietary property and information to execute confidentiality and invention rights agreements in our favorbefore beginning their relationship with us. While such arrangements are intended to enable us to better control the use and disclosure of ourproprietary information and provide for our ownership of proprietary technology developed on our behalf, they may not provide us withmeaningful protection for such property and technology in the event of unauthorized use or disclosure. Suprenza Intellectual Property Suprenza is based on the know-how, technology and intellectual property, including patents, owned by Alpex Pharma SA and licensed to us byAlpex. We are dependent on the ability and competence of Alpex and other third parties for the continued development of Suprenza. Suprenza iscovered by the following issued and pending patents. We have listed the issued patent, U.S. #6,149,938, titled “Process for the preparation of agranulate suitable to the preparation of rapidly disintegrable mouth-soluble tablets and compositions obtained thereby” in the FDA’s publicationcalled “Approved Drug Products with Therapeutic Equivalence Evaluations” otherwise known as the “Orange Book”. We also have a pendingpatent titled “Solid Dosage formulations containing weight-loss drugs” which, if granted, will be listed in the Orange Book. There is noassurance that additional patents will be granted, or if granted, that they will be enforceable.

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Competition We operate in a highly competitive and regulated industry which is subject to rapid and frequent changes. We face significant competition fromorganizations that are pursuing drugs that would compete with the drug candidates that we are developing and the same or similar products thattarget the same conditions we intend to treat. Due to our limited resources, we may not be able to compete successfully against theseorganizations, which include many large, well-financed and experienced pharmaceutical and biotechnology companies, as well as academic andresearch institutions and government agencies. Government Regulation Our activities are subject to the laws and regulations of multiple governmental authorities in the United States as well as in other countries inwhich our products may be tested or marketed. In the United States, prescription drug products are subject to extensive pre- and post-marketregulation by the FDA, including regulations that govern the testing, manufacturing, safety, efficacy, labeling, storage, record keeping,advertising and promotion under the Federal Food, Drug, and Cosmetic Act, or FFDCA, and by comparable agencies and laws in foreigncountries. We are also subject to other federal, state and local environmental and safety laws and regulations, including regulation of the use andcare of laboratory animals. Failure to comply with applicable FDA or other requirements may result in civil or criminal penalties, recall orseizure of products, partial or total suspension of production or withdrawal of the product from the market. Product Approval Process The process required by the FDA before our drug candidates may be marketed in the United States generally involves the following: Preclinical Testing Preclinical tests include laboratory studies to evaluate toxicity in animals. The results of preclinical tests, together with manufacturinginformation and analytical data, are submitted as part of an Investigational New Drug application, or IND, to the FDA. Clinical testing also mustsatisfy extensive Good Clinical Practice, or GCP, regulations. Clinical Trials Clinical trials are typically conducted in the following sequential phases, which may overlap:

· Phase 1 Clinical Trials . Studies are initially conducted in a limited number of healthy volunteers to test for safety, dose tolerance,absorption, metabolism, distribution and excretion.

· Phase 2 Clinical Trials . Studies are conducted in a limited patient population to identify possible adverse effects and safety risks, to

determine the efficacy of the product for specific targeted indications and to determine dose tolerance and optimal dosage. We may haveto conduct multiple Phase 2 clinical trials prior to beginning larger and more expensive Phase 3 clinical trials.

· Phase 3 Clinical Trials . These are commonly referred to as pivotal studies. When Phase 2 evaluations demonstrate that a dose range of

the product is effective and has an acceptable safety profile, Phase 3 clinical trials are undertaken in large patient populations to furtherevaluate dosage, to provide statistically significant evidence of clinical efficacy and to confirm safety in an expanded and diverse patientpopulation at multiple, geographically dispersed clinical trial sites.

· Phase 4 Clinical Trials . In some cases, the FDA may condition approval of an NDA for a drug candidate on the sponsor's agreement to

conduct additional clinical trials to continue to monitor the drug's safety after NDA approval. In addition, a sponsor may decide to conductadditional clinical trials after the FDA has approved an NDA to test efficacy in additional conditions and seek approval for newindications. Post-approval trials are typically referred to as Phase 4 clinical trials.

In addition some of our product candidates are combination prescription drugs. To test these products we will need to comply with the FDA’sregulation that we show contribution of each active drug in the formulation and that the combination provides superior efficacy compared toindividual drugs taken alone. This means that our clinical trials for our product candidates will need to evaluate the combination as compared toeach component separately and to placebo.

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New Drug Application The results of product development, preclinical studies, manufacturing process and clinical trials are submitted to the FDA as part of an NDA.The cost of preparing and submitting an NDA is substantial. The Prescription Drug User Fee Act, requires the payment of user fees with thesubmission of NDAs, including 505(b)(2) NDAs. These application fees are substantial ($1,841,500 in the FDA’s Fiscal Year 2012) and willlikely increase in future years. Manufacturers and sponsors of approved drugs are subject to annual product and establishment fees of $520,100per manufacturing establishment and $98,970 per product. Upon completion of its review of the NDA, FDA issues an approval letter. If the FDA is not satisfied with the information provided in theapplication it issues a Complete Response Letter, or CRL. A complete response letter outlines the deficiencies in the submission and may requireadditional testing or information in order for the FDA to reconsider the application. If and when those deficiencies have been addressed to theFDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing suchresubmissions in 2 or 6 months depending on the type of information included. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition ofNDA approval, the FDA may require post-approval testing and surveillance to monitor the drug’s safety or efficacy and may impose otherconditions, including labeling restrictions which can materially affect the potential market and profitability of the drug. Once granted, productapprovals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing. Section 505(b)(2) New Drug Applications As an alternate path to FDA approval for modifications to products previously approved by the FDA, an applicant may file an NDA underSection 505(b)(2) of the FFDCA. Section 505(b)(2) was enacted as part of the Hatch-Waxman Act. This statutory provision permits the filing ofan NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which theapplicant has not obtained a right of reference. The Hatch-Waxman Act permits the applicant to rely upon the FDA’s findings of safety andeffectiveness for previously approved products. The FDA may then approve the new product candidate for all or some of the label indicationsfor which the referenced product has been approved, as well as for any new indication for which the Section 505(b)(2) applicant has submittedits own data. The FDA requires companies to perform additional studies or measurements to support the change from the approved product. We submitted ourinitial NDA for Suprenza under Section 505(b)(2), based on bioequivalence studies which we conducted and safety information that has beencollected for the approved drug product that is incorporated in this product candidate. To the extent that a Section 505(b)(2) application relies onthe FDA’s finding of safety and effectiveness of a previously-approved drug, the applicant is required to certify to the FDA concerning anypatents listed for the approved product in the Orange Book. Specifically, the applicant must certify when the application is submitted that: (1)there is no patent information listed; (2) the listed patent has expired; (3) the listed patent has not expired, but will expire on a particular date andapproval is sought after patent expiration; or (4) the listed patent is invalid or will not be infringed by the manufacture, use or sale of the product.A certification that the new product will not infringe the already approved product’s Orange Book listed patents or that such patents are invalid iscalled a paragraph IV certification. If the applicant has provided a paragraph IV certification to the FDA, the applicant must also send notice ofthe paragraph IV certification to the patent holder and the original NDA holder. In the event that the patent holder or NDA holder files a patentinfringement lawsuit against the applicant within 45 days of its receipt of our paragraph IV notification, such lawsuit would automaticallyprevent the FDA from approving the applicant’s Section 505(b)(2) NDA until the earliest of 30 months, expiration of the patent, settlement ofthe lawsuit or a decision in the infringement case that is favorable to the applicant. Any such patent infringement lawsuits could be costly, take asubstantial amount of time to resolve and divert management resources. Product approvals based on new clinical investigation are granted three years of Hatch-Waxman marketing exclusivity. Under this form ofexclusivity, the FDA is precluded from approving a competing generic drug application or, in some cases, a competing 505(b)(2) application.However the FDA can accept and commence review of such applications during the three year exclusivity period and grant the approvalconcurrent with the expiration of the exclusivity period. Further, if another company obtains approval for either product candidate for the sameindication we are studying before we do, our approval could be blocked until the other company’s Hatch-Waxman marketing exclusivityexpires.

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Pediatric Information Under the Pediatric Research Equity Act of 2003, or PREA, NDAs or supplements to NDAs must contain data to assess the safety andeffectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for eachpediatric subpopulation for which the drug is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers.The Best Pharmaceuticals For Children Act, or BPCA, provides sponsors with an additional 6-month period of market exclusivity on all forms ofthe drug containing the active ingredient, if the sponsor submits results of pediatric studies specifically requested by the FDA under BPCA. Inorder to receive the BPCA exclusivity, the drug must have other existing patent or exclusivity protection in effect. Post-Approval Requirements Once an NDA is approved, a product will be subject to certain post-approval requirements. We and our contract manufacturers are required tocomply with applicable FDA manufacturing requirements contained in the FDA’s cGMP regulations. cGMP regulations require, among otherthings, quality control, and quality assurance. Risk Evaluation and Mitigation Strategy Programs The FDA can require a drug-specific Risk Evaluation and Mitigation Strategy, or REMS to ensure the benefits of the drug outweighs the risks. Indetermining whether a REMS is necessary, the FDA considers the size of the population likely to use the drug, the seriousness of the disease orcondition to be treated, the expected benefit of the drug, the duration of treatment, the seriousness of known or potential adverse events andwhether the drug is a new molecular entity. If the FDA determines a REMS is necessary, a sponsor must submit a proposed REMS as part of itsapplication, or if the request is made post-approval, not later than 120 days after the FDA notifies the drug sponsor. A REMS may be required toinclude various elements, such as a medication guide or patient package insert, a communication plan to educate health care providers of thedrug’s risks, limitations on how a drug may be prescribed or dispensed or other measures that the FDA deems necessary to assure the safe use ofthe drug. REMS programs must be evaluated on an ongoing basis and the FDA may require changes needed to address ongoing safety issues orcorrective actions to address any noncompliance. Additional Government Regulations In addition to FDA restrictions on marketing of pharmaceutical products, several other types of state and federal laws have been applied torestrict certain marketing practices in the pharmaceutical industry in recent years. These laws include antikickback statutes and false claimsstatutes. The federal healthcare program anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, solicitingor receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcareitem or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs. This statute has been interpreted toapply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other.Violations of the anti-kickback statute are punishable by imprisonment, criminal fines, civil monetary penalties and exclusion from participationin federal healthcare programs. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain commonactivities from prosecution or other regulatory sanctions, the exemptions and safe harbors are drawn narrowly, and practices that involveremuneration intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exemption orsafe harbor. Drug Enforcement Administration Regulation The Drug Enforcement Administration, or DEA, regulates drugs that are controlled substances. Controlled substances are those drugs that appearon one of the five schedules promulgated and administered by the DEA under the Controlled Substances Act, or CSA. The CSA governs, amongother things, the inventory, distribution, recordkeeping, handling, security and disposal of controlled substances. If our drug candidates arescheduled by the DEA as controlled substances, we will be subject to periodic and ongoing inspections by the DEA and similar state drugenforcement authorities to assess our ongoing compliance with DEA's regulations. Any failure to comply with these regulations could lead to avariety of sanctions, including the revocation, or a denial of renewal of any DEA registration, injunctions, or civil or criminal penalties.

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Other U.S. Regulatory Requirements In addition to the FDA regulations, the Centers for Medicare and Medicaid Services, other divisions of the U.S. Department of Health andHuman Services, the U.S. Department of Justice and individual U.S. Attorney offices within the Department of Justice, and state and localgovernments also have jurisdiction over us and our activities. For example, sales, marketing, and scientific/educational grant programs mustcomply with the anti-fraud and abuse provisions of the Social Security Act, the False Claims Act, the privacy provision of the Health InsurancePortability and Accountability Act, and similar state laws, each as amended. Pricing and rebate programs must comply with the Medicaid rebaterequirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Health Care Act of 1992, each as amended. If products aremade available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirementsapply. All of these activities are also potentially subject to federal and state consumer protection, unfair competition, and other laws. Moreover,we are now, and in the future may become subject to, additional federal, state, and local laws, regulations, and policies relating to safe workingconditions, laboratory practices, the experimental use of animals, and/or the use, storage, handling, transportation, and disposal of human tissue,waste, and hazardous substances, including radioactive and toxic materials and infectious disease agents used in conjunction with our researchwork. Employees As of the date of this Form 8-K, we have one (1) employee in a senior management position and we employ four (4) part-time consultants for ourregulatory and clinical study programs. We also have one part-time consultant in accounting and finance. None of our employees are covered bya collective bargaining agreement. We consider our relationship with our employees to be good. Facilities We maintain our offices in a sub-leased facility at 63 Great Road, Maynard, MA 01754. We do not intend to expand our operations for theforeseeable future and do not intend to lease additional space. Our sub lease arrangement is on month-to-month basis and we may terminate ourobligation at any time without notice. Legal Proceedings On May 17, 2013, we received notification from Zydus Pharmaceuticals (USA) Inc. (“Zydus”) that Zydus had submitted Abbreviated New DrugApplication No. 204663 to the FDA seeking approval to engage in the commercial manufacture, use or sale of generic versions of the 15 mg and30 mg dosages of our Suprenza® tablets. The notification informed us that Zydus was seeking to manufacture and sell its generic product prior tothe expiration of U.S. Patent No. 6,149,938 (the “‘938 patent”) which is listed in the Orange Book and covers Suprenza®, and that the ZydusANDA contained a certification that its proposed generic product does not infringe the ‘938 patent (“Paragraph IV Certification”). On June 19,2013, we received a separate notification from Zydus that it was also pursuing approval for the 37.5 mg dosage of Suprenza® under the same-numbered ANDA, with a separate Paragraph IV Certification. In response, within 45 days of receiving the first notification from Zydus, we andour partners (Alpex Pharma, S.A. and Prenzamax, LLC), filed suit against Zydus and its parent Cadila Healthcare Limited (d/b/a Zydus Cadila) inFederal District Court in Delaware and New Jersey for infringement of the ‘938 patent pursuant, pursuant to the Hatch-Waxman statutory regime.We promptly notified the FDA of the initiation of this lawsuit and, pursuant to statute, Zydus’s ANDA for a generic version of Suprenza® cannotbe approved by the FDA for 30 months from our receipt of Zydus’ Paragraph IV notice letters while this lawsuit proceeds. Recently, Akrimax has initiated discussions with Zydus management to seek a resolution to this dispute. These discussions are at very early stagebut Zydus has indicated that a negotiated settlement should be explored. No terms have been agreed to and the companies are evaluating generalconcepts of a framework for settlement. It is customary in the specialty pharmaceuticals industry to enter into such agreement however we cannotgive any assurance that we will reach such a settlement or if we did it will be on terms favorable to us. Increasingly, such settlements arescrutinized by the US Federal Trade Commission (FTC) to ensure that they are not anti-competitive. We intend to model our settlement on termsthat are commonly agreed to in such cases and generally accepted by the FTC. If we are unable to reach such a settlement we fully intend to defend our intellectual property. The litigation is likely to take a long time, isexpensive and the outcome is uncertain.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following management’s discussion and analysis should be read in conjunction with Citius Pharmaceutical’s historical financial statementsand the related notes thereto. Management’s discussion and analysis contains forward-looking statements, such as statements of our plans,objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, thewords “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions(“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-lookingstatements are subject to risks and uncertainties including those under “Risk Factors” in Item 1 Description of Business in this Form 8-K thatcould cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. The Company’sactual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of severalfactors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring afterthe date of this report. Basis of Presentation References in this section to “Citius,” “we,” “us,” “our,” and “the Company” refer to Citius Pharmaceuticals, LLC. The audited financial statements for our fiscal years ended December 31, 2013 and 2012 and for the six months ended June 30, 2014 and 2013include a summary of our significant accounting policies and should be read in conjunction with the discussion below. In the opinion ofmanagement, all material adjustments necessary to present fairly the results of operations for such periods have been included in these auditedfinancial statements. All such adjustments are of a normal recurring nature. Overview Citius Pharmaceuticals, LLC was founded in Massachusetts in January 2007. Activities since the Company’s inception through June 30, 2014,were devoted primarily to the development and commercialization of therapeutic products for large and growing markets using innovativepatented or proprietary formulations and novel drug delivery technology. As of June 30, 2014, the Company had devoted substantially all of its efforts to product development, raising capital, building infrastructurethrough strategic alliances and coordinating activities relating to its first commercial product Suprenza. The Company has not yet realized anyrevenues from its planned principal operations. Results of Operations for the Six Months Ended June 30, 2014 compared to Six Months Ended June 30, 2013

Six Months Ended

June 30, 2014 2013 Revenues $ - $ - Operating expenses:

Research and development - 54,739 General and administrative 51,134 504,394

Total operating expenses 51,134 559,133 Operating loss (51,134) (559,133)Interest expense 74,025 37,902 Net loss $ (125,159) $ (597,035)

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Revenues The Company did not generate any revenues for the six months ended June 30, 2014 and 2013. Beginning in May 2012, the Company’s strategicsales and marketing partner, Prenzamax, generated revenues from the sale of Suprenza, the Company’s first commercial product. Under thepartnering agreement, the Company was not entitled to any revenues during the six months ended June 30, 2014 and 2013. Research and Development Expenses For the six months ended June 30, 2014, there were no research and development expenses incurred as compared to $54,739 during the sixmonths ended June 30, 2013. The decrease in 2014 was primarily due to the Company’s limited working capital. During the six months endedJune 30, 2014, the Company was actively seeking to raise additional capital in order to fund its research and development efforts. General and Administrative Expenses For the six months ended June 30, 2014, general and administrative expenses decreased by $453,260, or approximately 90%, compared togeneral and administrative expenses for the six months ended June 30, 2014. Expense decreases were primarily attributable to the Company’slimited working capital as the Company focused its efforts solely on raising new capital to fund operations. General and administrative staffing expenses decreased by $325,526 during the six months ended June 30, 2014 compared to the six monthsended June 30, 2013 due to the resignation of certain employees. In addition, professional fees decreased by $100,516 primarily due to higherfinancing costs incurred for legal services, financial consulting and accounting fees during the six months ended June 30, 2013. Interest Expense For the six months ended June 30, 2014, interest expense increased by $36,123 primarily due to higher outstanding balances on our notes payableas the Company continued to borrow money to fund its operations. The Company borrowed $575,000 during the six months ended June 30, 2013and borrowed $600,000 in November 2013. In addition, the Company incurred $42,000 in debt issuance costs in April 2013 that were amortizedto interest expense over the twelve month term of the note. Amortization expense was $14,000 and $7,000 for the six months ended June 30,2014 and 2013, respectively. Net Loss For the six months ended June 30, 2014, we incurred a net loss of $125,159 compared to a net loss for the six months ended June 30, 2013 of$597,035. The decrease in the net loss was primarily due to the Company’s decreased activities resulting from its inability to fund its operations. Results of Operations for the Year Ended December 31, 2013 compared to Year Ended December 31, 2012 Year Ended December 31, 2013 2012 Revenues $ - $ - Operating expenses:

Research and development 492,136 705,812 General and administrative 690,396 310,301

Total operating expenses 1,182,532 1,016,113 Operating loss (1,182,532) (1,016,113)Interest expense 105,471 33,312 Net income (loss) $ (1,288,003) $ (1,049,425)

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Revenues The Company did not generate any revenues for the years ended December 31, 2013 and 2012. Beginning in May 2012, the Company’s strategicsales and marketing partner, Prenzamax, generated revenues from the sale of Suprenza, the Company’s first commercial product. Under thepartnering agreement, the Company was not entitled to any revenues during the years ended December 31, 2013 and 2012. Research and Development Expenses For the year ended December 31, 2013, research and development expenses decreased by $213,676, or approximately 30%, compared to the yearended December 31, 2012. The decrease in 2013 was primarily attributable to a decrease of $194,055 in development expenses for ourhydrocortisone lidocaine cream from $197,696 in 2012 to $3,641 in 2013, and a decrease of $18,208 in regulatory expenses for Suprenza from$506,015 in 2012 to $487,807 in 2013. General and Administrative Expenses For the year ended December 31, 2013, general and administrative expenses increased $380,095, or approximately 122%, compared to the yearended December 31, 2012. Expense increases were primarily attributable to the Company’s transition from operating in a private environment topreparing to operate in a publicly traded environment. Expanded staffing increased our payroll expenses by $239,481, or approximately 171%, to$379,658 in 2013 from $140,177 in 2012. The increase was primarily attributable to the addition of two executive positions during 2012.Professional fees increased to $261,821 in 2013 from $117,369 in 2012, an increase of $144,452. This increase was primarily attributable toincreases in legal fees for litigation relating to Suprenza and financing matters. Interest Expense For the year ended December 31, 2013, interest expense increased by $72,159 primarily due to higher outstanding balances on our notes payableas the Company continued to borrow money to fund its operations. The Company borrowed $1,175,000 during the year ended December 31,2013. In addition, the Company incurred $42,000 in debt issuance costs in April 2013 that were amortized to interest expense over the twelvemonth term of the note. Amortization expense was $28,000 for the year ended December 31, 2013. Net Loss For the year ended December 31, 2013, we incurred a net loss of $1,288,003 compared to a net loss for the year ended December 31, 2012 of$1,049,425. The increase in the net loss of $238,578 was primarily due to the Company’s increase in general and administrative expenses of$380,095 offset by the decrease in research and development expenses of $213,676. In addition, an increase in interest expense of $72,159contributed to the increased net loss.

LIQUIDITY AND CAPITAL RESOURCES Going Concern Uncertainty and Working Capital Citius has incurred operating losses of $1,288,003 and $1,049,425 for the years ended December 31, 2013 and 2012, respectively, and incurred anet loss of $125,159 for the six months ended June 30, 2014. At December 31, 2013 and 2012, Citius had an accumulated members’ deficit of$2,901,754 and $1,613,751, respectively. At June 30, 2014, Citius had an accumulated members’ deficit of $2,976,913. Citius’s net cash used inoperations during the years ended December 31, 2013 and 2012 was $1,095,266 and $917,798, respectively and $80,947 for the six monthsended June 30, 2014. As of June 30, 2014, Citius had a working capital deficit of $1,297,314. The working capital deficit was attributable to the operating lossesincurred by the Company since inception along with short-term borrowing. The Company’s primary sources of cash flow since inception havebeen from financing activities. During the years ended December 31, 2013 and 2012 the Company received proceeds of $1,175,000 and$400,000, respectively from the issuance of debt. During the six months ended June 30, 2014 and the years ended December 31, 2013 and 2012the Company received proceeds of $50,000, $0 and $500,000, respectively from the issuance of membership interests. Our primary uses ofoperating cash were for product development and commercialization activities, regulatory expenses, employee compensation, consulting fees,legal and accounting fees, insurance and travel expenses.

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On July 31, 2014, the note holders demanded conversion of the outstanding $1,685,000 in Convertible Notes, the $350,000 Subordinated Noteand the accrued interest of $196,058 into 3,667,886 membership interests of Citius. Citius and the two major note holders agreed to convert theConvertible Notes and accrued interest at the 2014 private placement price of $0.60 per share of common stock while the Subordinated Noteissued in the 2013 private placement converted at the price of $0.65 per share. The membership interests were exchanged for shares of commonstock in the Reverse Acquisition. After the Reverse Acquisition, the Company expects that it will have sufficient funds to continue operations for 12 months. The Company plansto raise additional capital. There is no assurance, however, that that the Company will be successful in raising the needed capital or that theproceeds will be received in a timely manner to fully support the Company’s operations. Inflation Our management believes that inflation has not had a material effect on our results of operations Contractual Obligations We do not have any liabilities related to long-term contractual obligations as of June 30, 2014. Off Balance Sheet Arrangements We do not have any off balance sheet arrangements.

Critical Accounting Policies Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared inaccordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to makeestimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets andliabilities. We review our estimates on an ongoing basis. We base our estimates on historical experience and on various other factors that webelieve to be reasonable under the circumstances. Actual results may differ from these estimates. We believe the judgments and estimatesrequired by the following accounting policies to be critical in the preparation of our financial statements. Research and Development Research and development costs, including upfront fees and milestones paid to collaborators who are performing research and developmentactivities under contractual agreement with the Company, are expensed as incurred. The Company defers and capitalizes its nonrefundableadvance payments that are for research and development activities until the related goods are delivered or the related services are performed.When the Company is reimbursed by a collaboration partner for work the Company performs, it records the costs incurred as research anddevelopment expenses and the related reimbursement as a reduction to research and development expenses in its statement of operations.Research and development expenses primarily consist of clinical and non-clinical studies, materials and supplies, third-party costs for contractedservices, and payments related to external collaborations and other research and development related costs. Patents and Trademarks Certain costs of outside legal counsel related to obtaining patents and trademarks for the Company are capitalized. Patent costs are amortizedover the legal life of the patents, generally twenty years, starting at the patent filing date. The costs of unsuccessful and abandoned applicationsare expensed when abandoned. The cost of maintaining existing patents are expensed as incurred. Income Taxes Citius was treated as a partnership for federal and state income taxes prior to the Reverse Acquisition. A partnership’s income or loss is allocateddirectly to the Members for income tax purposes. Accordingly, there is no provision for federal and state income taxes in the accompanyingfinancial statements.

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The Company follows accounting guidance regarding the recognition, measurement, presentation and disclosure of uncertain tax positions in thefinancial statements. Tax positions taken or expected to be taken in the course of preparing the Company’s tax returns, including the position thatCitius qualified as a pass-through entity, are required to be evaluated to determine whether the tax positions are “more-likely-than-not” of beingsustained by the applicable tax authorities. Tax positions not deemed to meet a more-likely-than-not threshold would be recorded in the financialstatements. There are no uncertain tax positions that require accrual or disclosure as of June 30, 2014. Any interest or penalties are charged to expense. None have been recognized in these financial statements. Generally, Citius is subject to federaland state tax examinations by tax authorities for all years subsequent to December 31, 2010. After the Reverse Acquisition, the Company will recognize deferred tax assets and liabilities based on differences between the financialreporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences areexpected to reverse. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assetsto be more likely than not. Recently Adopted Accounting Pronouncements In June 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “DevelopmentStage Entities”, Topic 915. The objective of the ASU is to improve financial reporting by reducing the cost and complexity associated with theincremental reporting requirements for development stage entities. The ASU removes Topic 915, Development Stage Entities in its entirety fromFASB Accounting Standards Codification (“ASC”). The ASU removes all incremental financial reporting requirements from U.S. GAAP fordevelopment stage entities, including the inception-to-date information and certain other disclosures. It also eliminates the guidance in ASC 810on how to assess whether a development stage entity has sufficient equity at risk in the evaluation of whether the development stage entity is avariable interest entity. Additionally, the ASU clarifies that all entities, including entities that have not begun operations, should provide the riskand uncertainty disclosures required in ASC 275. The Company has elected to early adopt as permitted by ASU 2014-10 and therefore hasomitted the incremental development stage reporting requirements. Item 3. Properties. We maintain our offices in a sub-leased facilitv at 63 Great Road, Maynard, MA 01754. We do not intend to expand our operations for theforeseeable future and do not intend to lease additional space. Our sub lease arrangement is on month-to-month basis and we may terminate ourobligation at any time without notice. Item 4. Security Ownership of Certain Beneficial Owners and Management. The following table sets forth certain information, as of the date of filing of this report, with respect to the beneficial ownership of theoutstanding common stock by (i) any holder of more than five (5%) percent; (ii) each of the Company’s executive officers and directors; and (iii)the Company’s directors and executive officers as a group. Except as otherwise indicated, each of the stockholders listed below has sole votingand investment power over the shares beneficially owned.

Name of Beneficial Owner

Shares ofCommon

StockBeneficially

Owned AfterClosing of

the ReverseAcquisition

Percentageof Shares of

CommonStock

BeneficiallyOwned

Geoffrey E. Clark (1) 7,432,506 24.8%Reinier Beeuwkes (1) 7,486,182 24.9%Neeta Wadekar 2,500,000 8.3%Leonard Mazur (2) 200,000 0.7%All executive officers and directors as a group before Reverse Acquisition 15,118,688 50.4%All executive officers and directors as a group after Reverse Acquisition 200,000 0.7%

(1) Executive officer and director resigned upon completion of the Reverse Acquisition.

(2) Executive officer and director.

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Item 5. Directors and Executive Officers. Below are the names and certain information regarding the Company’s executive officers and directors following the Reverse Acquisition ofCitius. Name Age Position(s)Leonard Mazur 68 Chief Executive Officer, President, Chief Operating Officer, and Director

Effective upon the Company’s meeting its information obligations under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), Mohammad Omar Rahman will resign and Leonard Mazur will be appointed as Chief Executive Officer, President, Chief OperatingOfficer and sole director of the Company. The Company expects that its Board of Directors will consist of four members. The following persons are currently directors of the Company. After the closing of the Private Offering, only Leonard Mazur will be a Director.In addition, it is anticipated that an additional individual, designated by the Placement Agents, will serve on the Company’s Board of Directorsand the Board will seek to appoint at least two more directors. Leonard Mazur is the cofounder and Vice Chairman of Akrimax Pharmaceuticals, LLC (“Akrimax”), a privately held pharmaceutical companyspecializing in producing cardiovascular and general pharmaceutical products. Akrimax was founded in September 2008 and has successfullylaunched prescription drugs while acquiring drugs from major pharmaceutical companies. The company has achieved a significant marketpresence with its product launches. Presently a drug in Akrimax’s portfolio is the fastest growing drug in its category. From January 2005 to May2012, Mr. Mazur also co-founded and served as the Chief Operating Officer of Triax Pharmaceuticals LLC (“Triax”), a specialty pharmaceuticalcompany producing prescription dermatological drugs. Within two years from its inception, Triax broke into the ranks of the top 10dermatological pharmaceutical companies in the US. Prior to joining Triax, he was the founder and, from 1995 to 2005, Chief Executive Officerof Genesis Pharmaceutical, Inc. (“Genesis”), a dermatological products company that marketed its products through dermatologists’ offices aswell as co-promoting products for major pharmaceutical companies. In 2003, Mr. Mazur successfully sold Genesis to Pierre Fabre, a leadingpharmaceutical company. In each of these ventures, under his guidance, the companies developed, acquired, in-licensed and successfullypromoted over 25 specialty pharmaceutical products. Mr. Mazur was also instrumental in raising approximately $400 million in equity and debtfinancing for these companies. Mr. Mazur has extensive sales, marketing and business development experience from his tenures at Medicis Pharmaceutical Corporation, asexecutive vice president, ICN Pharmaceuticals, Inc. as Vice President, Sales & Marketing, Knoll Pharma (a division of BASF), and CooperLaboratories, Inc. Mr. Mazur has been responsible for the launch of major drugs into the US market including Dynacin (Medicis) anantibiotic,Virazole (ICN) a break through antiviral and Isoptin (BASF) a break through cardiovascular drug. Mr. Mazur is a member of the Board of Trustees of Manor College and is a recipient of the Ellis Island Medal of Honor. Mr. Mazur receivedboth his BA and MBA from Temple University and has served in the U.S. Marine Corps Reserves. Mr. Mazur has served as President, Chief Operating Officer and director of Citius since July 2013, and is expected to assume the additionalposition of Chief Executive Officer of the Company following the Reverse Acquisition.

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Board Leadership Structure and Role in Risk Oversight Our Board of Directors is primarily responsible for overseeing our risk management processes on behalf of the Company. The Board ofDirectors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding ourCompany’s assessment of risks. The Board of Directors focuses on the most significant risks facing our Company and our -Company’s generalrisk management strategy, and also ensures that risks undertaken by our Company are consistent with the board’s appetite for risk. While theboard oversees our Company’s risk management, management is responsible for day-to-day risk management processes. We believe this divisionof responsibilities is the most effective approach for addressing the risks facing our Company and that our board leadership structure supportsthis approach. Involvement in Certain Legal Proceedings To our knowledge, our directors and executive officers have not been involved in any of the following events during the past ten years:

1. any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officereither at the time of the bankruptcy or within two years prior to that time;

2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minoroffenses);

3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or bankingactivities or to be associated with any person practicing in banking or securities activities;

4. being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to haveviolated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

5. being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequentlyreversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, anylaw or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraudin connection with any business entity; or

6. being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization,any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members orpersons associated with a member.

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Item 6. Executive Compensation. The following table sets forth information regarding compensation paid to our Chief Executive Officer and Chief Medical Officer for Citius’fiscal years ended December 31, 2013 and 2012. Trail One, Inc. did not pay any compensation to its Chief Executive Officer for its fiscal yearsended September 30, 2013 and 2012.

Name & Position Fiscal Year Salary

($) Bonus

($) Stock Awards

($)

All OtherCompensation

($) Total

($) Reinier Beeuwkes 2013 0 0 0 0 0 Chief Executive Officer 2012 0 0 0 0 0 Geoffrey E. Clark 2013 0 0 0 0 0 Chief Medical Officer 2012 0 0 0 0 0

Board of Directors and Corporate Governance The Company expects that its Board of Directors will consist of four members. On the First Closing (subject to the Company’s meeting itsinformation obligations under the Exchange Act), all of the current members of the Board of Directors of Company will resign andsimultaneously therewith, a new Board of Directors will be appointed. The new Board will consist of Leonard Mazur, and an additional personwho will be designated by the Placement Agents. In addition, the Company will seek to appoint at least two additional independent directors.Upon completion of the Reverse Acquisition, Dr. Reinier Beeuwkes and Dr. Geoffrey E. Clark would assume advisory roles. The Company’sdirectors are elected at the annual meeting of shareholders to hold office until the annual meeting of shareholders for the ensuing year or untiltheir successors have been duly elected and qualified. Officers are elected annually by the Board of Directors and serve at the discretion of the Board. Board Committees The Board may appoint an audit committee, nominating committee and/or compensation committee, to adopt charters relative to each suchcommittee and to formulate and adopt a code of ethics. Board Independence None of our current directors is an “independent” director as that term is defined by SEC rules, including the rules relating to the independencestandards of an audit committee. Outstanding Equity Awards at Fiscal Year-End The Company had no outstanding equity awards as of the closing of the Reverse Acquisition.

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Director Compensation No director of the Company received any compensation for services as director for the Company’s last fiscal year. Risk Management The Company does not believe risks arising from its compensation policies and practices for its employees are reasonably likely to have amaterial adverse effect on the Company. Item 7. Certain Relationships and Related Transactions, and Director Independence Certain Relationships and Related Transactions Between July 12, 2010 and March 25, 2013, Citius issued convertible promissory notes in the aggregate principal amount of $1,685,000,including $850,000 to Dr. Geoffrey Clark, Citius’s Chief Medical Officer, and $835,000 to Dr. Reinier Beeuwkes, Citius’s Chairman. ReinierBeeuwkes and Geoffrey Clark have resigned as officers and directors effective September 12, 2014. See “Recent Sales of UnregisteredSecurities”. On November 19, 2013, Citius issued two promissory notes, each in the principal amount of $300,000, to Dr. Geoffrey Clark and Dr. ReinierBeeuwkes, respectively. Reinier Beeuwkes and Geoffrey Clark have resigned as officers and directors effective September 12, 2014. See “RecentSales of Unregistered Securities.” Citius’s headquarters are located in the office space of Ischemix, LLC, a company majority-owned by Dr. Geoffrey Clark and Dr. ReinierBeeuwkes. The Company does not pay for use of the space. As of June 30, 2014, the Company owes $56,134 to Ischemix LLC for expenses paid on the Company’s behalf. Ischemix is owned by ReinierBeeuwkes and Geoffrey Clark who were both officers and directors, as well as principal stockholders of the Company. Reinier Beeuwkes andGeoffrey Clark have resigned as both officers and directors effective September 12, 2014. In November 2011, we entered into an exclusive license agreement with Prenzamax LLC (“Prenzamax”), pursuant to which we granted toPrenzamax a license for sales of Suprenza in the U.S. Prenzamax’s performance of this agreement is guaranteed by Akrimax LLC (“Akrimax”), aspecialty pharmaceuticals sales and marketing company. The exclusive license agreement provides that all of the sales and marketing expenseswill be incurred and borne by Prenzamax. Both we and Prenzamax will equally share the expenses related to FDA establishment fees, productfees and post-marketing studies and the resulting earnings will be shared equally by us and Prenzamax. The co-founder and Vice Chairman ofAkrimax is Leonard Mazur, our President and Chief Operating Officer, who assumed the additional position of Chief Executive Officer of theCompany after the Reverse Acquisition. In June 2014, Citius sold Membership Interests that converted to 200,000 shares of common stock to Leonard Mazur for an aggregate purchaseprice of $50,000. Item 8. Legal Proceedings We are not party to any legal proceedings.

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Item 9. Market Price of and Dividends on Common Equity and Related Stockholder Matters (a) Market Information The Company's common stock is not currently traded. We are quoted under the ticker symbol TRLO.OB and we expect the Company’s commonstock to commence trading within the coming twelve months, though there can be no assurance that this will be the case. (b) Holders of Common Stock We are authorized to issue 90,000,000 shares of common stock, $0.001 par value per share. Currently we have 30,025,286 shares of commonstock issued and outstanding. As of September 12, 2014, there were approximately 50 shareholders of the Company’s common stock. Each share of common stock shall have one (1) vote per share for all purposes. The holders of a majority of the shares entitled to vote, present inperson or represented by proxy, shall constitute a quorum at all meetings of our shareholders. Our common stock does not provide preemptive,subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled tocumulative voting for election of the board of directors. Holders of common stock are entitled to receive ratably such dividends as may be declared by the board of directors out of funds legallyavailable therefore as well as any distributions to the security holder. We have never paid cash dividends on our common stock, and do notexpect to pay such dividends in the foreseeable future. In the event of a liquidation, dissolution or winding up of our company, holders of common stock are entitled to share ratably in all of our assetsremaining after payment of liabilities. Holders of common stock have no preemptive or other subscription or conversion rights. There are noredemption or sinking fund provisions applicable to the common stock. (c) Dividends The Company has never paid dividends on its Common Stock. The Company intends to follow a policy of retaining earnings, if any, to financethe growth of the business and does not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of futuredividends on the Common Stock will be at sole discretion of the Board of Directors and will depend on the Company’s profitability and financialcondition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant. (d) Securities Authorized for Issuance under Equity Compensation Plans The Company has not established any compensation plans to which our securities are authorized for issuance to employees or non-employees(such as directors, consultants and advisors) in exchange for consideration in the form of services. Item 10. Recent Sales of Unregistered Securities Between February 2007 and December 2007, Citius issued 5,374,000 Membership Interests for gross proceeds of $31,300. Between June 2008 and December 2008, Citius issued 1,600,000 Membership Interests for gross proceeds of $240,000. Between July 2009 and December 2009, Citius issued 3,183,333 Membership Interests for gross proceeds of $477,500. Between July 2010 and December 2010, Citius issued 2,500,000 Membership Interests for gross proceeds of $475,000. Between March 2011 and December 2011, Citius issued 3,100,000 Membership Interests for gross proceeds of $775,000. Between January 2012 and December 2012, Citius issued 2,000,000 Membership Interests for gross proceeds of $500,000.

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Between July 12, 2010 and March 25, 2013, Citius issued convertible promissory notes in the aggregate principal amount of $1,685,000,including $850,000 to Dr. Geoffrey Clark, Citius’s Chief Medical Officer, and $835,000 to Dr. Reinier Beeuwkes, Citius’s Chief ExecutiveOfficer. The convertible notes accrued interest at 3% per year, were payable on demand commencing 10 years after issuance, and wereconvertible into common stock following a reorganization or conversion into a corporation, at a conversion price equal to the greater of the fairmarket value or $0.25 ($0.60 if the common stock trade is traded on a national securities exchange). The outstanding convertible notes andaccrued interest were converted into an aggregate of 3,061,355 shares of Citius’s common stock on July 31, 2014. In April 2013, Citius issued a subordinated convertible promissory note in the principal amount of $350,000 to Highline Capital . The noteaccrued interest at 10% per year and was payable on demand any time after April 2014. The note and accrued interest was converted into anaggregate of 606,531 shares of Citius’s common stock on July 31, 2014. On November 19, 2013, Citius issued two promissory notes, each in the principal amount of $300,000, to Dr. Geoffrey Clark and Dr. ReinierBeeuwkes, respectively. Each note bears interest at the rate of 5% per year. The principal amount of each note, together with accrued interestwith respect to the amount of principal due, is payable in December 2014. The parties intend to negotiate an extension, partial payment orconversion of the notes into Common Stock of the Company. In March 2014, Citius sold 200,000 Membership Interests that converted to 200,000 shares of common stock to Leonard Mazur for an aggregatepurchase price of $50,000. The transactions described above were exempt from registration under Section 4(a)(2) of the Securities Act. Item 11. Description of Registrant’s Securities to be Registered. The Company’s authorized capital stock consists of 90,000,000 shares of common stock, par value of $0.001 per share, and 10,000,000 shares ofpreferred stock, par value $0.001 per share, of which 1 share has been designated Special Voting Preferred Stock. As of the date of the filing ofthis report, there are 30,025,286 shares of the Company’s common stock issued and outstanding. Holders of the Company’s common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders ofcommon stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election ofdirectors can elect all of the directors. Holders of the Company’s common stock representing a majority of the voting power of the Company’scapital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting ofstockholders. A vote by the holders of a majority of the Company’s outstanding shares is required to effectuate certain fundamental corporatechanges such as liquidation, merger or an amendment to the Company’s certificate of incorporation. Holders of the Company’s common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legallyavailable funds. In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in allassets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. TheCompany’s common stock has no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to the Company’scommon stock. The Company’s articles of incorporation authorize the issuance of 10,000,000 shares of “blank check” preferred stock, par value $0.001 pershare, in one or more series, subject to any limitations prescribed by law, without further vote or action by the stockholders. Each such series ofpreferred stock shall have such number of shares, designations, preferences, voting powers, qualifications, and special or relative rights orprivileges as shall be determined by our board of directors, which may include, among others, dividend rights, voting rights, liquidationpreferences, conversion rights and preemptive rights. Item 12. Indemnification of Directors and Officers Neither our Articles of Incorporation nor Bylaws prevent us from indemnifying our officers, directors and agents to the extent permitted underthe Nevada Revised Statute ("NRS"). NRS Section 78.7502 provides that a corporation shall indemnify any director, officer, employee or agentof a corporation against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with any the defense to theextent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit orproceeding referred to Section 78.7502(1) or 78.7502(2), or in defense of any claim, issue or matter therein.

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NRS 78.7502(1) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to anythreatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in theright of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at therequest of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise,against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him inconnection with the action, suit or proceeding if he: (a) is not liable pursuant to NRS 78.138; or (b) acted in good faith and in a manner which hereasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had noreasonable cause to believe his conduct was unlawful. NRS Section 78.7502(2) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to anythreatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that heis or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer,employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid insettlement and attorneys' fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he: (a)is not liable pursuant to NRS 78.138; or (b) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the bestinterests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by acourt of competent jurisdiction, after exhaustion of all appeals there from, to be liable to the corporation or for amounts paid in settlement to thecorporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdictiondetermines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for suchexpenses as the court deems proper. NRS Section 78.747 provides that except as otherwise provided by specific statute, no director or officer of a corporation is individually liable fora debt or liability of the corporation, unless the director or officer acts as the alter ego of the corporation. The court as a matter of law mustdetermine the question of whether a director or officer acts as the alter ego of a corporation. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuantto the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed inthe Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment bythe registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suitor proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in theopinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whethersuch indemnification by us is against public policy as expressed hereby in the Securities Act and we will be governed by the final adjudication ofsuch issue. Item 13. Financial Statements and Supplementary Data Reference is made to the filings by Trail One on Form 10-K and 10-Q for Trail One’s financial statements. The financial statements of Citius begin on Page F-1. Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure See Item 4.01. Item 15. Exhibits. See Item 9.01. Item 3.02 Unregistered Sales of Equity Securities. See Item 1.01.

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Item 4.01 Change in Registrant’s Certifying Accountant. Effective September 12, 2014, the Board of Directors of the Company dismissed M&K CPAs, PLLC (“M&K”) as its independent registeredaccountant and engaged Wolf & Company, P.C. (“Wolf”) to serve as its independent registered accounting firm. M&K’s audit reports on theCompany’s financial statements for the fiscal years ended September 30, 2013 and 2012 did not contain an adverse opinion or a disclaimer ofopinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that, the audit reports included anexplanatory paragraph with respect to the uncertainty as to the Company’s ability to continue as a going concern. During the years endedSeptember 30, 2013 and 2012 and during the subsequent interim period preceding the date of M&K’s dismissal, there were (i) no disagreementswith M&K on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, and (ii) noreportable events (as that term is defined in Item 304(a)(1)(v) of Regulation S-K). Wolf is the independent registered accounting firm for Citius, and its report on the financial statements of Citius at December 31, 2013 and 2012is included in this current report on Form 8-K. Prior to engaging Wolf, the Company did not consult with Wolf regarding the application ofaccounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company’sfinancial statements. The Company has requested M&K to furnish it with a letter addressed to the SEC stating whether it agrees with the statements made above bythe Company. The Company has filed this letter as an exhibit to this 8-K. Item 5.01 Changes in Control of Registrant. See Item 2.01. Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers. See Item 1.01. Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. See Item 1.01. Item 5.06 Change in Shell Company Status. See Item 1.01.

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Item 9.01 Financial Statements and Exhibits. (a) Financial statements of Citius are included following the signature page. (b) Pro forma financial information. See exhibit 99.1. (c) Shell Company Transactions. See (a) and (b) of this Item 9.01. (d) Exhibits ExhibitNumber

Description

2.1 Share Exchange and Reorganization Agreement, dated as of September 12, 2014 among the Company, Citius Pharmaceuticals,LLC, and the beneficial holders of the membership interests of Citius identified in the Agreement

3.1 Amended and Restated Articles of Incorporation of the Company 3.2 Bylaws of the Company (Incorporated by reference to Exhibit 3.2 to Registration Statement on Form S-1 as filed November 23,

2010)

10.1 Form of Subscription Agreement 10.2 Form of Registration Rights Agreement 10.3 Form of Investor Warrant 16 Letter from M&K CPAs, PLLC

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by theundersigned hereunto duly authorized. CITIUS PHARMACEUTICALS, INC. Dated: September 18, 2014 By: /s/ Leonard Mazur Leonard Mazur Chief Executive Officer Principal Executive Officer and Principal

Financial Officer

54

Citius Pharmaceuticals, LLCFinancial StatementsYears Ended December 31, 2013 and 2012and the Six Months Ended June 30, 2014and 2013 (Unaudited)

F-1

Table of Contents

Report of Independent Registered Public Accounting Firm F-3 Financial Statements: Balance Sheets F-4 Statements of Operations F-5 Statements of Changes in Members’ Deficit F-6 Statements of Cash Flows F-7 Notes to Financial Statements F-8

F-2

Report of Independent Registered Public Accounting Firm

To the Managers and Members of Citius Pharmaceuticals, LLC: We have audited the accompanying balance sheets of Citius Pharmaceuticals, LLC (the “Company”) as of December 31, 2013 and 2012, andthe related statements of operations, changes in members’ deficit, and cash flows for the years then ended. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CitiusPharmaceuticals, LLC as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended inconformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note1 to the financial statements, the Company has not yet produced revenue, has suffered recurring losses from operations, has significant workingcapital and members’ deficits and negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability tocontinue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not includeany adjustments that might result from the outcome of this uncertainty.

Boston, MassachusettsAugust 8, 2014

F-3

Citius Pharmaceuticals, LLC

Balance Sheets June 30, December 31,

2014 2013 2012 (Unaudited)

AssetsCurrent assets:

Cash and cash equivalents $ 23,443 $ 54,390 $ 41,656 Debt issuance costs - 14,000 - Deferred offering costs 25,000 25,000 - Prepaid expenses - 9,174 -

Total current assets 48,443 102,564 41,656 Trademarks 5,401 5,401 5,401

Total assets $ 53,844 $ 107,965 $ 47,057

Liabilities and Members' Deficit Current liabilities:

Accounts payable $ 136,774 $ 172,489 $ 97,392 Accrued expenses - 3,553 520 Accrued interest 202,849 142,824 65,352 Promissory notes 600,000 600,000 - Subordinated convertible promissory note 350,000 350,000 - Due to related party 56,134 55,853 37,544

Total current liabilities 1,345,757 1,324,719 200,808 Convertible promissory notes 1,685,000 1,685,000 1,460,000

Total liabilities 3,030,757 3,009,719 1,660,808 Commitments and contingencies Members' deficit (2,976,913) (2,901,754) (1,613,751)

Total liabilities and members' deficit $ 53,844 $ 107,965 $ 47,057

See accompanying report of independent registered public accounting firm and notes to the financial statements.

F-4

Citius Pharmaceuticals, LLC

Statements of Operations Six Months Ended June 30, Years Ended December 31,

2014 2013 2013 2012 (Unaudited) (Unaudited) Revenue $ - $ - $ - $ - Operating expenses:

Research and development - 54,739 492,136 705,812 General and administrative 51,134 504,394 690,396 310,301

Total operating expenses 51,134 559,133 1,182,532 1,016,113 Operating loss (51,134) (559,133) (1,182,532) (1,016,113) Other expense:

Interest expense 74,025 37,902 105,471 33,312 Net loss $ (125,159) $ (597,035) $ (1,288,003) $ (1,049,425)

See accompanying report of independent registered public accounting firm and notes to the financial statements.

F-5

Citius Pharmaceuticals, LLC

Statements of Changes in Members’ Deficit

Members' Deficit Membership Interests Amount

Balance as of December 31, 2011 15,757,334 $ (1,064,326)

Member interests issuances 2,000,000 500,000 Net loss - (1,049,425)

Balance as of December 31, 2012 17,757,334 (1,613,751)

Net loss - (1,288,003) Balance as of December 31, 2013 17,757,334 (2,901,754)

Member interest issuance 200,000 50,000 Net loss - (125,159)

Balance as of June 30, 2014 (unaudited) 17,957,334 $ (2,976,913)

See accompanying report of independent registered public accounting firm and notes to the financial statements.

F-6

Citius Pharmaceuticals, LLC

Statements of Cash Flows Six Months Ended June 30, Years Ended December 31,

2014 2013 2013 2012 (Unaudited) (Unaudited) Cash flows from operating activities:

Net loss $ (125,159) $ (597,035) $ (1,288,003) $ (1,049,425)Adjustments to reconcile net loss to net cash used in operating

activities: Amortization of debt issuance costs 14,000 7,000 28,000 - Changes in operating assets and liabilities:

Prepaid expenses 9,174 - (9,174) - Accounts payable (35,715) 8,771 75,097 70,214 Accrued expenses (3,553) - 3,033 (9,443)Accrued interest 60,025 30,903 77,472 33,312 Due to related party 281 17,370 18,309 37,544

Net cash used in operating activities (80,947) (532,991) (1,095,266) (917,798) Cash flows from investing activities:

Payments to acquire trademarks - - - (2,024)Net cash used in investing activities - - - (2,024)

Cash flows from financing activities:

Issuance of convertible promissory notes - 225,000 225,000 400,000 Issuance of promissory notes - - 600,000 - Issuance of subordinated convertible promissory note - 350,000 350,000 - Proceeds from issuance of membership interests 50,000 - - 500,000 Deferred offering costs - - (25,000) - Debt issuance costs - (42,000) (42,000) -

Net cash provided by financing activities 50,000 533,000 1,108,000 900,000 Increase (decrease) in cash and cash equivalents (30,947) 9 12,734 (19,822) Cash and cash equivalents at beginning of period 54,390 41,656 41,656 61,478 Cash and cash equivalents at end of period $ 23,443 $ 41,665 $ 54,390 $ 41,656

See accompanying report of independent registered public accounting firm and notes to the financial statements.

F-7

Citius Pharmaceuticals, LLC

Notes to Financial Statements

Years Ended December 31, 2013 and 2012and the Six Months Ended June 30, 2014 and 2013 (Unaudited)

1. NATURE OF OPERATIONS

Citius Pharmaceuticals, LLC (“Citius” or the “Company”) is a pharmaceutical company headquartered in Maynard, Massachusetts,focused on developing innovative formulations aimed at improving the delivery and compliance of approved drugs. The Companyis a Massachusetts limited liability company and was founded on January 23, 2007. The Company currently has one approved andmarketed product, Suprenza (phentermine hydrochloride), which it has out licensed for promotion in the United States, Canada andMexico. Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development,recruiting management and technical staff, and raising capital. See Note 3 – Recently Adopted Accounting Pronouncements. Citius is subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, risksrelated to the development by Citius or its competitors of research and development stage products, market acceptance of itsproducts, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners, theCompany’s ability to obtain additional financing and the Company’s compliance with governmental and other regulations. Going Concern Uncertainty The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assetsand the satisfaction of liabilities in the normal course of business. The Company experienced negative cash flows from operationsof $1,095,266 and $917,798 for the years ended December 31, 2013 and 2012, respectively. At December 31, 2013, the Companyalso has a working capital deficit of ($1,222,155) and a members’ deficit of ($2,901,754). The Company has no revenue and hasrelied on member contributions and debt to finance its operations. At December 31, 2013, the Company did not have sufficientcapital to fund its operations. This raises substantial doubt about the Company’s ability to continue as a going concern. The Company plans to raise capital through equity financings from outside investors as well as raise additional funds fromexisting members. There is no assurance, however, that that the Company will be successful in raising the needed capital or thatthe proceeds will be received in a timely manner to fully support the Company’s operations. These financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might benecessary as a result of the above uncertainty.

F-8

Citius Pharmaceuticals, LLC

Notes to Financial Statements (Continued)

2. BUSINESS AGREEMENTS

Alpex Pharma S.A. On June 12, 2008, the Company entered into a collaboration and license agreement (the “Alpex Agreement”) with Alpex PharmaS.A. (“Alpex”), in which Alpex granted the Company an exclusive right and license to use certain Alpex intellectual property in orderto develop and commercialize orally disintegrating tablet formulations of pharmaceutical products in United States, Canada andMexico. In addition, Alpex manufactures Suprenza, the Company’s commercialized pharmaceutical product, on a contract basis. Theagreement was amended on November 15, 2011 as part of an Amendment and Coordination Agreement (see the “Three-PartyAgreement” below). Under the terms of the Alpex Agreement, as amended by the Three-Party Agreement dated November 15, 2011 (see below), Alpex isentitled to a payment per tablet manufactured and a percentage of all milestone, royalty and other payments received by the Companyfrom Prenzamax, LLC, pursuant to a sublicense agreement (see below). In addition, under the terms of the Alpex Agreement, Alpexretained the right to use the clinical data generated by the Company to file for regulatory approval and market Suprenza in the rest ofthe world. In the event that Alpex has such sales, Alpex will pay the Company a percentage royalty on net sales, as defined (“AlpexRevenue”). No milestone, royalty or other payments have been earned or received by the Company through December 31, 2013 andthrough June 30, 2014.

Prenzamax, LLC On November 15, 2011, the Company entered into an exclusive license agreement (the “Sublicense Agreement”) with Prenzamax,LLC (“Prenzamax”), in which the Company granted Prenzamax and its affiliates the exclusive right to commercialize Suprenza inthe United States. Under the terms of the Sublicense Agreement, Prenzamax is to pay the Company a percentage of the product’sEBITDA, as defined (“Profit Share Payments”). In addition, Prenzamax is to reimburse the Company directly for certaindevelopment costs. Further, under the terms of the Sublicense Agreement, Prenzamax is required to share in the royalty payment dueto Alpex under the Alpex Agreement. In addition, Prenzamax is entitled to a percentage of the Alpex Revenue received by theCompany. The Company has not been reimbursed for any development costs nor has it earned any royalty payments through December 31,2013 and through June 30, 2014.

F-9

Citius Pharmaceuticals, LLC

Notes to Financial Statements (Continued) BUSINESS AGREEMENTS (concluded) Three-Party Agreement On November 15, 2011, the Company, Alpex and Prenzamax entered into the Three-Party Agreement wherein the terms of the AlpexAgreement were modified and Prenzamax and the Company agreed to each pay a portion of certain regulatory filing fees for as long asPrenzamax is purchasing Suprenza from Alpex pursuant to the Three-Party Agreement. Private Placements In 2013, the Company entered into an exclusive investment banking agreement (“2013 PPM”) and executed a letter of intent with aplacement agent to raise up to $6.0 million in principal amount of 10% convertible subordinated promissory notes (See Note 6). Theletter of intent contemplates a Reverse Acquisition with a public company and an automatic conversion of the notes into units ofcommon stock and warrants as defined therein. The 2013 PPM was completed with a total of $350,000 raised. In 2014, the Company finalized a new exclusive investment banking agreement (“2014 Private Placement”) and executed a letter ofintent with a placement agent to raise up to $5.1 million and issue up to 8,500,000 Units described below. The letter of intentcontemplates a Reverse Acquisition with a public company. Each Unit consists of one share of common stock of the public companyand a five-year warrant to purchase another share of common stock of the public company at an exercise price of $0.60 per share. Asof December 31, 2013 and through June 30, 2014, the Company capitalized as deferred offering costs a $25,000 retainer for legal costsassociated with this offering.

3. SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies followed by the Company in the preparation of the financial statements is asfollows: Use of Estimates The process of preparing financial statements in conformity with accounting principles generally accepted in the United States ofAmerica (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of assets and liabilities at the date of financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from those estimates and changes in estimates may occur.

F-10

Citius Pharmaceuticals, LLC

Notes to Financial Statements (Continued)

SIGNIFICANT ACCOUNTING POLICIES (continued) Cash and Cash Equivalents The Company considers all highly liquid instruments with maturities of less than three months at the time of purchase to be cashequivalents. Research and Development Research and development costs, including upfront fees and milestones paid to collaborators who are performing research anddevelopment activities under contractual agreement with the Company, are expensed as incurred. The Company defers and capitalizesits nonrefundable advance payments that are for research and development activities until the related goods are delivered or the relatedservices are performed. When the Company is reimbursed by a collaboration partner for work the Company performs, it records thecosts incurred as research and development expenses and the related reimbursement as a reduction to research and developmentexpenses in its statement of operations. Research and development expenses primarily consist of clinical and non-clinical studies,materials and supplies, third-party costs for contracted services, and payments related to external collaborations and other research anddevelopment related costs. Patent and Trademarks Certain costs of outside legal counsel related to obtaining patents and trademarks for the Company are capitalized. Patent costs areamortized over the legal life of the patents, generally twenty years, starting at the patent filing date. The costs of unsuccessful andabandoned applications are expensed when abandoned. The cost of maintaining existing patents are expensed as incurred. Income Taxes The Company is treated as a partnership for federal and state income taxes. A partnership’s income or loss is allocated directly to theMembers for income tax purposes. Accordingly, there is no provision for federal and state income taxes in the accompanying financialstatements. The Company follows accounting guidance regarding the recognition, measurement, presentation and disclosure of uncertain taxpositions in the financial statements. Tax positions taken or expected to be taken in the course of preparing the Company’s tax returns,including the position that the Company qualifies as a pass-through entity, are required to be evaluated to determine whether the taxpositions are “more-likely-than-not” of being sustained by the applicable tax authorities. Tax positions not deemed to meet a more-likely-than-not threshold would be recorded in the financial statements. There are no uncertain tax positions that require accrual ordisclosure as of June 30, 2014 and December 31, 2013.

F-11

Citius Pharmaceuticals, LLC

Notes to Financial Statements (Continued)

SIGNIFICANT ACCOUNTING POLICIES (concluded) Income Taxes (concluded) Any interest or penalties are charged to expense. None have been recognized in these financial statements. Generally, the Company issubject to federal and state tax examinations by tax authorities for all years subsequent to December 31, 2010. Concentrations of Credit Risk The Company has no significant off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts orother hedging arrangements. Recently Adopted Accounting Pronouncements In June 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-10,“Development Stage Entities”, Topic 915. The objective of the ASU is to improve financial reporting by reducing the cost andcomplexity associated with the incremental reporting requirements for development stage entities. The ASU removes Topic 915,Development Stage Entities in its entirety from FASB Accounting Standards Codification (“ASC”). The ASU removes all incrementalfinancial reporting requirements from U.S. GAAP for development stage entities, including the inception-to-date information andcertain other disclosures. It also eliminates the guidance in ASC 810 on how to assess whether a development stage entity hassufficient equity at risk in the evaluation of whether the development stage entity is a variable interest entity. Additionally, the ASUclarifies that all entities, including entities that have not begun operations, should provide the risk and uncertainty disclosures requiredin ASC 275. The Company has elected to early adopt as permitted by ASU 2014-10 and therefore has omitted the incrementaldevelopment stage reporting requirements.

4. MEMBERS’ EQUITY

Pursuant to the Company’s Limited Liability Company Operating Agreement dated July 8, 2008 (the “Operating Agreement”), theCompany had authorized and issued 17,957,334, 17,757,334 and 17,757,334 Membership Interests as of June 30, 2014 and December31, 2013 and 2012, respectively. Each member is entitled to one vote for each Membership Interest held. Allocation of Profits and Losses Losses of the Company are allocated among the Members as follows:

a) To the Members to the extent of any profits allocated previously; then,

F-12

Citius Pharmaceuticals, LLC

Notes to Financial Statements (Continued)

MEMBERS’ EQUITY (concluded) Allocation of Profits and Losses (concluded)

b) To the Members to the extent of any positive capital balances; then, c) To the Members in proportion to each Members’ Membership Interest.

Profits of the Company are allocated among the Members as follows: a) To the Members in amounts equal to previously allocated losses; then,

To the Members in proportion to each Member’s Membership Interest. Limitations of Members’ Liability Members’ obligations, liability and responsibility to restore negative capital balances or make additional contributions are all limitedpursuant to the terms of the Operating Agreement. Membership Issuances Prior to January 1, 2012, the Company authorized and issued 15,757,334 Membership Interests for total gross proceeds of $1,998,800ranging from $0.001 to $0.25 per Membership Interest. During the year ended December 31, 2012, the Company authorized and issued 2,000,000 Membership Interests for total grossproceeds of $500,000, or $0.25 per Membership Interest. During the six months ended June 30, 2014, the Company authorized and issued 200,000 Membership Interests for total grossproceeds of $50,000, or $0.25 per Membership Interest.

5. RELATED PARTY TRANSACTIONS

The Company’s headquarters is located in the office space of a company affiliated through common ownership. The Company has notrecorded any revenue or expense related to the use of the office space as management has determined the usage to be immaterial andthe affiliate has not charged for the usage. As of June 30, 2014 and December 31, 2013 and 2012, the Company owed $56,134, $55,853 and $37,544, respectively, to a relatedparty for the expenses the related party paid on the Company’s behalf.

F-13

Citius Pharmaceuticals, LLC

Notes to Financial Statements (Continued)

6. NOTES PAYABLE

Convertible Promissory Notes Between July 12, 2010 and November 30, 2012, the Company issued several convertible promissory notes (collectively the“Convertible Notes”) to existing Members of the Company in aggregate total principal amount of $1,460,000. The Convertible Notesaccrue interest at 3.00% per annum and are payable on demand only after their respective 10-year maturities. Between January 1, 2013and March 25, 2013, the Company issued Convertible Notes to existing Members of the Company in aggregate total principal amountof $225,000. The Convertible Notes accrue interest at 5.00% per annum and are payable on demand only after their respective 10-yearmaturities. The unpaid principal and accrued interest are only convertible into common stock following a reorganization or conversioninto a corporation at the option of the holder. The unpaid principal and accrued interest will convert into common stock at the greaterof the fair value of the common stock on the date of the conversion or $0.25 ($0.69 if the Company’s common stock is admitted totrade on a national exchange prior to the date of conversion). At June 30, 2014, December 31, 2013 and 2012, the Convertible Noteshave an aggregate principal balance of $1,685,000, $1,685,000 and $1,460,000, respectively. Promissory Notes In November 2013, the Company issued two promissory notes (the “Promissory Notes”) to two existing Members of the Company inaggregate total principal amount of $600,000. The Promissory Notes accrue interest at 5.00% per annum and are due at the earliest of(1) December 19, 2014, (2) the occurrence of an event of default as defined in the Promissory Notes, (3) an initial installment of$100,000 principal amount, to each Member, upon the receipt by the Company of a minimum $6,500,000 in aggregate proceeds underany financing transaction, (4) a second installment of $100,000 principal amount, to each Member, upon the receipt by the Companyof a minimum $8,500,000 in aggregate proceeds under any financing transaction, and (5) a third installment of $100,000 principalamount, to each Member, upon the receipt by the Company of a minimum $10,000,000 in aggregate proceeds under any financingtransaction. At June 30, 2014, December 31, 2013 and 2012, the Promissory Notes have an aggregate principal balance of $600,000,$600,000 and $0, respectively. Subordinated Convertible Promissory Note In April 2013 and in conjunction with the 2013 PPM (See Note 2), the Company issued a subordinated convertible promissory note(the “Subordinated Note”) in a principal amount of $350,000. The Subordinated Note accrues interest at 10% per annum and ispayable on demand any time after April 2014. If the Company has not repaid the Subordinated Note at the time of the closing of aReverse Acquisition, (see Note 2 - Private Placements), as defined in the Subordinate Note agreement, the unpaid principal andaccrued interest will automatically convert into common stock by dividing the amount due by a price per unit of $0.65. Also, uponautomatic conversion, the purchaser of the Subordinated Note will receive a warrant to purchase the same number of shares in towhich the Subordinated Note converts. At June 30, 2014, December 31, 2013 and 2012, the Subordinated Note has an aggregateprincipal balance of $350,000, $350,000 and $0, respectively.

F-14

Citius Pharmaceuticals, LLC

Notes to Financial Statements (Continued)

NOTES PAYABLE (concluded) Debt Summary and Maturities During 2013, the Company incurred $42,000 of debt issuance costs related to the Subordinated Convertible Promissory Note which isbeing amortized over the term of the underlying debt. Amortization of debt issuance costs recorded as interest expense for the sixmonths ended June 30, 2014 and 2013 and the years ended December 31, 2013 and 2012 amounted to $14,000, $7,000, $28,000 and$0, respectively. Management expects all of the above notes to convert in the Reverse Acquisition, otherwise they are due pursuant to the followingschedule:

Maturities

of

Years Ending December 31, Notes

Payable 2014 $ 950,000 2015 - 2016 - 2017 - 2018 - Thereafter 1,685,000 $2,635,000

Interest expense on the notes for the six months ended June 30, 2014 and 2013 and the years ended December 31, 2013 and 2012,including non-cash interest related to debt issuance costs, was $74,025, $37,902, $105,471 and $33,312, respectively.

7. EMPLOYMENT AGREEMENTS

In December 2012 and January 2013, the Company entered into employment agreements with two employees. As of December 31,2013, the employment agreements had expired.

F-15

Citius Pharmaceuticals, LLC

Notes to Financial Statements (Continued)

8. COMMITMENTS AND CONTINGENCIES

Legal Proceedings On May 17, 2013, the Company received notification from Zydus Pharmaceuticals (USA) Inc. (“Zydus”) that Zydus had submittedAbbreviated New Drug Application No. 204663 to the FDA seeking approval to engage in the commercial manufacture, use or sale ofgeneric versions of the 15 mg and 30 mg dosages of our Suprenza® tablets. The notification informed the Company that Zydus wasseeking to manufacture and sell its generic product prior to the expiration of U.S. Patent No. 6,149,938 (the “938 patent”) which islisted in the Orange Book and covers Suprenza®, and that the Zydus ANDA contained a certification that its proposed generic productdoes not infringe the ‘938 patent (“Paragraph IV Certification”). On June 19, 2013, the Company received a separate notification fromZydus that it was also pursuing approval for the 37.5 mg dosage of Suprenza® under the same-numbered ANDA, with a separateParagraph IV Certification. In response, within 45 days of receiving the first notification from Zydus, the Company and our partners (Alpex Pharma, S.A. andPrenzamax, LLC), filed suit against Zydus and its parent Cadila Healthcare Limited (d/b/a Zydus Cadila) in Federal District Court inDelaware and New Jersey for infringement of the 938 patent pursuant, pursuant to the Hatch-Waxman statutory regime. The Companypromptly notified the FDA of the initiation of this lawsuit and, pursuant to statute, Zydus’s ANDA for a generic version of Suprenza®cannot be approved by the FDA for 30 months from our receipt of Zydus’ Paragraph IV notice letters while this lawsuit proceeds. Recently, Akrimax has initiated discussions with Zydus management to seek a resolution to this dispute. These discussions are at veryearly stage but Zydus has indicated that a negotiated settlement should be explored. No terms have been agreed to and the companiesare evaluating general concepts of a framework for settlement. It is customary in the specialty pharmaceuticals industry to enter intosuch agreement however the Company cannot give any assurance that we will reach such a settlement or if we did it will be on termsfavorable to us. Increasingly, such settlements are scrutinized by the US Federal Trade Commission (FTC) to ensure that they are notanti-competitive. The Company intends to model our settlement on terms that are commonly agreed to in such cases and generallyaccepted by the FTC. If the Company is unable to reach such a settlement, the Company fully intends to defend its intellectual property. The litigation islikely to take long time, is expensive and the outcome is uncertain.

F-16

Citius Pharmaceuticals, LLC

Notes to Financial Statements (Concluded)

9. SUBSEQUENT EVENTS

Management has evaluated subsequent events through August 8, 2014, which is the date the financial statements were available to beissued. There were no subsequent events that required adjustment to or disclosure in the financial statements except as described belowand in Note 2 – Private Placements and Note 4. On July 31, 2014, in anticipation of the completion of the $2,000,000 minimum financing under the 2014 Private Placement and theReverse Acquisition with a public company, the note holders demanded conversion of the outstanding $2,035,000 Convertible Notesand Subordinated Note and accrued interest into 3,667,886 Membership Interests of Citius. Citius and the two major note holdersagreed to convert the Convertible Notes and accrued interest at the 2014 Private Placement price of $0.60 per share of common stockwhile the Subordinated Note issued in the 2013 PPM converted at the price of $0.65 per share. All of the Company’s MembershipInterests are expected to be exchanged for shares of common stock in a public company in the Reverse Acquisition.

F-17

EXHIBIT 2.1 SHARE EXCHANGE AND REORGANIZATION AGREEMENT, dated as of September 12, 2014 (the “Agreement”), among CITIUSPHARMACEUTICALS, LLC, a Massachusetts limited liability company (“Citius” ) ; TRAIL ONE, INC., a Nevada corporation(“PublicCo”); and THE BENEFICIAL HOLDERS OF THE MEMBERSHIP INTERESTS OF CITIUS IDENTIFIED IN SCHEDULEA HERETO (the “Citius Holders”).

INTRODUCTION

PublicCo desires to acquire all of the issued and outstanding membership interests, whether voting, economic or otherwise, of CitiusMembership Interests (the “Citius Membership Interests”) solely in exchange for an aggregate of 21,625,219 shares (the “Shares”) ofauthorized, but theretofore unissued, shares of common stock, par value $0.001 per share, of PublicCo (the “PublicCo Common Stock”). TheCitius Holders desire to exchange all of their beneficially owned Citius Membership Interests solely for shares of PublicCo Common Stock inthe amount set forth herein.

On or prior to the date hereof, the respective boards of directors or analogous governing body of each of PublicCo and Citius have,and the Citius Holders have, approved and adopted this Agreement and it is the intent of the parties hereto that the transactions contemplatedhereby be structured so as to qualify as a tax-free exchange under Section 151 of the Internal Revenue Code of 1986, as amended (the“Code”), and the provisions of this Agreement will be interpreted in a manner consistent with this intent.

NOW, THEREFORE, in consideration of the premises and mutual representations, warranties and covenants herein contained, theparties hereby agree as follows:

ARTICLE I

ACQUISITION AND EXCHANGE OF CITIUS MEMBERSHIP INTERESTS

Section 1.01 The Agreement . The parties hereto hereby agree that, at the closing of the transactions contemplated hereby (the“Closing”), PublicCo shall acquire all of the issued and outstanding Citius Membership Interests solely in exchange for an aggregate of21,738,750 Shares of authorized, but theretofore unissued, shares of PublicCo Common Stock. The parties hereto agree that at the Closing,Citius will become a wholly-owned subsidiary of PublicCo subject to the conditions and provisions of Section 1.03 hereof.

Section 1.02 Exchange of Shares.

(a) At the Closing, PublicCo will cause to be issued and held for delivery to the Citius Holders or their designees, stock certificatesrepresenting in the aggregate the Shares, in exchange for all of the issued and outstanding the membership interests of Citius MembershipInterests, which interests will be delivered to PublicCo at the Closing.

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(b) The shares of PublicCo Common Stock to be issued pursuant to paragraph (a) of this Section 1.02 will be authorized out oftheretofore unissued shares of PublicCo Common Stock, and will be issued to the Citius Holders or as directed thereby as set forth in Schedule1.02(b) hereof.

(c) All shares of PublicCo Common Stock to be issued hereunder shall be deemed “restricted securities” as defined in paragraph (a)of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), and the Citius Holders hereby represent that they areacquiring said shares for investment purposes only and without the intent to make a further distribution of such shares. All shares of PublicCoCommon Stock to be issued under the terms of this Agreement shall be issued pursuant to an exemption from the registration requirements ofthe Securities Act, under Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder. Certificates representingthe shares of PublicCo Common Stock to be issued hereunder shall bear a restrictive legend in substantially the following form:

The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended,and may not be offered for sale, sold, or otherwise disposed of, except in compliance with the registrationprovisions of such Act or pursuant to an exemption from such registration provisions, the availability of which isto be established to the satisfaction of the Company.

Section 1.03 Closing. The Closing will take place at a date and time (the “Closing Date”) and place to be mutually agreed upon by

the parties hereto, and will be subject to the provisions of Article III of this Agreement. At the Closing:

(a) Citius will deliver to PublicCo certificates or other evidences representing all of the issued and outstanding Citius MembershipInterests including any options, warrants or convertible securities, duly endorsed, so as to make PublicCo the holder thereof, free and clear ofall liens, claims and other encumbrances; and

(b) PublicCo will deliver to, or at the direction of, the Citius Holders, in accordance with Schedule 1.02(b) hereof, stock certificatesrepresenting an aggregate of 21,738,750 shares of PublicCo Common Stock, which certificates will bear a standard restrictive legend in theform customarily used with restricted securities and as set forth in Section 1.02(c) above.

(c) Mohammad Omar Rahman, the majority stockholder of PublicCo (“MOR”), has agreed that, on the Closing Date, MOR shalldeliver to PublicCo for cancellation all of the restricted shares of PublicCo Common Stock owned beneficially and of record thereby. As aresult of the foregoing and giving effect thereto, there shall be 5,011,250 shares of Publico Common Stock outstanding upon theconsummation of the transactions contemplated hereby.

Section 1.04 Approval by Board of Directors. In anticipation of this Agreement, PublicCo has taken all necessary and requisitecorporate and other action, including without limitation, actions of the Board of Directors in order to approve this Agreement and alltransactions contemplated hereby and in connection herewith.

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ARTICLE II

REPRESENTATIONS AND WARRANTIES

Section 2.01 Representations and Warranties of PublicCo. PublicCo hereby represents and warrants to, and agrees with, Citiusand the Citius Holders as follows:

(a) (i) PublicCo is subject to the periodic reporting requirements of Section 13 of the Securities Exchange Act of 1934, as amended(the “Exchange Act”), by virtue of Section 15(d) thereunder. PublicCo has made available to Citius and the Citius Holders true, complete, andcorrect copies of all forms, reports, schedules, statements, and other documents required to be filed by it under the Exchange Act, as suchdocuments have been amended since the time of the filing thereof (collectively, including all forms, reports, schedules, statements, exhibits,and other documents filed by PublicCo therewith, the “SEC Documents”). The SEC Documents, including, without limitation, any financialstatements and schedules included therein, at the time filed or, if subsequently amended, as so amended, (i) did not contain any untruestatement of a material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) compliedin all material respects with the applicable requirements of the Exchange Act and the applicable rules and regulations thereunder.

(ii) Except as otherwise disclosed in the SEC Documents, PublicCo maintains disclosure controls and procedures required by Rule13a-15 or 15d-15 under the Exchange Act; such controls and procedures are effective to ensure that:

(A) all material information concerning PublicCo is made known on a timely basis to the individuals responsible for thepreparation of PublicCo’s filings with the SEC and other public disclosure documents;

(B) transactions are executed in accordance with management’s general or specific authorizations;

(C) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted

accounting principles and to maintain asset accountability;

(D) access to assets is permitted only in accordance with management’s general or specific authorization; and

(E) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action istaken with respect to any differences.

PublicCo has made available to Citius and the Citius Holders copies of, all written descriptions of, and all policies, manuals and otherdocuments promulgating, such disclosure controls and procedures. The books, records and accounts of PublicCo accurately and fairly reflect,in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, PublicCo all to the extent requiredby generally accepted accounting principles.

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(iii) The Chief Executive Officer and the Chief Financial Officer of PublicCo has signed, and PublicCo has filed with orfurnished to the SEC, as the case may be, all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002; suchcertifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn; and neitherPublicCo nor any of its officers has received notice from any governmental entity questioning or challenging the accuracy, completeness, formor manner of filing or submission of such certifications.

(iv) PublicCo has heretofore made available to Citius and the Citius Holders complete and correct copies of all certificationsfiled with or furnished to the SEC, as the case may be, pursuant to Sections 302 and 906 of Sarbanes-Oxley Act of 2002 and hereby reaffirms,represents and warrants to Citius and the Citius Holders the matters and statements made in such certificates.

(b) At the date hereof and at the Closing Date:

(i) the PublicCo Common Stock is eligible to trade and be quoted on, and is quoted on, the over-the-counter Bulletin Boardmarket, and/or the OTCQB market and/or OTCQX and/or the OTCPink market (the “OTCBB”) and has received no notice or othercommunication indicating that such eligibility is subject to challenge or review by the any applicable regulatory agency, electronic marketadministrator, or exchange;

(ii) PublicCo has and shall have performed or satisfied all of its undertakings to, and of its obligations and requirements

with, the SEC; (iii) PublicCo has not, and shall not have taken any action that would preclude, or otherwise jeopardize, the inclusion of the

PublicCo Common Stock for quotation on the OTCBB; and

(iv) the PublicCo Common Stock is eligible for participation in The Depository Trust Company (“DTC”) book entry system andPublicCo has not received any correspondence from DTC with respect to any DTC “Chill” being imposed or threatened.

(c) Other than as disclosed in the SEC Documents, PublicCo has no subsidiaries or affiliated corporation or owns any interest in anyother enterprise (whether or not such enterprise is a corporation). PublicCo has been duly organized and is validly existing as a corporation ingood standing under the laws of the State of Nevada with full power and authority (corporate and other) to own, lease and operate itsrespective properties and conduct its respective business as described in the SEC Documents; except as otherwise disclosed in the SECDocuments, PublicCo is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which theownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or bein good standing would not have a material adverse effect on its business, prospects, condition (financial or otherwise), and results ofoperations of PublicCo; no proceeding has been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limitor curtail, such power and authority or qualification; PublicCo is in possession of, and operating in compliance with, all authorizations,licenses, certificates, consents, orders and permits from state, federal, foreign and other regulatory authorities that are material to the conductof its business, all of which are valid and in full force and effect; PublicCo is not in violation of its charter or bylaws or in default in theperformance or observance of any obligation, agreement, covenant or condition contained in any material bond, debenture, note or otherevidence of indebtedness, or in any material lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or otheragreement or instrument to which it is a party or by which it or its properties or assets may be bound, which violation or default would have amaterial adverse effect on the business, prospects, financial condition or results of operations of PublicCo; and PublicCo is not in violation ofany law, order, rule, regulation, writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic orforeign, having jurisdiction over PublicCo or over its properties or assets, which violation would have a material adverse effect on thebusiness, prospects, financial condition or results of operations of PublicCo taken as a whole. The SEC Documents accurately describe anycorporation, association or other entity owned or controlled, directly or indirectly, by PublicCo.

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(d) PublicCo has all requisite power and authority to execute, deliver, and perform this Agreement. All necessary proceedings ofPublicCo have been duly taken to authorize the execution, delivery, and performance of this Agreement thereby. This Agreement has beenduly authorized, executed, and delivered by PublicCo, constitutes the legal, valid, and binding obligation of PublicCo, and is enforceable as toPublicCo in accordance with its terms. Except as otherwise set forth in this Agreement, no consent, authorization, approval, order, license,certificate, or permit of or from, or declaration or filing with, any federal, state, local, or other governmental authority or any court or othertribunal is required by PublicCo for the execution, delivery, or performance of this Agreement thereby. No consent, approval, authorization ororder of, or qualification with, any court, government or governmental agency or body, domestic or foreign, having jurisdiction over PublicCoor over its properties or assets is required for the execution and delivery of this Agreement by PublicCo and the consummation by PublicCo ofthe transactions herein contemplated, except such as may be required under the Securities Act or under state or other securities or blue skylaws, all of which requirements have been, or in accordance therewith will be, satisfied in all material respects. No consent of any party to anymaterial contract, agreement, instrument, lease, license, arrangement, or understanding to which PublicCo is a party, or to which its or any ofits respective businesses, properties, or assets are subject, is required for the execution, delivery, or performance of this Agreement byPublicCo; and the execution, delivery, and performance of this Agreement by PublicCo will not violate, result in a breach of, conflict with, or(with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under, entitle any party toreceive rights or privileges that such party was not entitled to receive immediately before this Agreement was executed under, or create anyobligation on the part of PublicCo to which it was not subject immediately before this Agreement was executed under, any term of any suchmaterial contract, agreement, instrument, lease, license, arrangement, or understanding, or violate or result in a breach of any term of thecertificate of incorporation or by-laws of PublicCo or (if the provisions of this Agreement are satisfied) violate, result in a breach of, orconflict with any law, rule, regulation, order, judgment, decree, injunction, or writ of any court, government or governmental agency or body,domestic or foreign, having jurisdiction over PublicCo or over its properties or assets.

(e) There is not any pending or, to the best of PublicCo's knowledge, threatened, action, suit, claim or proceeding against PublicCo, orany of PublicCo’s current or past officers or any of the respective properties, assets or rights of PublicCo, before any court, government orgovernmental agency or body, domestic or foreign, having jurisdiction over PublicCo or over PublicCo’s current or past officers or theproperties of PublicCo, or otherwise that (i) is reasonably likely to result in any material adverse change in the respective business, prospects,financial condition or results of operations of PublicCo or might materially and adversely affect its properties, assets or rights taken as a whole,(ii) might prevent consummation of the transactions contemplated by this Agreement, or (iii) alleging violation of any Federal or statesecurities laws.

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(f) The authorized capital stock of PublicCo consists of 90,000,000 shares of PublicCo Common Stock, of which 5,011,250 shares of

PublicCo Common Stock are outstanding, and 10,000,000 shares of “blank check” preferred stock, none of which is outstanding. Each of suchoutstanding shares of PublicCo Common Stock is duly and validly authorized, validly issued, fully paid, and nonassessable, has not beenissued and is not owned or held in violation of any preemptive or similar right of stockholders. Except as disclosed in the SEC Documents, (i)there is no commitment, plan, or arrangement to issue, and no outstanding option, warrant, or other right calling for the issuance of, any shareof capital stock of or any security or other instrument convertible into, exercisable for, or exchangeable for Membership Interests of,PublicCo, and (ii) there is outstanding no security or other instrument convertible into or exchangeable for capital stock of PublicCo. Whendelivered by PublicCo against payment therefor in accordance with the terms of this Agreement, and assuming that the Citius MembershipInterests exchanged therefor are validly authorized and issued, fully paid, and nonassessable, the Shares will be duly and validly issued andfully paid and nonassessable, and will be sold free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest ofany kind created by PublicCo; and no preemptive or similar right, co-sale right, registration right, right of first refusal or other similar right ofstockholders exists with respect to any of the Shares or the issuance and sale thereof other than those that have been expressly waived prior tothe date hereof and those that will automatically expire upon the execution hereof. No further approval or authorization of any stockholder,the Board of Directors of PublicCo or others is required for the issuance and sale or transfer of the Shares, except as may be required underthe Securities Act, the rules and regulations promulgated thereunder or under state or other securities or blue sky laws. PublicCo has no stockoption, stock bonus and other stock plans or arrangements. As a result of the share cancellation referenced in Section 1.03(c) hereto and givingeffect thereto, there shall be 5,011,250 shares of PublicCo Common Stock outstanding upon the consummation of the transactionscontemplated hereby.

(g) M&K CPAS, PLLC, Houston, Texas, who examined the financial statements of PublicCo, together with the related schedules

and notes, for the period from September 9, 2010 (inception) through September 30, 2013, and for the years ended September 30, 2012 and2013, and for the nine months ended June 30, 2013 and 2014, each filed with the SEC as a part of the SEC Documents, are independentaccountants within the meaning of the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder; and the auditedfinancial statements of PublicCo, together with the related schedules and notes, and the unaudited financial information, forming part of theSEC Documents, fairly present and will fairly present the financial position and the results of operations of PublicCo at the respective datesand for the respective periods to which they apply; and all audited financial statements of PublicCo, together with the related schedules andnotes, and the unaudited financial information, filed with the SEC as part of the SEC Documents, complied and will comply as to form in allmaterial respects with applicable accounting requirements and with the rules and regulations of the SEC with respect hereto when filed, havebeen and will be prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involvedexcept as may be otherwise stated therein (except as may be indicated in the notes thereto or as permitted by the rules and regulations of theUnited States Securities and Exchange Commission the (“SEC”)) and fairly present and will fairly present, subject in the case of the unauditedfinancial statements, to customary year end audit adjustments, the financial position of PublicCo as at the dates thereof and the results of itsoperations and cash flows. The procedures pursuant to which the aforementioned financial statements have been audited are compliant withgenerally accepted auditing standards. The selected and summary financial and statistical data included in the SEC Documents present andwill present fairly the information shown therein and have been compiled on a basis consistent with the audited financial statements presentedtherein. No other financial statements or schedules are required to be included in the SEC Documents. The financial statements referred to inthis Section 3.01(g) contain all certifications and statements required under the SEC’s Order, dated June 27, 2002, pursuant to Section 21(a)(1)of the Exchange Act (File No. 4-460), Rule 13a-14 or 15d-14 under the Exchange Act, or 18 U.S.C. Section 1350 (Sections 302 and 906 of theSarbanes-Oxley Act of 2002) with respect to the report relating thereto. Since June 30, 2014 (the “PublicCo Financial Statement Date”):

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(i) There has at no time been a material adverse change in the financial condition, results of operations, businesses, properties,assets, liabilities, or future prospects of PublicCo.

(ii) PublicCo has not authorized, declared, paid, or effected any dividend or liquidating or other distribution in respect of its

capital stock or any direct or indirect redemption, purchase, or other acquisition of any stock of PublicCo.

(iii) Except as set forth in the SEC Documents, the operations and businesses of PublicCo have been conducted in all respectsonly in the ordinary course.

Other than a “going concern” qualification in the report of the auditors with respect to the financial statements of PublicCo, there is no factknown to PublicCo which materially adversely affects or in the future (as far as PublicCo can reasonably foresee) may materially adverselyaffect the financial condition, results of operations, businesses, properties, assets, liabilities, or future prospects of PublicCo; provided,however, that PublicCo does not express any opinion as to political or economic matters of general applicability. PublicCo has made known,or caused to be made known, to the accountants or auditors who have prepared, reviewed, or audited the aforementioned consolidatedfinancial statements all material facts and circumstances which could affect the preparation, presentation, accuracy, or completeness thereof.

(h) Subsequent to the respective dates as of which information is given in the SEC Documents, there has not been (i) any materialadverse change in the business, prospects, financial condition or results of operations of PublicCo, (ii) any transaction committed to orconsummated that is material to PublicCo, (iii) any obligation, direct or contingent, that is material to PublicCo incurred by PublicCo, exceptsuch obligations as have been incurred in the ordinary course of business, (iv) any change in the capital stock or outstanding indebtedness ofPublicCo or any subsidiary thereof that is material to PublicCo, (v) any dividend or distribution of any kind declared, paid, or made on thecapital stock of PublicCo, or (vi) any loss or damage (whether or not insured) to the property of PublicCo which has a material adverse effecton the business, prospects, condition (financial or otherwise), or results of operations thereof.

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(i) At the Closing, PublicCo shall have no properties or assets other than immaterial intangible assets (such as the web site ofPublicCo) and PublicCo shall be free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest. At the Closingand giving effect to the Spin-Off (as hereinafter defined), PublicCo shall be party to no agreements except for this Agreement and the Spin-Off Agreement, dated as of the date hereof, between PublicCo and Ralph Montrone, which shall be a legal, valid and binding agreement,enforceable against PublicCo in accordance with its respective terms.

(j) At the Closing and giving effect to the Spin-Off, PublicCo shall have no liability of any nature, accrued or contingent, including,without limitation, liabilities for federal, state, local, or foreign taxes and penalties, interest, and additions to tax (“Taxes”), and liabilities tocustomers, vendors, professionals, investment banks or suppliers. Without limiting the generality of the foregoing, the amounts set up asprovisions for Taxes, if any, in the financial statements of PublicCo (the “ Last PublicCo Financial Statements”) at the PublicCo FinancialStatement Date are sufficient for all accrued and unpaid Taxes of PublicCo, whether or not due and payable and whether or not disputed,under tax laws, as in effect on the Last PublicCo Financial Statement Date or now in effect, for the period ended on such date and for all fiscalperiods prior thereto. The execution, delivery, and performance of this Agreement by PublicCo will not cause any Taxes to be payable (otherthan those that may possibly be payable by Citius Holders as a result of the sale of the Shares) or cause any lien, charge, or encumbrance tosecure any Taxes to be created either immediately or upon the nonpayment of any Taxes. PublicCo has filed all federal, state, local, andforeign tax returns required to be filed by it; has made available to Citius and the Citius Holders a true and correct copy of each such returnwhich was filed in the past six years; has paid (or has established on the last balance sheet included in the Last PublicCo Financial Statementsa reserve for) all Taxes, assessments, and other governmental charges payable or remittable by it or levied upon it or its properties, assets,income, or franchises which are due and payable; and has made available to Citius and the Citius Holders a true and correct copy of any reportas to adjustments received by it from any taxing authority during the past six years and a statement as to any litigation, governmental or otherproceeding (formal or informal), or investigation pending, threatened, or in prospect with respect to any such report or the subject matter ofsuch report. PublicCo has paid all taxes payable thereby due on or prior to the date hereof.

(k) Except as disclosed in the SEC Documents, PublicCo does not have any insurance; PublicCo has at no time been refused anyinsurance coverage sought or applied for.

( l ) (i) No labor disturbance by the employees of PublicCo exists or, to the best of PublicCo’s knowledge, is imminent.PublicCo is not aware of any existing or imminent labor disturbance by the employees of any principal suppliers or customers of PublicCothat might be expected to result in any material adverse change in the business, prospects, financial condition, or results of operations ofPublicCo. No collective bargaining agreement exists with any of PublicCo’s employees and, to the best of PublicCo's knowledge, no suchagreement is imminent.

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(ii) PublicCo does not have, or contribute to, and has never maintained or contributed to, any pension, profit-sharing, option,other incentive plan, or any other type of Employee Benefit Plan (as defined in Section 3(3) of ERISA) or Pension Plan (as defined in ERISA)and PublicCo does not have any obligation to or customary arrangement with employees for bonuses, incentive compensation, vacations,severance pay, sick pay, sick leave, insurance, service award, relocation, disability, tuition refund, or other benefits, whether oral or written.

(m) The Company has no, and has no rights to use, patents, patent rights, inventions, trade secrets, know-how, trademarks, service

marks, trade names, logos, or copyrights. PublicCo has not received any notice of, or has knowledge of, any infringement of or conflict withasserted rights of PublicCo by others with respect to any patents, patent rights, inventions, trade secrets, know-how, trademarks, service marks,trade names, logos, or copyrights; and PublicCo has not received any notice of, or has no knowledge of, any infringement of, or conflict with,asserted rights of others with respect to any patents, patent rights, inventions, trade secrets, know-how, trademarks, service marks, tradenames, logos, or copyrights described or referred to in the SEC Documents as owned by or used by it or which, individually or in theaggregate, in the event of an unfavorable decision, ruling or finding, would have a material adverse effect on the business, prospects, financialcondition or results of operations of PublicCo.

(n) PublicCo has been advised concerning the Investment Company Act of 1940, as amended (the “ Investment Company Act”), andthe rules and regulations thereunder, and has in the past conducted its affairs in such a manner as to ensure that it is not and will not become an“investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act and suchrules and regulations.

( o ) (i) PublicCo has not, and no person or entity acting on behalf of or at the request of PublicCo has, at any time during thelast five years (i) made any unlawful contribution to any candidate for foreign office or failed to disclose fully any contribution in violation oflaw, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any other applicable jurisdiction.

(ii) To the best knowledge of PublicCo, no director, officer, agent, employee, or other person associated with, or acting onbehalf of, PublicCo, has, directly or indirectly: used any corporate funds for unlawful contributions, gifts, entertainment, or other unlawfulexpenses relating to political activity; made any unlawful payment to foreign or domestic government officials or employees or to foreign ordomestic political parties or campaigns from corporate funds; violated any provision of the Foreign Corrupt Practices Act of 1977, asamended; or made any bribe, rebate, payoff, influence payment, kickback, or other unlawful payment. PublicCo's internal accounting controlsand procedures are sufficient to cause PublicCo to comply in all respects with the Foreign Corrupt Practices Act of 1977, as amended.

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(iii) Neither PublicCo, nor any officer, director or affiliate of PublicCo, has been, within the five years ending on theClosing Date, a party to any bankruptcy petition against such person or against any business of which such person was affiliated; convicted ina criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); subject to any order,judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarilyenjoining, barring, suspending or otherwise limiting their involvement in any type of business, securities or banking activities; or found by acourt of competent jurisdiction in a civil action, by the SEC or the Commodity Futures Trading Commission to have violated a federal or statesecurities or commodities law, and the judgment has not been reversed, suspended or vacated.

(p) PublicCo has not, and no person acting on behalf thereof, has taken or will take, directly or indirectly, any action designed to, orthat might reasonably be expected to cause or result in, stabilization in violation of law, or manipulation, of the price of the PublicCoCommon Stock to facilitate the sale or resale of the Shares.

( q ) (i) PublicCo is in compliance in all material respects with all rules, laws and regulations relating to the use, treatment,storage and disposal of toxic substances and protection of health or the environment (“Environmental Laws”) that are applicable to itsbusiness, (ii) PublicCo has not received notice from any governmental authority or third party of an asserted claim under Environmental Laws,(iii) to the best knowledge of PublicCo, PublicCo is not likely to be required to make future material capital expenditures to comply withEnvironmental Laws (iv) no property which is owned, leased or occupied by PublicCo has been designated as a Superfund site pursuant to theComprehensive Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. § 9601, et seq.), or otherwise designated as acontaminated site under applicable state or local law, and (v) PublicCo is not in violation of any federal or state law or regulation relating tooccupational safety or health.

(r) There are no outstanding loans, advances or guarantees of indebtedness by PublicCo to, or for the benefit of, any of the officers,directors, or director-nominees of PublicCo or any of the members of the families of any of them, except as disclosed in the SEC Documents.

(s) PublicCo has not incurred any liability, direct or indirect, for finders' or similar fees on behalf of or payable by PublicCo or Citiusand the Citius Holders in connection with the transactions contemplated hereby or any other transaction involving PublicCo , Citius or theCitius Holders.

(t) No stockholder of PublicCo has any right to request or require PublicCo to register the sale of any shares owned by such

stockholder under the Securities Act on any registration statement. (u) PublicCo is in compliance with, and is not in violation of, applicable federal, state, local or foreign statutes, laws and regulations

(including without limitation, any applicable building, zoning or other law, ordinance or regulation) affecting its properties or the operation ofits business, including, without limitation, Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated pursuant thereto orthereunder. PublicCo is not subject to any order, decree, judgment or other sanction of any court, administrative agency or other tribunal. (v) PublicCo is not party to any contract, agreement or arrangement other than this Agreement and as otherwise disclosed in the SECDocuments.

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Section 2.02 Representations and Warranties of Citius . Except as set forth in the letter, of even date herewith (the “CitiusDisclosure Letter”), from Citius to PublicCo, which Citius Disclosure Letter and the exceptions contained therein shall be deemed to be part ofthe representations and warranties made in this Section 2.02 and which Citius Disclosure Letter has been delivered by Citius to PublicCosimultaneously with the execution and delivery hereof, Citius hereby represents and warrants to PublicCo that the statements contained in thisSection 2.02 are true and correct. The Citius Disclosure Letter shall be arranged and labeled so as to correspond to the numbered and letteredsubsections contained in this Section 2.02.

(a) Citius has no subsidiaries or affiliated corporation or owns any interest in any other enterprise (whether or not such enterprise is acorporation). Citius has been duly organized and is validly existing as a limited liability company in good standing under the laws of the Stateof Massachusetts, with full power and authority (corporate and other) to own, lease and operate its respective properties and conduct itsrespective business as conducted on the date hereof; Citius is duly qualified to do business as a foreign corporation and is in good standing ineach jurisdiction in which the ownership or leasing of its properties or the conduct of its business requires such qualification, except where thefailure to be so qualified or be in good standing would not have a material adverse effect on its business, prospects, condition (financial orotherwise), and results of operations of Citius and its subsidiaries taken as a whole; no proceeding has been instituted in any such jurisdiction,revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification; Citius is in possession of, andoperating in compliance with, all authorizations, licenses, certificates, consents, orders and permits from state, federal, foreign and otherregulatory authorities that are material to the conduct of its business, all of which are valid and in full force and effect; Citius is not inviolation of its charter or bylaws or in default in the performance or observance of any obligation, agreement, covenant or condition containedin any material bond, debenture, note or other evidence of indebtedness, or in any material lease, contract, indenture, mortgage, deed of trust,loan agreement, joint venture or other agreement or instrument to which it is a party or by which it or its properties or assets may be bound,which violation or default would have a material adverse effect on the business, prospects, financial condition or results of operations of Citiusand the subsidiaries thereof taken as a whole; and neither Citius nor any subsidiary thereof is in violation of any law, order, rule, regulation,writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic or foreign, having jurisdiction overCitius or any subsidiary thereof o r over its properties or assets, which violation would have a material adverse effect on the business,prospects, financial condition or results of operations of Citius and the subsidiaries thereof taken as a whole.

(b) Citius has all requisite power and authority to execute, deliver, and perform this Agreement. All necessary proceedings of Citiushave been duly taken to authorize the execution, delivery, and performance of this Agreement thereby. This Agreement has been dulyauthorized, executed, and delivered by Citius, constitutes the legal, valid, and binding obligation of Citius, and is enforceable as to Citius inaccordance with its terms. Except as otherwise set forth in this Agreement, no consent, authorization, approval, order, license, certificate, orpermit of or from, or declaration or filing with, any federal, state, local, or other governmental authority or any court or other tribunal isrequired by Citius for the execution, delivery, or performance of this Agreement thereby. No consent, approval, authorization or order of, orqualification with, any court, government or governmental agency or body, domestic or foreign, having jurisdiction over Citius or over itsproperties or assets is required for the execution and delivery of this Agreement by Citius and the consummation by Citius of the transactionsherein contemplated, except such as may be required under the Securities Act or under state or other securities or blue sky laws. No consent ofany party to any material contract, agreement, instrument, lease, license, arrangement, or understanding to which Citius is a party, or to whichits or any of its respective businesses, properties, or assets are subject, is required for the execution, delivery, or performance of thisAgreement by Citius; and the execution, delivery, and performance of this Agreement by Citius will not violate, result in a breach of, conflictwith, or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under, entitle anyparty to receive rights or privileges that such party was not entitled to receive immediately before this Agreement was executed under, orcreate any obligation on the part of Citius to which it was not subject immediately before this Agreement was executed under, any term of anysuch material contract, agreement, instrument, lease, license, arrangement, or understanding, or violate or result in a breach of any term of thecertificate of incorporation or by-laws of Citius or (if the provisions of this Agreement are satisfied) violate, result in a breach of, or conflictwith any law, rule, regulation, order, judgment, decree, injunction, or writ of any court, government or governmental agency or body, domesticor foreign, having jurisdiction over Citius or over its properties or assets.

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(c) There is not any pending or, to the best of Citius's knowledge, threatened, action, suit, claim or proceeding against Citius, or anyof Citius’s current or past officers or any of the respective properties, assets or rights of Citius, before any court, government or governmentalagency or body, domestic or foreign, having jurisdiction over Citius or over Citius’s current or past officers or the properties of Citius, orotherwise that (i) is reasonably likely to result in any material adverse change in the respective business, prospects, financial condition orresults of operations of Citius or might materially and adversely affect its properties, assets or rights taken as a whole, (ii) might preventconsummation of the transactions contemplated by this Agreement, or (iii) alleging violation of any Federal or state securities laws.

(d) There are 21,625,219 Citius Membership Interests issued and outstanding, and beneficially and of record owned by the CitiusHolders as provided in Schedule A hereto. All of the Citius Membership Interests are duly and validly authorized, validly issued, fully paid,and nonassessable, have not been issued and are not owned or held in violation of any preemptive or similar right of members. (i) There is nocommitment, plan, or arrangement to issue, and no outstanding option, warrant, or other right calling for the issuance of, any CitiusMembership Interests, or any security or other instrument convertible into, exercisable for, or exchangeable for Citius Membership Interests,and (ii) there is outstanding no security or other instrument convertible into or exchangeable for Citius Membership Interests. When deliveredby Citius in accordance with the terms of this Agreement, the Citius Membership Interests will be duly and validly issued and fully paid andnonassessable, and will be sold free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest of any kind; andno preemptive or similar right, co-sale right, registration right, right of first refusal or other similar right of stockholders exists with respect toany of such Citius Membership Interests or the issuance and sale thereof other than those that have been expressly waived prior to the datehereof and those that will automatically expire upon the execution hereof. No further approval or authorization of any member, manager, theBoard of Directors (or other governing body) of Citius or others is required for the issuance and sale or transfer of the Citius MembershipInterests to be delivered pursuant hereto, except as may be required under the Securities Act, the rules and regulations promulgated thereunderor under state or other securities or blue sky laws. Citius has no stock option, stock bonus and other stock plans or arrangements.

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(e) To the best of Citius’s knowledge, the properties and assets (including Intangibles) owned by Citius (other than those leased orlicensed by Citius to a third party) or leased or licensed by Citius from a third party constitute all such properties and assets which arenecessary to the business of Citius as presently conducted.

(f) Citius has made available to PublicCo the certificate of organization, as amended to date, and operating agreement, as amended todate, of Citius (or, in each case, the comparable charter documents, if any, under applicable law) and all amendments thereto, as presently ineffect, certified by the Secretary thereof or an authorized signatory thereof.

(g) Citius has been advised concerning the Investment Company Act of 1940, as amended (the “ Investment Company Act”), and therules and regulations thereunder, and has in the past conducted its affairs in such a manner as to ensure that it is not and will not become an“investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act and suchrules and regulations.

( h ) (i) Citius has not, and no person or entity acting on behalf or at the request of Citius has, at any time during the last fiveyears (i) made any unlawful contribution to any candidate for foreign office or failed to disclose fully any contribution in violation of law, or(ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-publicduties, other than payments required or permitted by the laws of the United States or any other applicable jurisdiction.

(ii) To the best knowledge of Citius, no director, member, manager, officer, agent, employee, or other person associatedwith, or acting on behalf of, Citius, has, directly or indirectly used any corporate funds for unlawful contributions, gifts, entertainment, orother unlawful expenses relating to political activity; made any unlawful payment to foreign or domestic government officials or employees orto foreign or domestic political parties or campaigns from corporate funds; violated any provision of the Foreign Corrupt Practices Act of1977, as amended; or made any bribe, rebate, payoff, influence payment, kickback, or other unlawful payment. Citius's internal accountingcontrols and procedures are sufficient to cause Citius to comply in all respects with the Foreign Corrupt Practices Act of 1977, as amended.

(iii) Neither Citius, nor any member, manager, officer, director or affiliate of Citius, has been, within the ten years ending on the dateof this Agreement, a party to any bankruptcy petition against such person or against any business of which such person was affiliated;convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); subjectto any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently ortemporarily enjoining, barring, suspending or otherwise limiting their involvement in any type of business, securities or banking activities; orfound by a court of competent jurisdiction in a civil action, by the Securities and Exchange Commission or the Commodity Futures TradingCommission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

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(i) Citius has not, and no person acting on behalf thereof, has taken or will directly or indirectly, any action designed to, or that mightreasonably be expected to cause or result in, stabilization in violation of law, or manipulation, of the price of the Citius Membership Intereststo facilitate the sale or resale of the Shares.

(j) Citius has not incurred any liability, direct or indirect, for finders' or similar fees on behalf of or payable by Citius or Citius and theCitius Holders in connection with the transactions contemplated hereby or any other transaction involving Citius , Citius or the Citius Holdersexcept any fee payable to Agincourt Ltd. (k) No stockholder of Citius has any right to request or require Citius to register the sale of any shares owned by such stockholder under theSecurities Act on any registration statement. (l) Citius is in compliance with, and is not in violation of, applicable federal, state, local or foreign statutes, laws and regulations (includingwithout limitation, any applicable building, zoning or other law, ordinance or regulation) affecting its properties or the operation of itsbusiness, the violation of which would have a material adverse effect on the business, prospects, financial condition, or results of operations ofCitius. Citius is not subject to any order, decree, judgment or other sanction of any court, administrative agency or other tribunal. (m) Citius has provided to PublicCo true and correct copies of the following: audited balance sheets of Citius as of December 31, 2012 and2013; unaudited balance sheets of Citius as of June 30, 2014; audited statements of income, statements of stockholders’ equity, and statementsof cash flows of Citius for the years ended December 31, 2012 and 2013; and the unaudited statements of income, statements of stockholders’equity, and statements of cash flows of Citius for the six months ended June 30, 2014. To the knowledge of Citius, each such balance sheetpresents fairly the financial condition, assets, liabilities, and stockholders’ equity of Citius as of its respective date; each such statement ofincome and statement of stockholders’ equity presents fairly the results of operations of Citius for the period indicated; and each suchstatement of cash flows fairly represents the financial condition of Citius in a material respects. Section 2.03 Representations and Warranties of the Citius Holders . The Citius Holders hereby represent and warrant to, and agrees with,PublicCo as follows: (a) To the knowledge of the Citius Holders, the representations and warranties of Citius set forth in Section 2.02 hereof are true and correct inall material respects. Nothing has come to the attention of the Citius Holders that would lead the Citius Holders to believe that anyrepresentation or warranty of Citius set forth on Section 2.02 hereof is untrue or incorrect in any material respect.

(b) Citius and the Citius Holders have each approved this Agreement and duly authorized the execution and delivery hereof. TheCitius Holders have full power and authority under the laws of the jurisdictions of residence thereof to execute, deliver, and perform thisAgreement and the transactions contemplated hereby and in connection herewith. The Citius Holders have reached the age of majority underapplicable law.

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(c) The Citius Holders own beneficially all of the Citius Membership Interests. The Citius Holders have full power and authority totransfer such Citius Membership Interests to PublicCo under, pursuant to, and in accordance with, this Agreement, and such CitiusMembership Interests are free and clear of any liens, charges, mortgages, pledges or encumbrances and are not subject to any claims as to theownership thereof, or any rights, powers or interest therein, by any third party and are not subject to any preemptive or similar rights ofstockholders or members.

( d ) (i) The Citius Holders represent that they are acquiring the shares of PublicCo Common Stock to be issued pursuant toSection 1.02(a) hereof for their own accounts and for investment only and not with a view to distribution or resale thereof within the meaningof such phrase as defined under the Securities Act. The Citius Holders shall not dispose of any part or all of such shares of PublicCo CommonStock in violation of the provisions of the Securities Act and the rules and regulations promulgated under the Securities Act by the UnitedStates Securities and Exchange Commission (the “SEC”) and all applicable provisions of state securities laws and regulations.

(ii) The certificate or certificates representing the shares of PublicCo Common Stock shall bear a legend in substantially theform set forth in Section 1.02(c) hereof.

(iii) The Citius Holders acknowledge being informed that the shares of PublicCo Common Stock to be issued pursuant toSection 1.02(a) hereof shall be unregistered, shall be “restricted securities” as defined in paragraph (a) of Rule 144 under the Securities Act,and must be held indefinitely unless (a) they are subsequently registered under the Securities Act, or (b) an exemption from such registration isavailable. The Citius Holders further acknowledge that PublicCo does not have an obligation to currently register such securities for theaccount of Citius Holders.

(iv) The Citius Holders acknowledge that they have been afforded access to all material information which they haverequested relevant to their decision to acquire the shares of PublicCo Common Stock and to ask questions of PublicCo’s management and that,except as set forth herein, neither PublicCo nor anyone acting on behalf of PublicCo has made any representations or warranties to the CitiusHolders which have induced, persuaded, or stimulated the Citius Holders to acquire such shares of PublicCo Common Stock.

(v) Either alone, or together with their investment advisor(s), the Citius Holders have the knowledge and experience in

financial and business matters to be capable of evaluating the merits and risks of the prospective investment in the shares of PublicCoCommon Stock, and the Citius Holders are and will be able to bear the economic risk of the investment in such shares of PublicCo CommonStock.

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ARTICLE III

CONDITIONS TO CLOSING

Section 3.01 Spin-Off Agreement. Ralph Montrone shall execute and deliver to PublicCo the Spin-Off Agreement, dated as of thedate hereof (the “Spin-Off Agreement”), pursuant to which PublicCo shall assign to Ralph Montrone all of the issued and outstanding capitalstock of Global Energy Express LLC, a Nevada limited liability corporation and a wholly-owned subsidiary of PublicCo (the “Spin-OffSubsidiary”), together with all of the business, operations, assets, and goodwill of the Spin-Off Subsidiary in exchange for indemnity fromRalph Montrone against claims arising in connection with such business and operation (the “Spin-Off”).

ARTICLE IV

MISCELLANEOUS

Section 4.01 Expenses. Whether or not the transactions contemplated in this Agreement are consummated, all costs and expensesincurred in connection with this Agreement and the transactions contemplated hereby, will be paid by the party incurring such expense or asotherwise agreed to herein.

Section 4.02 Necessary Actions. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use allreasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable underapplicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. In the event at any timeafter the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement, the proper executive officers and/ordirectors of PublicCo or Citius, as the case may be, or the relevant Citius Holders or Citius Holders will take all such necessary action.

Section 4.03 Extension of Time; Waivers . At any time prior to the Closing Date:

(a) PublicCo may waive any inaccuracies in the representations and warranties of Citius or any Citius Holders, or contained herein orin any document delivered pursuant hereto by Citius or Citius Holders, and (iii) waive compliance with any of the agreements or conditionscontained herein to be performed by Citius or any Citius Holders. Any agreement on the part of PublicCo to any such extension or waiver willbe valid only if set forth in an instrument, in writing, signed on behalf of PublicCo.

(b) Citius and the Citius Holders (by action of the Citius Holders), may waive any inaccuracies in the representations and warrantiesof PublicCo contained herein or in any document delivered pursuant hereto by PublicCo. Any agreement on the part of Citius and to any suchextension or waiver will be valid only if set forth in an instrument, in writing, signed on behalf of Citius.

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Section 4.04 Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall bemailed by certified mail, return receipt requested or by the most nearly comparable method if mailed from or to a location outside of theUnited States or by Federal Express, Express Mail, or similar overnight delivery or courier service or delivered (in person or by telecopy,telex, or similar telecommunications equipment) against receipt to the party to which it is to be given at the address of such party set forth inthe introductory paragraph to this Agreement (or to such other address as the party shall have furnished in writing in accordance with theprovisions of this Section 4.04. Any notice to PublicCo or to Citius shall be addressed to the attention of the Corporate Secretary. Any noticeor other communication given by certified mail (or by such comparable method) shall be deemed given at the time of certification thereof (orcomparable act), except for a notice changing a party's address which will be deemed given at the time of receipt thereof. Any notice given byother means permitted by this Section 4.04 shall be deemed given at the time of receipt thereof.

Section 4.05 Parties in Interest. This Agreement will inure to the benefit of and be binding upon the parties hereto and therespective successors and assigns. Nothing in this Agreement is intended to confer, expressly or by implication, upon any other person anyrights or remedies under or by reason of this Agreement.

Section 4.06 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an originaland all together will constitute one document. The delivery by facsimile or .pdf of an executed counterpart of this Agreement will be deemedto be an original and will have the full force and effect of an original executed copy.

Section 4.07 Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of anyprovision hereof will not affect the validity or enforceability of any of the other provisions hereof. If any provisions of this Agreement, or theapplication thereof to any person or any circumstance, is illegal, invalid or unenforceable, (a) a suitable and equitable provision will besubstituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceableprovision, and (b) the remainder of this Agreement and the application of such provision to other persons or circumstances will not be affectedby such invalidity or unenforceability, nor will such invalidity or unenforceability affect the validity or enforceability of such provision, or theapplication thereof, in any other jurisdiction.

Section 4.08 Headings. The Article and Section headings are provided herein for convenience of reference only and do not constitutea part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

Section 4.09 Governing Law.

(a) This Agreement will be deemed to be made in and in all respects will be interpreted, construed and governed by and in accordancewith the law of the State of New York, without regard to the conflict of law principles thereof.

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( b ) EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVEJURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE FEDERAL COURTS SITTING IN THE STATE OFNEW YORK IN ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH OF THEPARTIES AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT MUST BELITIGATED EXCLUSIVELY IN ANY SUCH STATE OR, TO THE EXTENT PERMITTED BY LAW, FEDERAL COURT THAT SITSIN THE STATE OF NEW YORK, AND ACCORDINGLY, EACH PARTY IRREVOCABLY WAIVES ANY OBJECTION WHICH ITMAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCHCOURT. EACH PARTY FURTHER IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FORNOTICES IN SECTION 4.04. NOTHING IN THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT WILL AFFECTTHE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. (c) EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY ORINDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBYOR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH OF THE PARTIES (1) CERTIFIESTHAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OROTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THEFOREGOING WAIVER AND (2) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TOENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THISSECTION 4.09(c).

Section 4.10 Survival of Representations and Warranties . All terms, conditions, representations and warranties set forth in thisAgreement or in any instrument, certificate, opinion, or other writing providing for in it, will survive the Closing and the delivery of the sharesof PublicCo Common Stock to be issued hereunder at the Closing for a period of one year after Closing, regardless of any investigation madeby or on behalf of any of the parties hereto.

Section 4.11 Assignability. This Agreement will not be assignable by operation of law or otherwise and any attempted assignment ofthis Agreement in violation of this subsection will be void ab initio.

Section 4.12 Amendment. This Agreement may only be amended or modified with the approval of the Citius Holders and the boardsof directors of each of PublicCo and Citius at any time. This Agreement may not be amended except by an instrument, in writing, signed onbehalf of each of the parties hereto.

Section 4.13 Extended Meanings. In this Agreement words importing the singular number include the plural and vice versa; wordsimporting the masculine gender include the feminine and neuter genders. The word “person” includes an individual, body corporate,partnership, trustee or trust or unincorporated association, executor, administrator or legal representative.

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Section 4.14 Entire Agreement. Except as otherwise expressly provided herein, this Agreement sets forth the entire understandingof the parties with respect to the subject matter hereof, and supersedes all existing agreements among them concerning such subject matter.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement in a manner legally binding upon themas of the date first above written. TRAIL ONE, INC. By: /s/ Mohammad Omar Rahman Name: Mohammad Omar Rahman Title: Chief Executive Officer

CITIUS PHARMACEUTICALS, LLC By: /s/ Leonard Mazur Name: Leonard Mazur Title: President and Chief Executive Officer

[CITIUS HOLDERS SIGNATURES FOLLOW]

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CITIUS HOLDERS: By: CITIUS GROWTH TRUST I By: CITIUS GROWTH TRUST II By: LIFESTYLE HEALTHCARE INC. By:

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EXHIBIT 3.1

AMENDED AND RESTATED ARTICLES OF INCORPORATIONOF

CITIUS PHARMACEUTICALS, INC. (f/k/a TRAIL ONE, INC.) I, Mohammad Omar Rahman, Chief Executive Officer and Sole Director of Citius Pharmaceuticals, Inc., a Nevada corporation, originallyincorporated as Trail One, Inc. on September 9, 2010 (the “Corporation”), do hereby certify that (a) the Board of Directors of the Corporation(the “Board”) by written consent in lieu of a meeting, on August 25, 2014, adopted certain resolutions, subject to shareholder approval, toamend and restate the Articles of Incorporation of the Corporation (the “Restated Articles”) pursuant to Section 78.385, Section 78.390 andSection 78.430 of the Nevada Revised Statutes (“NRS”), (b) upon recommendation of the Board, by written consent in lieu of a meeting onAugust 25, 2014, the stockholders of the Corporation holding a majority of the voting power approved and adopted these Restated Articlespursuant to Section 78.320 of the NRS and (c) set forth below is the correct text of the Restated Articles, as amended to the date of thiscertificate:

FIRST: The name of the Corporation is Citius Pharmaceuticals, Inc.

SECOND: Its principal office in the State of Nevada is located at 2215-B Renaissance Drive, Las Vegas, Nevada, 89119, Clark County. Thename of its registered agent is CSC Services of Nevada, Inc.

THIRD: The nature of the business, object or purposes to be transaction, promoted or carried on are to carry on any lawful businesswhatsoever which the Corporation may deem proper or convenient, or which may be calculated, directly or indirectly to promote the interestsof the Corporation or to enhance the value of its property; to have, enjoy and exercise, all the rights, powers and privileges, which are now orwhich may hereafter be conferred upon corporations organized under the same statutes as this Corporation; to conduct its business anywherein the world.

FOURTH: The total number of shares of capital stock which may be issued by the Corporation is one hundred million (100,000,000), ofwhich ninety million (90,000,000) shares shall be common stock of the par value of $0.001 per shares (the “Common Stock”) and ten million(10,000,000) shares shall be preferred stock of the par value of $0.001 per share (the “Preferred Stock”), which Preferred Stock shall be issuedfrom time to time in one or more series, with such distinctive serial designations as shall be stated and expressed in the resolution orresolutions providing for the issue of such shares from time to time adopted by the Board; and in such resolution or resolutions providing forthe issue of shares of each particular series, the Board is expressly authorized to fix the annual rate or rates of dividends for the particularseries; the dividend payment dates for the particular series and the date from which dividends on all shares of such series issued prior to therecord date for the first dividend payment date shall be cumulative; the redemption price or prices for the particular series; the voting powersfor the particular series; the rights, if any, of holders of the shares of the particular series to convert the same into shares of any other series orclass or other securities of the corporation, with any provisions for the subsequent adjustment of such conversion rights; and to classify orreclassify any unissued preferred shares by fixing or altering from time to time any of the foregoing rights, privileges and qualifications. Allshares of the Preferred Stock of any one series shall be identical with each other in all respects, except that shares of any one series issued atdifferent times may differ as to the dates from which dividends thereon shall be cumulative; and all shares of Preferred Stock shall be of equalrank, regardless of series, and shall be identical in all respects except as to the particulars fixed by the Board as hereinabove provided or asfixed herein.

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FIFTH: Each issued and outstanding share of Common Stock as of September 10, 2014 or other such date as fixed by the Board (the “SplitEffective Date”) shall be combined and converted automatically, without further action, into 0.625 fully paid and non-assessable shares ofCommon Stock. No certificate representing any fractional share interest in the Corporation's post-split shares shall be issued. In lieu of anyfraction of a post-split share to which the shareholder is otherwise entitled for all of the holdings of such shareholder, a fractional share shallbe rounded up and a shareholder of pre-split shares will receive an entire post-split share. No cash payment shall be made to reduce oreliminate any fractional share interest. Shareholders are not required to exchange their certificates representing shares of Common Stock heldprior to the reverse stock split for new certificates representing shares of Common Stock after the reverse stock split.

SIXTH: The Corporation is to have perpetual existence.

SEVENTH: Subject to the by-laws, if any, adopted by the stockholders, the Board is expressly authorized to make, alter or amend the by-lawsof the corporation. The directors, without restriction or limitation, shall have all of the powers and authorities expressly conferred upon themby the statutes of this State and this corporation may in its by-laws confer powers upon its directors in addition to the powers and authoritiesexpressly conferred upon them by the statutes of this State.

EIGHTH: The Corporation may enter into contracts or transact business with one or more of its directors, or with any firm of which one ormore of its directors are members, or with any Corporation or association in which any one of its directors is a stockholder, director or officer,and such contract or transaction shall not be invalidated or in any wise affected by the fact that such director or directors have or may haveinterests therein which are or might be adverse to the interests of the Corporation, even though the vote of the director or directors having suchadverse interest shall have been necessary to obligate the Corporation upon such contract or transaction provided such adverse interest iseither known or made known to the remaining directors; and no director or directors having such adverse interest shall be liable to theCorporation or to any stockholder or creditor thereof, or to any other person, for any loss incurred by it under or by reason of any such contractor transaction; nor shall any such director or directors be accountable for any gains or profits realized thereon: Always provided, however, thatsuch contract or transaction shall at the time at which it was entered into have been a reasonable one to have been entered into and shall havebeen upon terms that at the time were fair.

NINTH: Meetings of stockholders may be held within or without the State of Nevada, if the by-laws so provide. The books of thiscorporation may be kept (subject to the provision of the statutes) outside of the State of Nevada at such places as may be from time to timedesignated by the Board or in the by-laws of the Corporation.

TENTH: This Corporation reserves the right to amend, alter, change or repeal any provision contained in these articles of incorporation, inthe manner now or hereafter prescribed by statute, or by these articles of incorporation, and all rights conferred upon stockholders herein aregranted subject to this reservation.

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ELEVENTH: A director or officer of the Corporation shall have no personal liability to the Corporation or its stockholders for damages forbreach of fiduciary duty as a director or officer, except for (a) acts or omissions which involve intentional misconduct, fraud or a knowingviolation of law; or (b) the payment of dividends in violation of the applicable statutes of Nevada. If the Nevada General Corporation Law isamended after approval by the stockholders of this Article ELEVENTH to authorize corporate action further eliminating or limiting thepersonal liability of directors or officers, the liability of a director or officer of the corporation shall be eliminated or limited to the fullestextent permitted by the Nevada General Corporation Law, as so amended from time to time. No repeal or modification of this ArticleELEVENTH by the stockholders shall adversely affect any right or protection of a director or officer of the corporation existing by virtue ofthis Article ELEVENTH at the time of such repeal or modification. The Amended and Restated Articles of Incorporation have been approved by a majority of the stockholders of the Corporation by writtenconsent in lieu of a meeting. IN WITNESS WHEREOF, Citius Pharmaceuticals, Inc. has caused its Chief Executive Officer and Sole Director to execute this Amendedand Restated Articles of Incorporation of Citius Pharmaceuticals, Inc. on this 10th day of September, 2014. By: /s/ Mohammad Omar Rahman Mohammad Omar Rahman

Chief Executive Officer and Sole Director

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EXHIBIT 10.1

SUBSCRIPTION AGREEMENT Pubco (to be identified prior to initial closing)

CITIUS PHARMACEUTICALS, LLC63 Great RoadMaynard, MA 01754Attention: Leonard Mazur Ladies and Gentlemen: 1. Subscription. The undersigned (the “Purchaser”), intending to be legally bound, hereby irrevocably agrees to purchase from Pubco 1, aNevada corporation (the “Company”) the number of units (the “Units”) set forth on the signature page hereof at a purchase price of $0.65 perUnit. Each Unit consists of (i) one share of the Company’s common stock, par value $0.001 per share (the “Common Stock”) and (ii) a 5 yearwarrant (each, a “Warrant” and collectively, the “Warrants”) to purchase one share of Common Stock at an exercise price of $0.65 per share.The Units are being purchased in connection with a reverse acquisition transaction between Citius Pharmaceuticals, LLC, a privately ownedMassachusetts limited liability company (“Citius LLC”), the Company and a newly formed wholly-owned subsidiary of the Company whichhas been formed solely for the transaction. 2. This subscription is submitted to you in accordance with and subject to the terms and conditions described in this Subscription Agreementand the Confidential Private Placement Memorandum of the Company and Citius LLC dated as of January 22, 2014, as amended orsupplemented from time to time, including all attachments, schedules and exhibits thereto (the “Memorandum”), relating to the offering (the“Offering”) by the Company of a Maximum of 10,000,000 Units ($6,500,000) (“Maximum Offering Amount”), and up to an additional6,000,000 Units ($3,900,000) (“Overallotment Amount”). Agincourt, Ltd as lead placement agent, and Newport Coast Securities, Inc., havetogether been engaged as placement agents in connection with the Offering (the “Placement Agents”). The terms of the Offering are morecompletely described in the Memorandum and such terms are incorporated herein in their entirety. 3. Payment. The Purchaser encloses herewith a check payable to, or will immediately make a wire transfer payment to, “Signature Bank,Escrow Agent for Citius Pharmaceuticals, LLC” in the full amount of the purchase price of the Units being subscribed for. Wire transferinstructions are set forth on page 14 hereof under the heading “To subscribe for Units in the private offering of Pubco/Citius Pharmaceuticals,LLC.” Such funds will be held for the Purchaser's benefit, and will be returned promptly, without interest or offset if this SubscriptionAgreement is not accepted by the Company and Citius, the Offering is terminated pursuant to its terms by the Company prior to the FirstClosing (as hereinafter defined), or the Maximum Offering Amount is not sold. Together with a check for, or wire transfer of, the full purchaseprice, the Purchaser is delivering a completed and executed Omnibus Signature Page to this Subscription Agreement and the RegistrationRights Agreement, in the form of Exhibit C to the Memorandum (the “Registration Rights Agreement”).___________________1 The identity of Pubco will be circulated to potential investors prior to the closing. In connection with the consummation of the proposedreverse acquisition transaction, it is contemplated that Pubco will change its name to Citius Pharmaceutical Holdings, Inc. (or a substantiallysimilar name to be determined by management).

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4. Deposit of Funds. All payments made as provided in Section 3 hereof shall be deposited by the Company, Citius LLC or the PlacementAgents as soon as practicable after receipt thereof with Signature Bank (the “Escrow Agent”), in a non-interest-bearing escrow account (the“Escrow Account”) until the earliest to occur of (a) the closing of the sale of the Maximum Offering Amount (the “First Closing”), (b) therejection of such subscription, and (c) the termination of the Offering by the Company, Citius LLC or the Placement Agents. The Company,Citius LLC and the Placement Agents may continue to offer and sell the Overallotment Units and conduct additional closings for the sale ofadditional Overallotment Units after the First Closing and until the termination of the Offering.

5. Acceptance of Subscription. The Purchaser understands and agrees that the Company and Citius LLC, in their sole discretion, reserves theright to accept or reject this or any other subscription for Units, in whole or in part, notwithstanding prior receipt by the Purchaser of notice ofacceptance of this subscription. The Company shall have no obligation hereunder until the Company shall execute and deliver to thePurchaser an executed copy of this Subscription Agreement. If this subscription is rejected in whole, the Offering of Units is terminated or theOffering Amount is not raised, all funds received from the Purchaser will be returned without interest or offset, and this SubscriptionAgreement shall thereafter be of no further force or effect. If this subscription is rejected in part, the funds for the rejected portion of thissubscription will be returned without interest or offset, and this Subscription Agreement will continue in full force and effect to the extent thissubscription was accepted.

6. Representations and Warranties.

The Purchaser hereby acknowledges, represents, warrants, and agrees as follows:

(a) None of the shares of Common Stock or the shares of Common Stock issuable upon exercise of the Warrants (the “WarrantShares”) offered pursuant to the Memorandum are registered under the Securities Act of 1933, as amended (the “Securities Act”), or any statesecurities laws. The Purchaser understands that the offering and sale of the Units is intended to be exempt from registration under theSecurities Act, by virtue of Section 4(2) thereof and the provisions of Regulation D (“Regulation D”) as promulgated by the United StatesSecurities and Exchange Commission (the “SEC”) thereunder, based, in part, upon the representations, warranties and agreements of thePurchaser contained in this Subscription Agreement;

(b) Prior to the execution of this Subscription Agreement, the Purchaser and the Purchaser's attorney, accountant, purchaserrepresentative and/or tax adviser, if any (collectively, the “Advisers”), have received the Memorandum and all other documents requested bythe Purchaser, have carefully reviewed them and understand the information contained therein;

(c) Neither the Securities and Exchange Commission nor any state securities commission or other regulatory authority has approvedthe Units, the Common Stock, the Warrants or the Warrant Shares, or passed upon or endorsed the merits of the offering of Units orconfirmed the accuracy or determined the adequacy of the Memorandum. The Memorandum has not been reviewed by any federal, state orother regulatory authority;

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(d) All documents, records, and books pertaining to the investment in the Units (including, without limitation, the Memorandum)

have been made available for inspection by such Purchaser and its Advisers, if any; (e) The Purchaser and its Advisers, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or

persons acting on behalf of the Company concerning the offering of the Units and the business, financial condition and results of operations ofthe Company and Citius, and all such questions have been answered to the full satisfaction of the Purchaser and its Advisers, if any;

(f) In evaluating the suitability of an investment in the Company, the Purchaser has not relied upon any representation or information

(oral or written) other than as stated in the Memorandum; (g) The Purchaser is unaware of, is in no way relying on, and did not become aware of the Offering of the Units through or as a result

of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or othercommunication published in any newspaper, magazine or similar media or broadcast over television, radio or the Internet (including, withoutlimitation, internet “blogs,” bulletin boards, discussion groups and social networking sites) in connection with the Offering and sale of theUnits and is not subscribing for the Units and did not become aware of the Offering of the Units through or as a result of any seminar ormeeting to which the Purchaser was invited by, or any solicitation of a subscription by, a person not previously known to the Purchaser inconnection with investments in securities generally;

(h) The Purchaser has taken no action that would give rise to any claim by any person for brokerage commissions, finders' fees or the

like relating to this Subscription Agreement or the transactions contemplated hereby (other than commissions to be paid by the Company tothe Placement Agent or as otherwise described in the Memorandum);

(i) The Purchaser, together with its Advisers, if any, has such knowledge and experience in financial, tax, and business matters, and,

in particular, investments in securities, so as to enable it to utilize the information made available to it in connection with the Offering toevaluate the merits and risks of an investment in the Units and the Company and to make an informed investment decision with respectthereto;

(j) The Purchaser is not relying on the Company, Citius LLC, the Placement Agents or any of their respective employees or agents

with respect to the legal, tax, economic and related considerations of an investment in the Units, and the Purchaser has relied on the advice of,or has consulted with, only its own Advisers;

(k) The Purchaser is acquiring the Units solely for such Purchaser's own account for investment purposes only and not with a view to

or intent of resale or distribution thereof, in whole or in part. The Purchaser has no agreement or arrangement, formal or informal, with anyperson to sell or transfer all or any part of the Units, the shares of Common Stock, the Warrants or the Warrant Shares, and the Purchaser hasno plans to enter into any such agreement or arrangement;

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(l) The Purchaser must bear the substantial economic risks of the investment in the Units indefinitely because none of the securities

included in the Units may be sold, hypothecated or otherwise disposed of unless subsequently registered under the Securities Act andapplicable state securities laws or an exemption from such registration is available. Legends shall be placed on the securities included in theUnits to the effect that they have not been registered under the Securities Act or applicable state securities laws and appropriate notationsthereof will be made in the Company's stock books. Appropriate notations will be made in the Company's stock books to the effect that thesecurities included in the Units have not been registered under the Securities Act or applicable state securities laws. Stop transfer instructionswill be placed with the transfer agent of the Units. The Company has agreed that purchasers of the Units will have, with respect to the sharesof Common Stock and the Warrant Shares, the registration rights described in the Registration Rights Agreement. Notwithstanding suchregistration rights, there can be no assurance that there will be any market for resale of the Units, the Common Stock, the Warrants or theWarrant Shares, nor can there be any assurance that such securities will be freely transferable at any time in the foreseeable future;

(m) The Purchaser has adequate means of providing for such Purchaser's current financial needs and foreseeable contingencies and

has no need for liquidity of its investment in the Units for an indefinite period of time; (n) The Purchaser is aware that an investment in the Units is high risk, involving a number of very significant risks and has carefully

read and considered the matters set forth under the caption “Risk Factors” in the Memorandum, and, in particular, acknowledges that CitiusLLC has a limited operating history, significant operating losses since inception, no revenues to date, limited assets and is engaged in a highlycompetitive business;

(o) The Purchaser meets the requirements of at least one of the suitability standards for an “accredited investor” as that term is

defined in Regulation D and as set forth on the Investor Questionnaire/Profile contained herein. The Purchaser understands that theinformation and representations and warranties provided by Purchaser in this Subscription Agreement is intended to enable the Company andthe Placement Agents, to discharge their respective responsibilities under an exemption from registration under the Act, and with respect to thePlacement Agents, their obligations under applicable FINRA rules, and thus the Company, Citius LLC, the Placement Agents and theirrespective advisors will rely upon the information contained herein;

(p) The Purchaser (i) if a natural person, represents that the Purchaser has reached the age of 21 and has full power and authority to

execute and deliver this Subscription Agreement and all other related agreements or certificates and to carry out the provisions hereof andthereof; (ii) if a corporation, partnership, or limited liability company or partnership, or association, joint stock company, trust, unincorporatedorganization or other entity, represents that such entity was not formed for the specific purpose of acquiring the Units, such entity is dulyorganized, validly existing and in good standing under the laws of the state of its organization, the consummation of the transactionscontemplated hereby is authorized by, and will not result in a violation of state law or its charter or other organizational documents, suchentity has full power and authority to execute and deliver this Subscription Agreement and all other related agreements or certificates and tocarry out the provisions hereof and thereof and to purchase and hold the securities constituting the Units, the execution and delivery of thisSubscription Agreement has been duly authorized by all necessary action, this Subscription Agreement has been duly executed and deliveredon behalf of such entity and is a legal, valid and binding obligation of such entity; or (iii) if executing this Subscription Agreement in arepresentative or fiduciary capacity, represents that it has full power and authority to execute and deliver this Subscription Agreement in suchcapacity and on behalf of the subscribing individual, ward, partnership, trust, estate, corporation, or limited liability company or partnership, orother entity for whom the Purchaser is executing this Subscription Agreement, and such individual, partnership, ward, trust, estate,corporation, or limited liability company or partnership, or other entity has full right and power to perform pursuant to this SubscriptionAgreement and make an investment in the Company, and represents that this Subscription Agreement constitutes a legal, valid and bindingobligation of such entity. The execution and delivery of this Subscription Agreement will not violate or be in conflict with any order,judgment, injunction, agreement or controlling document to which the Purchaser is a party or by which it is bound;

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(q) The Purchaser and the Advisers, if any, have had the opportunity to obtain any additional information, to the extent the Company

and/or Citius have such information in its possession or could acquire it without unreasonable effort or expense, necessary to verify theaccuracy of the information contained in the Memorandum and all documents received or reviewed in connection with the purchase of theUnits and have had the opportunity to have representatives of the Company and Citius provide them with such additional informationregarding the terms and conditions of this particular investment and the financial condition, results of operations, business of the Companyand Citius deemed relevant by the Purchaser or the Advisers, if any, and all such requested information, to the extent the Company had suchinformation in its possession or could acquire it without unreasonable effort or expense, has been provided to the full satisfaction of thePurchaser and the Advisers, if any;

(r) Any information which the Purchaser has heretofore furnished or is furnishing herewith to the Company, Citius or the Placement

Agent is complete and accurate and may be relied upon by the Company, Citius and the Placement Agent in determining the availability of anexemption from registration under federal and state securities laws in connection with the offering of securities as described in theMemorandum. The Purchaser further represents and warrants that it will notify and supply corrective information to the Company, Citius andthe Placement Agent immediately upon the occurrence of any change therein occurring prior to the Company's issuance of the securitiescontained in the Units;

(s) The Purchaser has significant prior investment experience, including investment in non-listed and non-registered securities. The

Purchaser is knowledgeable about investment considerations in companies with limited operating histories. The Purchaser has a sufficient networth to sustain a loss of its entire investment in the Company in the event such a loss should occur. The Purchaser's overall commitment toinvestments which are not readily marketable is not excessive in view of the Purchaser’s net worth and financial circumstances and thepurchase of the Units will not cause such commitment to become excessive. The Purchaser has determined that the investment in the Units isa suitable one for the Purchaser;

(t) The Purchaser is satisfied that the Purchaser has received adequate information with respect to all matters which it or the Advisers,

if any, consider material to its decision to make this investment;

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(u) The Purchaser acknowledges that any estimates or forward-looking statements or projections included in the Memorandum wereprepared by Citius in good faith but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteedby the Company or Citius and should not be relied upon;

(v) No oral or written representations have been made, or oral or written information furnished, to the Purchaser or the Advisers, ifany, in connection with the Offering which are in any way inconsistent with the information contained in the Memorandum;

(w) Within five (5) days after receipt of a request from the Company, Citius LLC or the Placement Agent, the Purchaser will providesuch information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which theCompany, Citius or the Placement Agent is subject;

(x) The Purchaser's substantive relationship with the Placement Agent or any subagent through which the Purchaser is subscribing forUnits predates the Placement Agents’ or such subagent's contact with the Purchaser regarding an investment in the Units;

(y) THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, ASAMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONSFROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TORESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT ASPERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THESECURITIES HAVE NOT BEEN RECOMMENDED, APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGECOMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OFTHE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY ORADEQUACY OF THE MEMORANDUM OR THIS SUBSCRIPTION AGREEMENT. ANY REPRESENTATION TO THE CONTRARYIS UNLAWFUL;

(z) In making an investment decision investors must rely on their own examination of the Company, Citius LLC and the terms of theOffering, including the merits and risks involved. The Purchaser should be aware that it will be required to bear the financial risks of thisinvestment for an indefinite period of time;

(aa) (For ERISA plans only). The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed of and

understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan assets” (as such term is definedin ERISA) in the Company is consistent with the provisions of ERISA that require diversification of plan assets and impose other fiduciaryresponsibilities. The Purchaser fiduciary or Plan (a) is responsible for the decision to invest in the Company; (b) is independent of theCompany or any of its affiliates; (c) is qualified to make such investment decision; and (d) in making such decision, the Purchaser fiduciary orPlan has not relied primarily on any advice or recommendation of the Company or any of its affiliates;

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( b b ) The Purchaser should check the Office of Foreign Assets Control (“OFAC”)website at <http://www.treas.gov/ofac> before making the following representations. The Purchaser represents that the amounts investedby it in the Company in the Offering were not and are not directly or indirectly derived from activities that contravene federal, state orinternational laws and regulations, including anti-money laundering laws and regulations. Federal regulations and Executive Ordersadministered by OFAC prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreigncountries, territories, entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on theOFAC website at <http://www.treas.gov/ofac>. In addition, the programs administered by OFAC (the “OFAC Programs”) prohibit dealingwith individuals2 or entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists;

(cc) To the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled by the Purchaser;

(3) if the Purchaser is a privately-held entity, any person having a beneficial interest in the Purchaser; or (4) any person for whom thePurchaser is acting as agent or nominee in connection with this investment is a country, territory, individual or entity named on an OFAC list,or a person or entity prohibited under the OFAC Programs. The Purchaser acknowledges that the Company may not accept any amounts froma prospective investor if such prospective investor cannot make the representation set forth in the preceding paragraph. The Purchaser agreesto promptly notify the Company and the Placement Agent should the Purchaser become aware of any change in the information set forth inthese representations. The Purchaser understands and acknowledges that, by law, the Company may be obligated to “freeze the account” ofthe Purchaser, either by prohibiting additional subscriptions from the Purchaser, declining any redemption requests and/or segregating theassets in the account in compliance with governmental regulations, and the Placement Agent may also be required to report such action and todisclose the Purchaser’s identity to OFAC. The Purchaser further acknowledges that the Company may, by written notice to the Purchaser,suspend the redemption rights, if any, of the Purchaser if the Company reasonably deems it necessary to do so to comply with anti-moneylaundering regulations applicable to the Company and the Placement Agent or any of the Company’s other service providers. Theseindividuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions andembargo programs;

(dd) To the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled by the Purchaser;

(3) if the Purchaser is a privately-held entity, any person having a beneficial interest in the Purchaser; or (4) any person for whom thePurchaser is acting as agent or nominee in connection with this investment is a senior foreign political figure,3 or any immediatefamily4 member or close associate5 of a senior foreign political figure, as such terms are defined in the footnotes below; and_______________2 These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFACsanctions and embargo programs.

3 A “senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branches ofa foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreigngovernment- owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or other entity that hasbeen formed by, or for the benefit of, a senior foreign political figure.

4 “Immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws. 5 A close associate of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually closerelationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic andinternational financial transactions on behalf of the senior foreign political figure.

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(ee) If the Purchaser is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if the Purchaser receives deposits from,makes payments on behalf of, or handles other financial transactions related to a Foreign Bank, the Purchaser represents and warrants to theCompany that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the Foreign Bank isauthorized to conduct banking activities; (2) the Foreign Bank maintains operating records related to its banking activities; (3) the ForeignBank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities; and (4) the Foreign Bankdoes not provide banking services to any other Foreign Bank that does not have a physical presence in any country and that is not a regulatedaffiliate.

(ii) For purposes of the representations and warranties set forth in this Section 6(a)(ii), the “Company” refers to Pubco and Citius

LLC. The Company hereby represents and warrants to the Purchaser as follows, which representations and warranties shall survivetermination of this Agreement: (a) Citius LLC and the Company are a corporation or limited liability company, as the case may be, duly formed, validly existing and

in good standing under the laws of their respective formation and has the corporate power to conduct the business which it conductsand proposes to conduct.

(b) The execution, delivery and performance of this Subscription Agreement by the Company have been duly authorized by the

Company and all other corporate action required to authorize and consummate the offer and sate of the Units has been duly takenand approved.

(c) The Units, Common Stock and Warrants to be issued and sold to the Purchaser as provided hereunder have been duly authorized

and when issued and delivered against payment therefor, will be validly issued, fully paid and non-assessable and will conform tothe description thereof in the Memorandum. There are no preemptive or other rights to subscribe for or to purchase, nor anyrestriction upon the voting or transfer of, any shares of the Common Stock issuable upon exercise of the Warrants pursuant to theCompany's certificate of incorporation or bylaws or any agreement or other outstanding instrument to which the Company is a partyor is otherwise known to the Company. The Company has reserved sufficient shares of Common Stock to be issued upon exerciseof the Warrants.

(d) The Company has obtained, or is in the process of obtaining, all licenses, permits and other governmental authorizations necessary

for the conduct of its business, except where the failure to so obtain such licenses, permits and authorizations would not have amaterial adverse effect on the Company. Such licenses, permits and other governmental authorizations which have been obtainedare in full force and effect, except where the failure to be so would not have a material adverse effect on the Company, and theCompany is in all material respects complying therewith.

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(e) The Company knows of no pending or threatened legal or governmental proceedings to which the Company is a party which would

materially adversely affect the business, financial condition or operations of the Company. (f) The Company is not in violation of or default under, nor will the execution and delivery of this Subscription Agreement or the

issuance of the Common Stock, or the consummation of the transactions herein contemplated, result in a violation of, or constitute adefault under, the Company’s Certificate of Incorporation or By-laws, any material obligations, agreements, covenants or conditionscontained in any bond, debenture, note or other evidence of indebtedness or in any material contract, indenture, mortgage, loanagreement, lease, joint venture or other agreement or instrument to which the Company is a party or by which it or any of itsproperties may be bound or any material order, rule, regulation, writ, injunction, or decree of any government, governmentalinstrumentality or court, domestic or foreign.

(g) The information provided in the Memorandum does not contain any untrue statement of a material fact or omit to state any material

fact required to be stated therein or necessary to make the statements therein not misleading. (h) As of the date hereof there is no litigation, arbitration, claim, governmental or other proceeding (formal or informal), or

investigation pending or to the Company's knowledge threatened, with respect to Pubco or Citius LLC, or its respective operations,businesses, properties, or assets, except as properly described in the Memorandum or such as individually or in the aggregate do notnow have and will not in the future have a material adverse effect upon the operations, business, properties, or assets of theCompany. Taken as a whole.

(i) To the best of its knowledge, the Company has not infringed, is not infringing, and has not received notice of infringement with

respect to asserted intangibles of others. To the best knowledge of the Company, none of the patents, patent applications,trademarks, service marks, trade names and copyrights, and licenses and rights to the foregoing presently owned or held by theCompany, materially infringe upon any like right of any other person or entity. The Company (i) owns or has the right to use, freeand clear of all liens, charges, claims, encumbrances, pledges, security interests, defects or other restrictions of any kindwhatsoever, sufficient patents, trademarks, service marks, trade names, copyrights, licenses and right with respect to the foregoing,to conduct its business as presently conducted except as set forth in the Memorandum, and (ii) except as set forth in theMemorandum, is not obligated or under any liability whatsoever to make any payments by way of royalties, fees or otherwise to anyowner or licensee of, or other claimant to, any patent, trademark, service mark, trade name, copyright, know-how, technology orother intangible asset, with respect to the use thereof or in connection with the conduct of its business as now conducted orotherwise. The Company has direct ownership of title to all its intellectual property (including all United States and foreign patentapplications and patents), other proprietary rights, confidential information and know-how; owns all the rights to its Intangibles asare currently used in or have potential for use in its business.

(j) The Company shall provide for the transfer, upon request of the Purchaser, or removal of any legends upon the Securities, all as

may be allowed in accordance with SEC Rule 144, and provide any required opinions of counsel to the Company’s transfer agents,at no cost to the Purchaser. The Company shall make generally available such information as may be necessary under SEC Rule144 to allow for the resale of Securities by the Purchaser for at least three (3) years after the final Closing of the Offering.

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(k) Prior to the Initial Closing, the Purchaser has received a supplement to the Memorandum which includes the following information:

(i) the material terms of the Company’s acquisition, by way of merger (“Merger”), with Citius LLC; (ii) the total considerationbeing issued in connection with the Merger, including the issuance of shares of Common Stock, options and warrants or debtsecurities; (iii) the terms of any employment or consulting agreements being entered into by the Company (iv) a capitalization chartreflecting and disclosing in reasonable detail the capitalization of the Company reflective of the Merger and the Offering; and (v)the issuance of any cash consideration or securities to any placement agents, finders or consultants.

7. Indemnification. The Purchaser agrees to indemnify and hold harmless the Company, Citius, the Placement Agent, and their respectiveofficers, directors, employees, agents, control persons and affiliates from and against all losses, liabilities, claims, damages, costs, fees andexpenses whatsoever (including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigationcommenced or threatened) based upon or arising out of any actual or alleged false acknowledgment, representation or warranty, ormisrepresentation or omission to state a material fact, or breach by the Purchaser of any covenant or agreement made by the Purchaser hereinor in any other document delivered in connection with this Subscription Agreement.

8 . Irrevocability; Binding Effect. The Purchaser hereby acknowledges and agrees that the subscription hereunder is irrevocable by thePurchaser, except as required by applicable law, and that this Subscription Agreement shall survive the death or disability of the Purchaser andshall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives, andpermitted assigns. If the Purchaser is more than one person, the obligations of the Purchaser hereunder shall be joint and several and theagreements, representations, warranties, and acknowledgments herein shall be deemed to be made by and be binding upon each such personand such person's heirs, executors, administrators, successors, legal representatives, and permitted assigns.

9. Modification. This Subscription Agreement shall not be modified or waived except by an instrument in writing signed by the party againstwhom any such modification or waiver is sought.

10. Immaterial Modifications to the Registration Rights Agreement. The Company may, at any time prior to the First Closing, modify theRegistration Rights Agreement if necessary to clarify any provision therein, without first providing notice or obtaining prior consent of thePurchaser, if, and only if, such modification is not material in any respect.

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11. Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed bycertified mail, return receipt requested, or delivered against receipt to the party to whom it is to be given (a) if to the Company or Citius, at theaddress set forth above, or (b) if to the Purchaser, at the address set forth on the signature page hereof (or, in either case, to such other addressas the party shall have furnished in writing in accordance with the provisions of this Section 10). Any notice or other communication given bycertified mail shall be deemed given at the time of certification thereof, except for a notice changing a party's address which shall be deemedgiven at the time of receipt thereof.

12. Assignability. This Subscription Agreement and the rights, interests and obligations hereunder are not transferable or assignable by thePurchaser and the transfer or assignment of the shares of Common Stock or the Warrants shall be made only in accordance with all applicablelaws.

13. Applicable Law. This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of New Yorkapplicable to contracts to be wholly- performed within said State.

14. Arbitration. The parties agree to submit all controversies to arbitration in accordance with the provisions set forth below and understandthat:

(a) Arbitration is final and binding on the parties.

(b) The parties are waiving their right to seek remedies in court, including the right to a jury trial.

(c) Pre-arbitration discovery is generally more limited and different from court proceedings.

(d) The arbitrator's award is not required to include factual findings or legal reasoning and any party's right to appeal or to seekmodification of rulings by arbitrators is strictly limited.

(e) The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry. (f) All controversies which may arise between the parties concerning this Subscription Agreement shall be determined by arbitration

pursuant to the rules then pertaining to the Financial Industry Regulatory Authority, Inc. (“FINRA”) in New York City, New York. Judgmenton any award of any such arbitration may be entered in the Supreme Court of the State of New York or in any other court having jurisdictionof the person or persons against whom such award is rendered. Any notice of such arbitration or for the confirmation of any award in anyarbitration shall be sufficient if given in accordance with the provisions of this Agreement. The parties agree that the determination of thearbitrators shall be binding and conclusive upon them. No punitive damages shall be awarded by any arbitration panel.

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15. Blue Sky Qualification. The purchase of Units under this Subscription Agreement is expressly conditioned upon the exemption fromqualification of the offer and sale of the Units from applicable federal and state securities laws. The Company shall not be required to qualifythis transaction under the securities laws of any jurisdiction and, should qualification be necessary, the Company shall be released from anyand all obligations to maintain its offer, and may rescind any sale contracted, in the jurisdiction.

16. Use of Pronouns. All pronouns and any variations thereof used herein shall be deemed to refer to the masculine, feminine, neuter,singular or plural as the identity of the person or persons referred to may require.

17. Confidentiality. The Purchaser acknowledges and agrees that any information or data the Purchaser has acquired from or about theCompany or Citius, not otherwise properly in the public domain, was received in confidence. The Purchaser agrees not to divulge,communicate or disclose, except as may be required by law or for the performance of this Agreement, or use to the detriment of the Companyor Citius or for the benefit of any other person or persons, or misuse in any way, any confidential information of the Company or Citius,including any scientific, technical, trade or business secrets of the Company or Citius and any scientific, technical, trade or business materialsthat are treated by the Company or Citius as confidential or proprietary, including, but not limited to, ideas, discoveries, inventions,developments and improvements belonging to the Company or Citius and confidential information obtained by or given to the Company orCitius about or belonging to third parties. 18. Miscellaneous.

(a) This Subscription Agreement, together with the Registration Rights Agreement, constitute the entire agreement between thePurchaser and the Company with respect to the subject matter hereof and supersede all prior oral or written agreements and understandings, ifany, relating to the subject matter hereof. The terms and provisions of this Subscription Agreement may be waived, or consent for thedeparture therefrom granted, only by a written document executed by the party entitled to the benefits of such terms or provisions.

(b) The representations and warranties of the Company and the Purchaser made in this Subscription Agreement shall survive the

execution and delivery hereof and delivery of the shares of Common Stock and Warrants contained in the Units.

(c) Each of the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers orothers engaged by such party) in connection with this Subscription Agreement and the transactions contemplated hereby whether or not thetransactions contemplated hereby are consummated. The Company shall provide, at its cost and expense, any and all opinions of counsel tothe Company’s transfer agent, with respect to any sale or transfer of shares of Common Stock, Warrants or Warrant Shares by a Purchaser.

(d) This Subscription Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all ofwhich shall together constitute one and the same instrument.

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(e) Each provision of this Subscription Agreement shall be considered separable and, if for any reason any provision or provisionshereof are determined to be invalid or contrary to applicable law, such invalidity or illegality shall not impair the operation of or affect theremaining portions of this Subscription Agreement.

(f) Paragraph titles are for descriptive purposes only and shall not control or alter the meaning of this Subscription Agreement as setforth in the text.

(g) The Purchaser understands and acknowledges that there may be multiple closings for this Offering.

19. Omnibus Signature Page. This Subscription Agreement is intended to be read and construed in conjunction with the Registration RightsAgreement pertaining to the issuance by the Company of the shares of Common Stock and Warrants to subscribers pursuant to theMemorandum. Accordingly, pursuant to the terms and conditions of this Subscription Agreement and such related agreements it is herebyagreed that the execution by the Purchaser of this Subscription Agreement, in the place set forth herein, shall constitute agreement to be boundby the terms and conditions hereof and the terms and conditions of the Registration Rights Agreement, with the same effect as if each of suchseparate but related agreement were separately signed.

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EXHIBIT 10.2

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into effective as of [insert], 2014, (the “Effective Date”)between Citius Pharmaceuticals Holdings, Inc., a Nevada corporation (the “Company”), and the persons who have executed the signaturepage(s) hereto (each, a “Purchaser” and collectively, the “Purchasers”).

RECITALS:

WHEREAS, the Company has entered into a Plan of Reorganization with Citius Pharmaceutical, LLC, a Massachusetts corporation(“Citius”), and a wholly-owned subsidiaries of the Company, pursuant to which Citius LLC became a wholly-owned subsidiary of theCompany (the “Acquisition”);

WHEREAS, simultaneously with the Acquisition and to provide the capital required by the Company for working capital and otherpurposes, the Company has offered in compliance with Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D of theSecurities Act (as defined herein), to investors in a private placement transaction (the “PPO”), units (“Units”) of its securities, each Unitconsisting of one share of Common Stock (the “Investor Shares”) and a common stock purchase warrant (the “Investor Warrants”) topurchase one share of Common Stock;

WHEREAS, the initial closing of the PPO and the closing of the Acquisition have taken place on the Effective Date; and

WHEREAS, in connection with the Acquisition and the PPO, the Company agrees to provide certain registration rights related to theInvestor Shares and the shares of Common Stock issuable upon exercise of the Investor Warrants, on the terms set forth herein;

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants, and conditions set forth herein,the parties mutually agree as follows:

1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

“Approved Market” means the Over-the-Counter Bulletin Board, the OTC Markets, the Nasdaq Stock Market, the New York StockExchange or the NYSE MKT.

“Blackout Period” means, with respect to a registration, a period, in each case commencing on the day immediately after the

Company notifies the Purchasers that they are required, because of the occurrence of an event of the kind described in Section 4(f) hereof, tosuspend offers and sales of Registrable Securities during which the Company, in the good faith judgment of its Board of Directors, determines(because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or theunavailability for reasons beyond the Company’s control of any required financial statements, disclosure of information which is in its bestinterest not to publicly disclose, or any other event or condition of similar significance to the Company) that the registration and distribution ofthe Registrable Securities to be covered by such Registration Statement, if any, would be seriously detrimental to the Company and itsstockholders and ending on the earlier of (1) the date upon which the material non-public information commencing the Blackout Period isdisclosed to the public or ceases to be material and (2) such time as the Company notifies the selling Holders that the Company will no longerdelay such filing of the Registration Statement, recommence taking steps to make such Registration Statement effective, or allow salespursuant to such Registration Statement to resume.

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“Business Day” means any day of the year, other than a Saturday, Sunday, or other day on which the Commission is required orauthorized to close.

“Commission” means the U. S. Securities and Exchange Commission or any other federal agency at the time administering theSecurities Act.

“Common Stock” means the common stock, par value $0.001 per share, of the Company and any and all shares of capital stock orother equity securities of: (i) the Company which are added to or exchanged or substituted for the Common Stock by reason of the declarationof any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other suchmodification of the capital structure of the Company; and (ii) any other corporation, now or hereafter organized under the laws of any state orother governmental authority, with which the Company is merged, which results from any consolidation or reorganization to which theCompany is a party, or to which is sold all or substantially all of the shares or assets of the Company, if immediately after such merger,consolidation, reorganization or sale, the Company or the stockholders of the Company own equity securities having in the aggregate morethan 50% of the total voting power of such other corporation.

“Effective Date” has the meaning given it in the preamble to this Agreement. “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission

promulgated thereunder. “Family Member” means (a) with respect to any individual, such individual’s spouse, any descendants (whether natural or adopted),

any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals together with anyorganization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any such individual, and anycorporation, association, partnership or limited liability company all of the equity interests of which are owned by those above describedindividuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial interests of such trust.

“Holder” means each Purchaser or any of such Purchaser’s respective successors and Permitted Assignees who acquire rights inaccordance with this Agreement with respect to any Registrable Securities directly or indirectly from a Purchaser or from any PermittedAssignee.

“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.

“Investor Shares” has the meaning given it in the recitals of this Agreement. “Investor Warrants” has the meaning given it in the recitals of this Agreement.

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“Majority Holders” means at any time Holders representing sixty-seven (67%) percent of the Investor Shares and the Investor

Warrants.

“Permitted Assignee” means (a) with respect to a partnership, its partners or former partners in accordance with their partnershipinterests, (b) with respect to a corporation, its stockholders in accordance with their interest in the corporation, (c) with respect to a limitedliability company, its members or former members in accordance with their interest in the limited liability company, (d) with respect to anindividual party, any Family Member of such party, (e) an entity that is controlled by, controls, or is under common control with a transferor,or (f) a party to this Agreement.

The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in

compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. “Registrable Securities” means the Investor Shares and the Registrable Warrant Shares but excluding (i) any Registrable Securities

that have been publicly sold without registration under the Securities Act either pursuant to Rule 144 of the Securities Act or otherwise, or thatare eligible to be sold without restriction under Rule 144 of the Securities Act; or (ii) any Registrable Securities sold by a person in atransaction pursuant to a registration statement filed under the Securities Act.

“Registrable Warrant Shares” means the shares of Common Stock issued or issuable to each Purchaser upon exercise of the Investor

Warrants. “Registration Default Date” means the date that is 180 days after the Registration Filing Date. “Registration Default Period” means the period following the Registration Filing Date or the Registration Default Date, as

applicable, during which any Registration Event occurs and is continuing. “Registration Event” means the occurrence of any of the following events:

(a) the Company fails to file with the Commission the Registration Statement on or before the Registration Filing Date;

(b) the Registration Statement is not declared effective by the Commission on or before the Registration Default Date;

(c) after the SEC Effective Date, sales cannot be made pursuant to the Registration Statement for any reason (includingwithout limitation by reason of a stop order, or the Company’s failure to update the Registration Statement) except as excused pursuant toSection 3(e); or

(d) the Common Stock generally or the Registrable Securities specifically are not listed or included for quotation on anApproved Market, or trading of the Common Stock is suspended or halted on the Approved Market, which at the time constitutes the principalmarket for the Common Stock, for more than two full, consecutive Trading Days; provided, however, a Registration Event shall not bedeemed to occur if all or substantially all trading in equity securities (including the Common Stock) is suspended or halted on the ApprovedMarket for any length of time.

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“Registration Filing Date” means the date that is 60 days after the date the PPO is completed or otherwise terminated.

“Registration Statement” means the registration statement that the Company is required to file pursuant to this Agreement to registerthe Registrable Securities.

“Rule 144” means Rule 144 promulgated by the Commission under the Securities Act. “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time

to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute promulgated in replacement thereof, andthe rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

“SEC Effective Date” means the date the Registration Statement is declared effective by the Commission.

“Trading Day” means (a) if the Common Stock is listed or quoted on an Approved Market, then any day during which securities aregenerally eligible for trading on the Approved Market, or (b) if the Common Stock is not then listed or quoted and traded on an ApprovedMarket, then any business day.

2. Registration.

(a) Registration on Form S-1. Not later than the Registration Filing Date, the Company shall file with the Commission a

Registration Statement on Form S-1, or other applicable form, relating to the resale by the Holders of all of the Registrable Securities, and theCompany shall use its commercially reasonably efforts to cause such Registration Statement to be declared effective prior to the RegistrationDefault Date. For the avoidance of doubt, the Registration Statement may include such other securities as determined by the Company.

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(b) Occurrence of Registration Event. If a Registration Event occurs, then the Company will make payments to each Holderof Registrable Securities (a “Qualified Purchaser”), as liquidated damages for the amount of damages to the Qualified Purchaser by reasonthereof, at a rate equal to 0.5% of the purchase price per Unit paid by such Holder in the PPO for the Registrable Securities then held by eachQualified Purchaser for each full period of 30 days of the Registration Default Period (which shall be pro rated for any period less than 30days); provided, however, if a Registration Event occurs (or is continuing) on a date more than one-year after the Company filed a CurrentReport on Form 8-K relating to the Acquisition and the PPO and providing Form 10 information with respect thereto, liquidated damagesshall be paid only with respect to that portion of the Qualified Purchaser’s Registrable Securities that cannot then be immediately resold inreliance on Rule 144. Notwithstanding the foregoing, the maximum amount of liquidated damages that the Company will be required to payto any pursuant to this Section 2(b) shall be an amount equal to 6% of the net proceeds received by the Company from the PPO, and the effectof this limitation on the aggregate liquidated damages will be applied pro rata among the Qualified Purchasers. Each such payment shall bedue and payable within five (5) days after the end of each full 30-day period of the Registration Default Period until the termination of theRegistration Default Period and within five days after such termination. Such payments shall constitute the Qualified Purchaser’s exclusiveremedy for such events. If the Company fails to pay any partial liquidated damages or refund pursuant to this Section in full within seven daysafter the date payable, the Company will pay interest thereon at a rate of 8% per annum (or such lesser maximum amount that is permitted tobe paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all suchinterest thereon, are paid in full. The Registration Default Period shall terminate upon (i) the filing of the Registration Statement in the case ofclause (a) of the definition of Registration Event, (ii) the SEC Effective Date in the case of clause (b) of the definition of Registration Event,(iii) the ability of the Qualified Purchaser to effect sales pursuant to the Registration Statement in the case of clause (c) of the definition ofRegistration Event, and (iv) the listing or inclusion and/or trading of the Common Stock on an Approved Market, as the case may be, in thecase of clause (d) of the definition of Registration Event. The amounts payable as liquidated damages pursuant to this Section 2(b) shall bepayable in lawful money of the United States by certified check payable to Purchaser.

(c) Notwithstanding the provisions of Section 2(b) above, (a) if the Commission does not declare the Registration Statement

effective on or before the Registration Default Date, or (b) if the Commission allows the Registration Statement to be declared effective at anytime before or after the Registration Default Date, subject to the withdrawal of certain Registrable Securities from the Registration Statement,and the reason for (a) or (b) is the Commission’s determination that (x) the offering of any of the Registrable Securities constitutes a primaryoffering of securities by the Company, (y) Rule 415 may not be relied upon for the registration of the resale of any or all of the RegistrableSecurities, and/or (z) a Holder of any Registrable Securities must be named as an underwriter, the Holders understand and agree that in thecase of (b) the Company may reduce, on a pro rata basis, the total number of Registrable Securities to be registered on behalf of each suchHolder, and, in the case of (a) or (b), that a Holder shall not be entitled to any liquidated damages with respect to the Registrable Securities notregistered for the reason set forth in (a), or so reduced on a pro rata basis as set forth in (b). In any such pro rata reduction, the number ofRegistrable Securities to be registered on such Registration Statement will first be reduced by the Registrable Securities represented by theRegistrable Warrant Shares (applied, in the case that some Registrable Warrant Shares may be registered, to the Holders on a pro rata basisbased on the total number of unregistered Registrable Warrant Shares held by such Holders on a fully diluted basis), and second byRegistrable Securities represented by Investor Shares (applied, in the case that some Investor Shares may be registered, to the Holders on apro rata basis based on the total number of unregistered Investor Shares held by such Holders). Any Registrable Securities not included in theInitial Registration Statement shall be included in a subsequent Registration Statement the Company will file no later than six months after theprior Registration Statement (or such other period as permitted under the Securities Act and applicable Commission rules and regulations).The Holders acknowledge and agree the provisions of this paragraph may apply to more than one Registration Statement.

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3. Registration Procedures for Registrable Securities. The Company will keep each Holder reasonably advised as to the filing andeffectiveness of the Registration Statement. At its expense with respect to the Registration Statement, the Company will:

(a) prepare and file with the Commission with respect to the Registrable Securities, a Registration Statement on Form S-1, orany other form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall beavailable for the sale of the Registrable Securities in accordance with the intended methods of distribution thereof, and use its commerciallyreasonable efforts to cause such Registration Statement to become effective and shall remain effective until the Investor Warrants are nolonger outstanding or for such shorter period ending on the earlier to occur of (i) the date as of which all of the Holders as selling stockholdersthereunder may sell all of the Registrable Securities registered for resale thereon without restriction pursuant to Rule 144 (or any successorrule thereto) promulgated under the Securities Act or (ii) the date when all of the Registrable Securities registered thereunder have been sold(the “Effectiveness Period”). Thereafter, the Company shall be entitled to withdraw such Registration Statement and the Investors shall haveno further right to offer or sell any of the Registrable Securities registered for resale thereon pursuant to the respective Registration Statement(or any prospectus relating thereto);

(b) if the Registration Statement is subject to review by the Commission, promptly, and in no event more than 15 business

days after receipt and respond to all comments and diligently pursue resolution of any comments to the satisfaction of the Commission; (c) prepare and file with the Commission such amendments and supplements to such Registration Statement as may be

necessary to keep such Registration Statement effective during the Effectiveness Period; (d) furnish, without charge, to each Holder of Registrable Securities covered by such Registration Statement (i) a reasonable

number of copies of such Registration Statement (including any Attachments thereto other than Attachments incorporated by reference), eachamendment and supplement thereto as such Holder may reasonably request, (ii) such number of copies of the prospectus included in suchRegistration Statement (including each preliminary prospectus and any other prospectus filed under Rule 424 of the Securities Act) as suchHolders may reasonably request, in conformity with the requirements of the Securities Act, and (iii) such other documents as such Holder mayrequire to consummate the disposition of the Registrable Securities owned by such Holder, but only during the Effectiveness Period;

(e) use its commercially reasonable efforts to register or qualify such registration under such other applicable securities laws

of such jurisdictions as any Holder of Registrable Securities covered by such Registration Statement reasonably requests and as may benecessary for the marketability of the Registrable Securities (such request to be made by the time the applicable Registration Statement isdeemed effective by the Commission) and do any and all other acts and things necessary to enable such Holder to consummate the dispositionin such jurisdictions of the Registrable Securities owned by such Holder; provided, that the Company shall not be required to (i) qualifygenerally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph, (ii) subject itself totaxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction.

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(f) notify each Holder of Registrable Securities, the disposition of which requires delivery of a prospectus relating thereto

under the Securities Act, of the happening of any event (as promptly as practicable after becoming aware of such event), which comes to theCompany’s attention, that will after the occurrence of such event cause the prospectus included in such Registration Statement, if not amendedor supplemented, to contain an untrue statement of a material fact or an omission to state a material fact required to be stated therein ornecessary to make the statements therein not misleading and the Company shall promptly thereafter prepare and furnish to such Holder asupplement or amendment to such prospectus (or prepare and file appropriate reports under the Exchange Act) so that, as thereafter deliveredto the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state anymaterial fact required to be stated therein or necessary to make the statements therein not misleading, unless suspension of the use of suchprospectus otherwise is authorized herein or in the event of a Blackout Period, in which case no supplement or amendment need be furnished(or Exchange Act filing made) until the termination of such suspension or Blackout Period;

(g) comply, and continue to comply during the Effectiveness Period, in all material respects with the Securities Act and the

Exchange Act and with all applicable rules and regulations of the Commission with respect to the disposition of all securities covered by suchRegistration Statement;

(h) as promptly as practicable after becoming aware of such event, notify each Holder of Registrable Securities being

offered or sold pursuant to the Registration Statement of the issuance by the Commission of any stop order or other suspension ofeffectiveness of the Registration Statement;

(i) use its commercially reasonable efforts to cause all the Registrable Securities covered by the Registration Statement to be

quoted on the OTC Bulletin Board or such other Approved Market on which securities of the same class or series issued by the Company arethen listed or traded;

(j) provide a transfer agent and registrar, which may be a single entity, for the shares of Common Stock at all times and

provide, at the expense of the Company, all legal opinions which may be required by such transfer agent with respect to the issuance ortransfer or re-issuance of the Registrable Securities;

(k) If requested by the Holders, cooperate with the Holders to facilitate the timely preparation and delivery of certificates

representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statement, which certificates shall be free, to theextent permitted by applicable law, of all restrictive legends, and to enable such Registrable Securities to be in such denominations andregistered in such names as any such Holders may request;

(l) during the Effectiveness Period, refrain from bidding for or purchasing any Common Stock or any right to purchase

Common Stock or attempting to induce any person to purchase any such security or right if such bid, purchase or attempt would in any waylimit the right of the Holders to sell Registrable Securities by reason of the limitations set forth in Regulation M of the Exchange Act; and

(m) take all other reasonable actions necessary to expedite and facilitate the disposition by the Holders of the Registrable

Securities pursuant to the Registration Statement.

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4. Suspension of Offers and Sales. Each Holder agrees that, upon receipt of any notice from the Company of the happening of anyevent of the kind described in Section 3(f) hereof or of the commencement of a Blackout Period, such Holder shall discontinue the dispositionof Registrable Securities included in the Registration Statement until such Holder’s receipt of the copies of the supplemented or amendedprospectus contemplated by Section 3(f) hereof or notice of the end of the Blackout Period, and, if so directed by the Company, such Holdershall deliver to the Company (at the Company’s expense) all copies (including, without limitation, any and all drafts), other than permanentfile copies, then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of suchnotice.

5. Registration Expenses. The Company shall pay all expenses in connection with any registration obligation provided herein,including, without limitation, all registration, filing, stock exchange fees, printing expenses, all fees and expenses of complying with applicablesecurities laws, and the fees and disbursements of counsel for the Company and of its independent accountants; provided, that, in anyregistration, each party shall pay for its own underwriting discounts and commissions and transfer taxes. Except as provided in this Sectionand Section 8, the Company shall not be responsible for the expenses of any attorney or other advisor employed by a Holder.

6. Assignment of Rights. No Holder may assign its rights under this Agreement to any party without the prior written consent of theCompany; provided, however, that any Holder may assign its rights under this Agreement without such consent to a Permitted Assignee aslong as (a) such transfer or assignment is effected in accordance with applicable securities laws; (b) such transferee or assignee agrees inwriting to become subject to the terms of this Agreement; and (c) such Holder notifies the Company in writing of such transfer or assignment,stating the name and address of the transferee or assignee and identifying the Registrable Securities with respect to which such rights are beingtransferred or assigned.

7. Information by Holder. A Holder with Registrable Securities included in any registration shall furnish to the Company suchinformation regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be requiredin order to comply with any applicable law or regulation in connection with the registration of such Holder’s Registrable Securities or anyqualification or compliance with respect to such Holder’s Registrable Securities and referred to in this Agreement. A form of SellingStockholder Questionnaire is attached as Attachment A hereto for such purposes.

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8. Indemnification.

(a) In the event of the offer and sale of Registrable Securities under the Securities Act, the Company shall, and hereby does,indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, partners, each other person whoparticipates as an underwriter in the offering or sale of such securities, and each other person, if any, who controls or is under common controlwith such Holder or any such underwriter within the meaning of Section 15 of the Securities Act, against any losses, claims, damages orliabilities, joint or several, and expenses to which the Holder or any such director, officer, partner or underwriter or controlling person maybecome subject under the Securities Act, the Exchange Act, or any other federal or state law, insofar as such losses, claims, damages, liabilitiesor expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untruestatement of any material fact contained in any registration statement prepared and filed by the Company under which Registrable Securitieswere registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or anyamendment or supplement thereto, or any omission to state therein a material fact required to be stated or necessary to make the statementstherein in light of the circumstances in which they were made not misleading, or any violation or alleged violation of the Securities Act, theExchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securitieslaw in connection with this Agreement; and the Company shall reimburse the Holder, and each such director, officer, partner, underwriter andcontrolling person for any legal or any other expenses reasonably incurred by them in connection with investigating, defending or settling anysuch loss, claim, damage, liability, action or proceeding; provided, that such indemnity agreement found in this Section 8(a) shall in no eventexceed the net proceeds from the PPO, as applicable, received by the Company plus interest of six percent (6%) per annum; andprovided further, that the Company shall not be liable in any such case (i) to the extent that any such loss, claim, damage, liability (or action orproceeding in respect thereof) or expense arises out of or is based upon an untrue statement in or omission from such registration statement,any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity withwritten information furnished to the Company by the Holder specifically for use in the preparation thereof or (ii) if the person asserting anysuch loss, claim, damage, liability (or action or proceeding in respect thereof) who purchased the Registrable Securities that are the subjectthereof did not receive a copy of an amended preliminary prospectus or the final prospectus (or the final prospectus as amended orsupplemented) at or prior to the written confirmation of the sale of such Registrable Securities to such person because of the failure of suchHolder or underwriter to so provide such amended preliminary or final prospectus and the untrue statement or omission of a material fact madein such preliminary prospectus was corrected in the amended preliminary or final prospectus (or the final prospectus as amended orsupplemented). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, orany such director, officer, partner, underwriter or controlling person and shall survive the transfer of such shares by the Holder.

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(b) As a condition to including Registrable Securities in any registration statement filed pursuant to this Agreement, each

Holder agrees to be bound by the terms of this Section 8 and to indemnify and hold harmless, to the fullest extent permitted by law, theCompany, its directors and officers, and each other person, if any, who controls the Company within the meaning of Section 15 of theSecurities Act, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer orcontrolling person may become subject under the Securities Act, the Exchange Act, or any other federal or state law, to the extent arising outof or based solely upon: (x) such Holder’s failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrueor alleged untrue statement of a material fact contained in any registration statement, any prospectus, or any form of prospectus, or in anyamendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of amaterial fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent,that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically forinclusion in the registration statement or such prospectus or (ii) to the extent that (1) such untrue statements or omissions are based solelyupon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent thatsuch information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed andexpressly approved in writing by such Holder expressly for use in the Registration Statement, such prospectus or such form of prospectus or inany amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(f) hereof, the use bysuch Holder of an outdated or defective prospectus after the Company has notified such Holder in writing that the prospectus is outdated ordefective and prior to the receipt by such Holder of the advice contemplated in Section 3(f). In no event shall the liability of any selling Holderhereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securitiesgiving rise to such indemnification obligation.

(c) Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a

claim referred to in this Section (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be madeagainst an indemnifying party, give written notice to the indemnifying party of the commencement of such action; provided, that the failure ofany indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Section, except tothe extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against anindemnified party, unless in the reasonable judgment of counsel to such indemnified party a conflict of interest between such indemnified andindemnifying parties may exist or the indemnified party may have defenses not available to the indemnifying party in respect of such claim,the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to suchindemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, theindemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter inconnection with the defense thereof, unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnifiedand indemnifying parties arises in respect of such claim after the assumption of the defenses thereof or the indemnifying party fails to defendsuch claim in a diligent manner, other than reasonable costs of investigation. Neither an indemnified nor an indemnifying party shall be liablefor any settlement of any action or proceeding effected without its consent. No indemnifying party shall, without the consent of theindemnified party, consent to entry of any judgment or enter into any settlement, which does not include as an unconditional term thereof thegiving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shallhave the right to retain, at its own expense, counsel with respect to the defense of a claim.

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(d) If an indemnifying party does or is not permitted to assume the defense of an action pursuant to Sections 9(c) or in thecase of the expense reimbursement obligation set forth in Sections 8(a) and (b), the indemnification required by Sections 8(a) and 8(b) shall bemade by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills received or expenses,losses, damages, or liabilities are incurred.

(e) If the indemnification provided for in Section 8(a) or 8(b) is held by a court of competent jurisdiction to be unavailable to

an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu ofindemnifying such indemnified party hereunder, shall (i) contribute to the amount paid or payable by such indemnified party as a result ofsuch loss, liability, claim, damage or expense as is appropriate to reflect the proportionate relative fault of the indemnifying party on the onehand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statementof a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties’ relativeintent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (ii) if the allocationprovided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinaftercalculated, not only the proportionate relative fault of the indemnifying party and the indemnified party, but also the relative benefits receivedby the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations. Noindemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled tocontribution from any indemnifying party who was not guilty of such fraudulent misrepresentation.

(f) Other Indemnification. Indemnification similar to that specified in this Section (with appropriate modifications) shall be

given by the Company and each Holder of Registrable Securities with respect to any required registration or other qualification of securitiesunder any federal or state law or regulation or governmental authority other than the Securities Act.

9. Rule 144. With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of theCommission that may at any time permit the Holders to sell the Registrable Securities to the public without registration, the Company agrees,until the earlier of such time as the Investor Warrants are no longer outstanding or the Holders no longer own any Registrable Securities: (i) tomake and keep public information available as those terms are understood in Rule 144, (ii) to file with the Commission in a timely manner allreports and other documents required to be filed by an issuer of securities registered under the Securities Act or the Exchange Act pursuant toRule 144, (iii) to furnish in writing upon such Holder’s request a written statement by the Company that it has complied with the reportingrequirements of Rule 144 and of the Securities Act and the Exchange Act, and to furnish to such Holder a copy of the most recent annual orquarterly report of the Company, and such other reports and documents so filed by the Company as may be reasonably requested in availingsuch Holder of any rule or regulation of the Commission permitting the selling of any such Registrable Securities without registration (iv) toundertake any additional actions commercially reasonably necessary to maintain the availability of the use of Rule 144 and (v) to provide, atthe Company’s expense any opinion of legal counsel as may be required by the Company’s transfer agent to allow for the sale and transfer ofany Registrable Securities in accordance with the Act.

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10. Independent Nature of Each Purchaser’s Obligations and Rights. The obligations of each Purchaser under this Agreement are

several and not joint with the obligations of any other Purchaser, and each Purchaser shall not be responsible in any way for the performanceof the obligations of any other Purchaser under this Agreement. Nothing contained herein and no action taken by any Purchaser pursuanthereto, shall be deemed to constitute such Purchasers as a partnership, an association, a joint venture, or any other kind of entity, or create apresumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactionscontemplated by this Agreement. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitationthe rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in anyproceeding for such purpose.

11. Miscellaneous.

(a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the United States ofAmerica and the State of New York, both substantive and remedial, without regard to New York conflicts of law principles. Any judicialproceeding brought against either of the parties to this Agreement or any dispute arising out of this Agreement or any matter related heretoshall be brought in the courts of the State of New York, New York County, or in the United States District Court for the Southern District ofNew York and, by its execution and delivery of this Agreement, each party to this Agreement accepts the jurisdiction of such courts. Theforegoing consent to jurisdiction shall not be deemed to confer rights on any person other than the parties to this Agreement.

(b) Remedies. Subject to Section 2(b) of this Agreement, in the event of a breach by the Company or by a Holder of any of

their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise allrights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under thisAgreement. Subject to Section 2(b) of this Agreement, the Company and each Holder agree that monetary damages would not provideadequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby furtheragrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that aremedy at law would be adequate.

(c) Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be

binding upon, the successors, Permitted Assignees, executors and administrators of the parties hereto. (d) No Inconsistent Agreements. The Company has not entered, as of the date hereof, and shall not enter, on or after the date

of this Agreement, into any agreement with respect to its securities that would have the effect of impairing the rights granted to the Holders inthis Agreement or otherwise conflicts with the provisions hereof.

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(e) Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with

regard to the subjects hereof. (f) Notices, etc. All notices or other communications which are required or permitted under this Agreement shall be in

writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, by electronic mail, orby courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), andshall be deemed to have been delivered as of the date so delivered:

If to the Company to:

Citius Pharmaceuticals Holdings, Inc.63 Grant RoadMaynard, MA 01754Attention: Leonard Mazur, Chief Executive Officer with copy to: Sichenzia Ross Friedman Ference LLP61 Broadway, 32nd FloorNew York, NY 10006Attention: Arthur S. Marcus, Esq. Facsimile: (212) 930-9725

If to the Purchasers:

To each Purchaser at the address set forth on the signature page hereto

or at such other address as any party shall have furnished to the other parties in writing.

(g) Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Holder, upon anybreach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construedto be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereunder occurring; nor shall anywaiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver,permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement, or any waiver onthe part of any Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extentspecifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to any holder, shall becumulative and not alternative.

(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable

against the parties actually executing such counterparts, and all of which together shall constitute one instrument. In the event that anysignature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whosebehalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

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(i) Severability. In the case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legalityand enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

(j) Amendments. The provisions of this Agreement may be amended at any time and from time to time, and particular

provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and the MajorityHolders. The Purchasers acknowledge that by the operation of this Section, the Majority Holders may have the right and power to diminish oreliminate all rights of the Purchasers under this Agreement.

[SIGNATURE PAGES FOLLOW]

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This Registration Rights Agreement is hereby executed as of the date first above written. COMPANY: CITIUS PHARMACEUTICALS HOLDINGS, INC. By: Name: Title: Chief Executive Officer

THE PURCHASER’S SIGNATURE TO THE SUBSCRIPTION AGREEMENT DATED OF EVENDATE HEREWITH SHALL CONSTITUTE THE PURCHASER’S SIGNATURE TO THIS

REGISTRATION RIGHTS AGREEMENT.

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EXHIBIT 10.3

Warrant Certificate No. ___________________ NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE UPON THE EXERCISEOF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANYSTATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO ISEFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCHREGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES,WHICH COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED,SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVEREGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS. Effective Date: September 12, 2014 Void After: September 12, 2019

CITIUS PHARMACEUTICALS, INC.

WARRANT TO PURCHASE COMMON STOCK

Citius Pharmaceuticals, Inc., a Nevada corporation (the “ Company”), for value received on September 12, 2014 (the “EffectiveDate”), hereby issues to Investor (the “Holder” or “Warrant Holder”) this Warrant (the “Warrant”) to purchase, ### shares (each suchshare as from time to time adjusted as hereinafter provided being a “Warrant Share” and all such shares being the “Warrant Shares”) of theCompany’s Common Stock (as defined below), at the Exercise Price (as defined below), as adjusted from time to time as provided herein, onor before September 12, 2019 (the “Expiration Date”), all subject to the following terms and conditions. This Warrant is one of a series ofwarrants of like tenor that have been issued in connection with the Company’s private offering solely to accredited investors of units inaccordance with, and subject to, the terms and conditions described in the Subscription Agreement, attached to the Confidential PrivatePlacement Memorandum of the Company dated July 9, 2014, as the same may be amended and supplemented from time to time (the“Subscription Agreement” and the “Private Placement Memorandum” respectively).

As used in this Warrant, (i) “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banksin the City of New York, New York, are authorized or required by law or executive order to close; (ii) “ Common Stock” means the commonstock of the Company, par value $0.001 per share, including any securities issued or issuable with respect thereto or into which or for whichsuch shares may be exchanged for, or converted into, pursuant to any stock dividend, stock split, stock combination, recapitalization,reclassification, reorganization or other similar event; (iii) “Exercise Price” means $0.60 per share of Common Stock, subject to adjustment asprovided herein; (iv) “Trading Day” means any day on which the Common Stock is traded (or available for trading) on its principal tradingmarket; (v) “Affiliate” means any person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is undercommon control with, a person, as such terms are used and construed in Rule 144 promulgated under the Securities Act of 1933, as amended(the “Securities Act”) and (vi) “Warrantholders” means the holders of Warrants issued pursuant to the Subscription Agreement and PrivatePlacement Memorandum.

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1. DURATION AND EXERCISE OF WARRANTS

(a) Exercise Period. The Holder may exercise this Warrant in whole or in part on any Business Day on or before 5:00 P.M., EasternTime, on the Expiration Date, at which time this Warrant shall become void and of no value.

(b) Exercise Procedures.

(i) While this Warrant remains outstanding and exercisable in accordance with Section 1(a), the Holder may exercise this

Warrant in whole or in part at any time and from time to time by:

(A) delivery to the Company of a duly executed copy of the Notice of Exercise attached as Attachment A; (B) surrender of this Warrant to the Secretary of the Company at its principal offices or at such other office or

agency as the Company may specify in writing to the Holder; provided, that the Company shall specify the same within 24 hours of receivingthe Notice of Exercise; and

(C) payment of the then-applicable Exercise Price per share multiplied by the number of Warrant Shares being

purchased upon exercise of the Warrant (such amount, the “ Aggregate Exercise Price”) made in the form of cash, or by certified check, bankdraft or money order payable in lawful money of the United States of America.

(ii) Upon the exercise of this Warrant in compliance with the provisions of this Section 1(b), the Company shall promptlyissue and cause to be delivered to the Holder a certificate for the Warrant Shares purchased by the Holder. Each exercise of this Warrant shallbe effective immediately prior to the close of business on the date (the “Date of Exercise”) that the conditions set forth in Section 1(b) havebeen satisfied, as the case may be. On or before the first Business Day following the date on which the Company has received each of theNotice of Exercise and the Aggregate Exercise Price (the “Exercise Delivery Documents”), the Company shall transmit an acknowledgmentof receipt of the Exercise Delivery Documents to the Company’s transfer agent (the “Transfer Agent”). On or before the third Business Dayfollowing the date on which the Company has received all of the Exercise Delivery Documents (the “Share Delivery Date”), the Companyshall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“ DTC”) Fast Automated Securities TransferProgram, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant tosuch exercise to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y) ifthe Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch by overnight courier to theaddress as specified in the Notice of Exercise, a certificate, registered in the Company’s share register in the name of the Holder or itsdesignee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of the ExerciseDelivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares withrespect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares.

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(iv) If the Company shall fail for any reason or for no reason to issue to the Holder, within three (3) Business Days of receiptof the Exercise Delivery Documents, a certificate for the number of shares of Common Stock to which the Holder is entitled and register suchshares of Common Stock on the Company’s share register or to credit the Holder’s balance account with DTC for such number of shares ofCommon Stock to which the Holder is entitled upon the Holder’s exercise of this Warrant, and if on or after such Business Day the Holderpurchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares ofCommon Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall,within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal tothe Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-InPrice”), at which point the Company’s obligation to deliver such certificate (and to issue such shares of Common Stock) shall terminate, or(ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares of Common Stock and pay cashto the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock,times (B) the closing bid price on the date of exercise.

(c) Partial Exercise. This Warrant shall be exercisable, either in its entirety or, from time to time, for part only of the number ofWarrant Shares referenced by this Warrant. If this Warrant is submitted in connection with any exercise pursuant to Section 1 and the numberof Warrant Shares represented by this Warrant submitted for exercise is greater than the actual number of Warrant Shares being acquired uponsuch an exercise, then the Company shall as soon as practicable and in no event later than five (5) Business Days after any exercise and at itsown expense, issue a new Warrant of like tenor representing the right to purchase the number of Warrant Shares purchasable immediatelyprior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.

(d) Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares,

the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordancewith Section 16.

(e) Warrant Solicitation Fee. The Company shall pay to each broker-dealer registered under the Securities and Exchange Act of 1934

and retained by the Company to solicit the exercise of the Warrant a cash fee equal to 5% of the exercise price paid by the Holder, includingany exercise by a Holder in lieu of the redemption of their Warrant as provided under Section 4 hereto. The Company has agreed to retain thePlacement Agent, on an executive basis, to act as solicitation agent with respect to the solicitation of their warrant.

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2. ISSUANCE OF WARRANT SHARES

(a) The Company covenants that all Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be (i) dulyauthorized, fully paid and non-assessable, and (ii) free from all liens, charges and security interests, with the exception of claims arisingthrough the acts or omissions of any Holder and except as arising from applicable Federal and state securities laws.

(b) The Company shall register this Warrant upon records to be maintained by the Company for that purpose in the name of the

record holder of such Warrant from time to time. The Company may deem and treat the registered Holder of this Warrant as the absoluteowner thereof for the purpose of any exercise thereof, any distribution to the Holder thereof and for all other purposes.

(c) The Company will not, by amendment of its certificate of incorporation, by-laws or through any reorganization, transfer of assets,

consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance orperformance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in thecarrying out of all the provisions of this Warrant and in the taking of all action necessary or appropriate in order to protect the rights of theHolder to exercise this Warrant, or against impairment of such rights. 3. ADJUSTMENTS OF EXERCISE PRICE, NUMBER AND TYPE OF WARRANT SHARES

(a) The Exercise Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment fromtime to time upon the occurrence of certain events described in this Section 3; provided, that notwithstanding the provisions of this Section 3,the Company shall not be required to make any adjustment if and to the extent that such adjustment would require the Company to issue anumber of shares of Common Stock in excess of its authorized but unissued shares of Common Stock, less all amounts of Common Stock thathave been reserved for issue upon the conversion of all outstanding securities convertible into shares of Common Stock and the exercise of alloutstanding options, warrants and other rights exercisable for shares of Common Stock.

(i) Subdivision or Combination of Stock. In case the Company shall at any time subdivide (whether by way of stockdividend, stock split or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effectimmediately prior to such subdivision shall be proportionately reduced and the number of Warrant Shares shall be proportionately increased,and conversely, in case the outstanding shares of Common Stock of the Company shall be combined (whether by way of stock combination,reverse stock split or otherwise) into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall beproportionately increased and the number of Warrant Shares shall be proportionately decreased. The Exercise Price and the Warrant Shares, asso adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described in this Section 3(a)(i).

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(ii) Dividends in Stock, Property, Reclassification. If at any time, or from time to time, all of the holders of Common Stock

(or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled toreceive, without payment therefore:

(A) any shares of stock or other securities that are at any time directly or indirectly convertible into or exchangeablefor Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or otherdistribution, or

(B) additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification,

combination of shares or similar corporate rearrangement (other than shares of Common Stock issued as a stock split or adjustments in respectof which shall be covered by the terms of Section 3(a)(i) above), then and in each such case, the Exercise Price and the number of Warrant Shares to be obtained upon exercise of this Warrant shall be adjustedproportionately, and the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares ofCommon Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securitiesand property (including cash in the cases referred to above) that such Holder would hold on the date of such exercise had such Holder been theholder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such sharesor all other additional stock and other securities and property. The Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted inthe same manner upon the happening of any successive event or events described in this Section 3(a)(ii).

( i i i) Reorganization, Reclassification, Consolidation, Acquisition or Sale. If any recapitalization, reclassification orreorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of allor substantially all of its assets or other transaction shall be effected in such a way that holders of Common Stock shall be entitled to receivestock, securities, or other assets or property (an “Organic Change”), then, as a condition of such Organic Change, lawful and adequateprovisions shall be made by the Company whereby the Holder hereof shall thereafter have the right to purchase and receive (in lieu of theshares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights representedby this Warrant) such shares of stock, securities or other assets or property as may be issued or payable with respect to or in exchange for anumber of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable andreceivable assuming the full exercise of the rights represented by this Warrant. In the event of any Organic Change, appropriate provision shallbe made by the Company with respect to the rights and interests of the Holder of this Warrant to the end that the provisions hereof (including,without limitation, provisions for adjustments of the Exercise Price and of the number of shares purchasable and receivable upon the exerciseof this Warrant and registration rights) shall thereafter be applicable, in relation to any shares of stock, securities or assets thereafter deliverableupon the exercise hereof. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, thesuccessor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shallassume by written instrument reasonably satisfactory in form and substance to the Holder executed and mailed or delivered to the registeredHolder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder such sharesof stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase. If there is an OrganicChange, then the Company shall cause to be mailed to the Holder at its last address as it shall appear on the books and records of theCompany, at least 10 calendar days before the effective date of the Organic Change, a notice stating the date on which such Organic Changeis expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitledto exchange their shares for securities, cash, or other property delivered upon such Organic Change; provided, that the failure to mail suchnotice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.The Holder is entitled to exercise this Warrant during the 10-day period commencing on the date of such notice to the effective date of theevent triggering such notice. In any event, the successor corporation (if other than the Company) resulting from such consolidation or mergeror the corporation purchasing such assets shall be deemed to assume such obligation to deliver to such Holder such shares of stock, securitiesor assets even in the absence of a written instrument assuming such obligation to the extent such assumption occurs by operation of law.

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(iv) Adjustment upon Issuance of shares of Common Stock. If and whenever on or after the Effective Date (but not later than365 days after the Effective Date), the Company issues or sells any shares of Common Stock (including the issuance or sale of shares ofCommon Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued bythe Company in connection with any Excluded Securities (as defined below) (the “Additional Shares”) for a consideration per share (the “NewIssuance Price”) less than a price (the “Applicable Price”) equal to the Exercise Price in effect immediately prior to such issue or sale ordeemed issuance or sale (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effectshall be reduced to a price determined as follows:

Adjusted Exercise Price = (A x B) + D whereA+C

“A” equals the number of shares of Common Stock outstanding, including the Additional Shares deemed to be issued

hereunder, immediately preceding the Dilutive Issuance;

“B” equals the Exercise Price in effect immediately preceding such Dilutive Issuance;

“C” equals the number of Additional Shares issued or deemed issued hereunder as a result of the Dilutive Issuance; and

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“D” equals the aggregate consideration, if any, received or deemed to be received by the Company upon such DilutiveIssuance.

“Excluded Securities” means: (A) Common Stock or common stock equivalents issued to directors, officers, employees or

consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retentionas consultants for bona fide services; (B) shares of Common Stock issued upon the conversion or exercise of options or common stockequivalents issued prior to the date hereof, provided such securities are not amended after the date hereof to increase the number of shares ofCommon Stock issuable thereunder or to lower the exercise or conversion price thereof; (C) securities issued pursuant to the SubscriptionAgreement; (D) shares of Common Stock issued or issuable by reason of a dividend, stock split or other distribution on shares of CommonStock (but only to the extent that such a dividend, split or distribution results in an adjustment in the Exercise Price pursuant to the otherprovisions of this Warrant); (E) Common Stock, options or common stock equivalents issued as consideration for an acquisition or strategictransaction approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a person (orto the equityholders of a person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a businesssynergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, butshall not, for the purposes of this clause (E), include a transaction in which the Company is issuing securities primarily for the purpose ofraising capital or to an entity whose primary business is investing in securities; (F) shares or common stock equivalents issued to anyplacement agent placing securities pursuant to the Private Placement Memorandum.

(b) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 3, the Company atits expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder of thisWarrant a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustmentis based. The Company shall promptly furnish or cause to be furnished to such Holder a like certificate setting forth: (i) such adjustments andreadjustments; and (ii) the number of shares and the amount, if any, of other property which at the time would be received upon the exerciseof the Warrant.

(c) Certain Events. If any event occurs as to which the other provisions of this Section 3 are not strictly applicable but the lack of any

adjustment would not fairly protect the purchase rights of the Holder under this Warrant in accordance with the basic intent and principles ofsuch provisions, or if strictly applicable would not fairly protect the purchase rights of the Holder under this Warrant in accordance with thebasic intent and principles of such provisions, then the Company's Board of Directors will, in good faith, make an appropriate adjustment toprotect the rights of the Holder; provided, that no such adjustment pursuant to this Section 3(c) will increase the Exercise Price or decrease thenumber of Warrant Shares as otherwise determined pursuant to this Section 3.

(d) Other Adjustments . If at any time conditions shall arise by reason of action taken by the Company which in the reasonable

opinion of the Board of Directors are not adequately covered by the provisions hereof and which might materially and adversely affect therights of the Holder or if at any time any such conditions are expected to arise by reason of any action contemplated by the Company, theBoard of Directors shall make adjustments, if any (not inconsistent with the standards established in this Section 3), of the Warrant price(including, if necessary, any adjustment as to the securities for which the Warrants may thereafter be exercisable) and any distribution which isor would be required to preserve the rights of the Holder.

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(e) No Dilution or Impairment. Subject to the provisions of Section 3(a)(iii), the Company will not, by amendment of its restated

articles of incorporation or through reorganization, consolidation, merger, dissolution, issue or sale of securities, sale of assets or any othervoluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in good faithassist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rightsof the holders of the Warrants against dilution or other impairment. 4. REDEMPTION OF WARRANTS

(a) General. Prior to the Expiration Date, the Company shall have the option, subject to the conditions set forth herein, to redeem allof the Warrants then outstanding upon not less than twenty (20) days nor more than sixty (60) days prior written notice to the Warrant Holdersat any time provided that, at the time of delivery of such notice (i) there is an effective registration statement covering the resale of theWarrant Shares; (ii) the closing price of the Company’s Common Stock for each of the twenty (20) consecutive Trading Days prior to the dateof the notice of redemption is at least $1.50, as proportionately adjusted to reflect any stock splits, stock dividends, combination of shares orlike events, with an average daily trading volume during such period of 50,000 shares; (iii) the Company is current in its reporting obligationunder the Securities and Exchange Act of 1934; (iv) holders receive at least 20 trading days written notice of the intended redemptions; and (v)the closing prices of the Common Stock within such 20 day notice period is not less than $1.17 for any three (3) days.

(b) Notice. Notice of redemption will be effective upon mailing in accordance with this Section and such date may be referred to

below as the “Notice Date.” Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than 30 daysprior to the date fixed for redemption to the Holders of the Warrants to be redeemed at their last addresses as they shall appear on theregistration books. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or notthe Holder received such notice.

(c) Redemption Date and Redemption Price. The notice of redemption shall state the date set for redemption, which date shall be not

less than twenty (20) days, or more than sixty (60) days, from the Notice Date (the “Redemption Date”). The Company shall not mail thenotice of redemption unless all funds necessary to pay for redemption of the Warrants to be redeemed shall have first been set aside by theCompany for the benefit of the Warrant Holders so as to be and continue to be available therefor. The redemption price to be paid to theWarrant Holders will be $0.001 for each share of Common Stock of the Company to which the Warrant Holder would then be entitled uponexercise of the Warrant being redeemed, as adjusted from time to time as provided herein (the “Redemption Price”).

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(d) Exercise. Following the Notice Date, the Warrant Holders may exercise their Warrants in accordance with Section 1 of this

Warrant between the Notice Date and 5:00 p.m. Eastern Time on the Redemption Date and such exercise shall be timely if the form of electionto purchase duly executed and the Warrant Exercise Price for the shares of Common Stock to be purchased are actually received by theCompany at its principal offices prior to 5:00 p.m. Eastern Time on the Redemption Date.

(e) Mailing. If any Warrant Holder does not wish to exercise any Warrant being redeemed, he should mail such Warrant to the

Company at its principal offices after receiving the notice of redemption. On and after 5:00 p.m. Eastern Time on the Redemption Date,notwithstanding that any Warrant subject to redemption shall not have been surrendered for redemption, the obligation evidenced by allWarrants not surrendered for redemption or effectively exercised shall be deemed no longer outstanding, and all rights with respect theretoshall forthwith cease and terminate, except only the right of the holder of each Warrant subject to redemption to receive the Redemption Pricefor each share of Common Stock to which he would be entitled if he exercised the Warrant upon receiving notice of redemption of the Warrantsubject to redemption held by him. 5. TRANSFERS AND EXCHANGES OF WARRANT AND WARRANT SHARES

(a) Registration of Transfers and Exchanges. Subject to Section 5(c), upon the Holder’s surrender of this Warrant, with a dulyexecuted copy of the Form of Assignment attached as Attachment B, to the Secretary of the Company at its principal offices or at such otheroffice or agency as the Company may specify in writing to the Holder, the Company shall register the transfer of all or any portion of thisWarrant. Upon such registration of transfer, the Company shall issue a new Warrant, in substantially the form of this Warrant, evidencing theacquisition rights transferred to the transferee and a new Warrant, in similar form, evidencing the remaining acquisition rights not transferred,to the Holder requesting the transfer.

(b) Warrant Exchangeable for Different Denominations. The Holder may exchange this Warrant for a new Warrant or Warrants, in

substantially the form of this Warrant, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then bepurchased hereunder, each of such new Warrants to be dated the date of such exchange and to represent the right to purchase such number ofWarrant Shares as shall be designated by the Holder. The Holder shall surrender this Warrant with duly executed instructions regarding suchre-certification of this Warrant to the Secretary of the Company at its principal offices or at such other office or agency as the Company mayspecify in writing to the Holder.

(c) Restrictions on Transfers. This Warrant may not be transferred at any time without (i) registration under the Securities Act or (ii)

an exemption from such registration and a written opinion of legal counsel addressed to the Company that the proposed transfer of theWarrant may be effected without registration under the Securities Act, which opinion will be in form and from counsel reasonably satisfactoryto the Company.

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(d) Permitted Transfers and Assignments. Notwithstanding any provision to the contrary in this Section 5, the Holder may transfer,

with or without consideration, this Warrant or any of the Warrant Shares (or a portion thereof) to the Holder’s Affiliates (as such term isdefined under Rule 144 of the Securities Act) without obtaining the opinion from counsel that may be required by Section 5(c)(ii), provided,that the Holder delivers to the Company and its counsel certification, documentation, and other assurances reasonably required by theCompany’s counsel to enable the Company’s counsel to render an opinion to the Company’s Transfer Agent that such transfer does not violateapplicable securities laws. 6. MUTILATED OR MISSING WARRANT CERTIFICATE

If this Warrant is mutilated, lost, stolen or destroyed, upon request by the Holder, the Company will, at its expense, issue, inexchange for and upon cancellation of the mutilated Warrant, or in substitution for the lost, stolen or destroyed Warrant, a new Warrant, insubstantially the form of this Warrant, representing the right to acquire the equivalent number of Warrant Shares; provided, that, as aprerequisite to the issuance of a substitute Warrant, the Company may require satisfactory evidence of loss, theft or destruction as well as anindemnity from the Holder of a lost, stolen or destroyed Warrant. 7. PAYMENT OF TAXES

The Company will pay all transfer and stock issuance taxes attributable to the preparation, issuance and delivery of this Warrant andthe Warrant Shares (and replacement Warrants) including, without limitation, all documentary and stamp taxes; provided, however, that theCompany shall not be required to pay any tax in respect of the transfer of this Warrant, or the issuance or delivery of certificates for WarrantShares or other securities in respect of the Warrant Shares to any person or entity other than to the Holder. 8. FRACTIONAL WARRANT SHARES

No fractional Warrant Shares shall be issued upon exercise of this Warrant. The Company, in lieu of issuing any fractional WarrantShare, shall round up the number of Warrant Shares issuable to nearest whole share. 9. NO STOCK RIGHTS AND LEGEND

No holder of this Warrant, as such, shall be entitled to vote or be deemed the holder of any other securities of the Company that mayat any time be issuable on the exercise hereof, nor shall anything contained herein be construed to confer upon the holder of this Warrant, assuch, the rights of a stockholder of the Company or the right to vote for the election of directors or upon any matter submitted to stockholdersat any meeting thereof, or give or withhold consent to any corporate action or to receive notice of meetings or other actions affectingstockholders (except as provided herein), or to receive dividends or subscription rights or otherwise (except as provide herein).

Each certificate for Warrant Shares initially issued upon the exercise of this Warrant, and each certificate for Warrant Shares issued to

any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form:

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“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANYINTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) AREGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATESECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES ANOPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLYSATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED ORTRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THEACT OR APPLICABLE STATE SECURITIES LAWS.” 10. REGISTRATION RIGHTS

The Holder shall be entitled to the registration rights as are contained in the Registration Rights Agreement of even date herewith, byand among the Company, the Holder and the other subscribers of the Company’s securities pursuant to the Subscription Agreements, theprovisions of which are deemed incorporated herein by reference. 11. NOTICES

All notices, consents, waivers, and other communications under this Warrant must be in writing and will be deemed given to a partywhen (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent byfacsimile or e-mail with confirmation of transmission (with respect to facsimile) by the transmitting equipment; (c) received or rejected by theaddressee, if sent by certified mail, return receipt requested, if to the registered Holder hereof; or (d) seven days after the placement of thenotice into the mails (first class postage prepaid), to the Holder at the address, facsimile number, or e-mail address furnished by the registeredHolder to the Company in accordance with the Subscription Agreement by and between the Company and the Holder, or if to the Company, toit at 63 Grant Road, Maynard, MA 01754, Attention: Leonard Mazur, Chief Executive Officer, (or to such other address, facsimile number, ore-mail address as the Holder or the Company as a party may designate by notice the other party) with a copy to Sichenzia Ross FriedmanFerence LLP, 61 Broadway, 32nd Floor, New York, NY 10006, Fax: 212-930-9725, Attention: Arthur S. Marcus, Esq. 12. SEVERABILITY

If a court of competent jurisdiction holds any provision of this Warrant invalid or unenforceable, the other provisions of this Warrantwill remain in full force and effect. Any provision of this Warrant held invalid or unenforceable only in part or degree will remain in full forceand effect to the extent not held invalid or unenforceable.

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13. BINDING EFFECT

This Warrant shall be binding upon and inure to the sole and exclusive benefit of the Company, its successors and assigns, theregistered Holder or Holders from time to time of this Warrant and the Warrant Shares. 14. SURVIVAL OF RIGHTS AND DUTIES

This Warrant shall terminate and be of no further force and effect on the earlier of 5:00 P.M., Eastern Time, on the Expiration Date orthe date on which this Warrant has been exercised in full. 15. GOVERNING LAW

This Warrant will be governed by and construed under the laws of the State of New York without regard to conflicts of lawsprinciples that would require the application of any other law. 16. DISPUTE RESOLUTION

In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, theCompany shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of theNotice of Exercise giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon suchdetermination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination orarithmetic calculation being submitted to the Holder, then the Company shall, within two Business Days, submit via facsimile (a) the disputeddetermination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b)the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall cause at itsexpense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company andthe Holder of the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations. Suchinvestment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrableerror. 17. NOTICES OF RECORD DATE

Upon (a) any establishment by the Company of a record date of the holders of any class of securities for the purpose of determiningthe holders thereof who are entitled to receive any dividend or other distribution, or right or option to acquire securities of the Company, orany other right, or (b) any capital reorganization, reclassification, recapitalization, merger or consolidation of the Company with or into anyother corporation, any transfer of all or substantially all the assets of the Company, or any voluntary or involuntary dissolution, liquidation orwinding up of the Company, or the sale, in a single transaction, of a majority of the Company’s voting stock (whether newly issued, or fromtreasury, or previously issued and then outstanding, or any combination thereof), the Company shall mail to the Holder at least ten (10)Business Days, or such longer period as may be required by law, prior to the record date specified therein, a notice specifying (i) the dateestablished as the record date for the purpose of such dividend, distribution, option or right and a description of such dividend, option or right,(ii) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up, or saleis expected to become effective and (iii) the date, if any, fixed as to when the holders of record of Common Stock shall be entitled to exchangetheir shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, transfer, consolation,merger, dissolution, liquidation or winding up.

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18. RESERVATION OF SHARES

The Company shall reserve and keep available out of its authorized but unissued shares of Common Stock for issuance upon theexercise of this Warrant, free from pre-emptive rights, such number of shares of Common Stock for which this Warrant shall from time to timebe exercisable. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued asprovided herein without violation of any applicable law or regulation. Without limiting the generality of the foregoing, the Companycovenants that it will use commercially reasonable efforts to take all such action as may be necessary or appropriate in order that the Companymay validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and use commercially reasonableefforts to obtain all such authorizations, exemptions or consents, including but not limited to consents from the Company’s stockholders orBoard of Directors or any public regulatory body, as may be necessary to enable the Company to perform its obligations under this Warrant. 19. NO THIRD PARTY RIGHTS

This Warrant is not intended, and will not be construed, to create any rights in any parties other than the Company and the Holder,and no person or entity may assert any rights as third- party beneficiary hereunder.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the date first set forth above.

CITIUS PHARMACEUTICALS, INC. By: Name: Leonard Mazur Title: Chief Executive Officer

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ATTACHMENT A

NOTICE OF EXERCISE

(To be executed by the Holder of Warrant if such Holder desires to exercise Warrant) To Citius Pharmaceuticals, Inc.: The undersigned hereby irrevocably elects to exercise this Warrant and to purchase thereunder, ________ full shares of CitiusPharmaceuticals Holding, Inc. common stock issuable upon exercise of the Warrant and delivery of:

$____________ (in cash as provided for in the foregoing Warrant) and any applicable taxes payable bythe undersigned pursuant to such Warrant.

The undersigned requests that certificates for such shares be issued in the name of:

________________________________________________(Please print name, address and social security or federal employer

identification number (if applicable))

________________________________________________

________________________________________________

If the shares issuable upon this exercise of the Warrant are not all of the Warrant Shares which the Holder is entitled to acquire uponthe exercise of the Warrant, the undersigned requests that a new Warrant evidencing the rights not so exercised be issued in the name of anddelivered to:

________________________________________________(Please print name, address and social security or federal employer

identification number (if applicable))

________________________________________________

________________________________________________ Name of Holder (print): _________________________ (Signature): __________________________________ (By:) _______________________________________ (Title:) ______________________________________ Dated: ______________________________________

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ATTACHMENT B

CITIUS PHARMACEUTICALS, INC.

FORM OF ASSIGNMENT

FOR VALUE RECEIVED,______________ hereby sells, assigns and transfers to each assignee set forth below all of the rights of theundersigned under the Warrant (as defined in and evidenced by the attached Warrant) to acquire the number of Warrant Shares set oppositethe name of such assignee below and in and to the foregoing Warrant with respect to said acquisition rights and the shares issuable uponexercise of the Warrant:

Name of Assignee Address Number of Shares

If the total of the Warrant Shares are not all of the Warrant Shares evidenced by the foregoing Warrant, the undersigned requests thata new Warrant evidencing the right to acquire the Warrant Shares not so assigned be issued in the name of and delivered to the undersigned. Name of Holder (print): _________________________ (Signature): __________________________________ (By:) _______________________________________ (Title:) ______________________________________ Dated: ______________________________________

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EXHIBIT 16

September 19, 2014 Securities and Exchange Commission100 F Street, N.E.Washington, D.C. 20549 Ladies and Gentlemen: We have read the statements included under Item 4.01 of Form 8-K dated September 12, 2014 of Citius Pharmaceuticals, Inc. (formerly TrailOne, Inc.) to be filed with the Securities and Exchange Commission and we agree with such statements insofar as they relate to our firm. Wehave no basis to agree or disagree with other statements of the registrant contained therein.

/s/ M&K CPAS, PLLC M&K CPAS, PLLCHouston, Texas

EXHIBIT 99.1

UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS The following unaudited condensed pro forma balance sheet as of June 30, 2014 was prepared as if the acquisition was effective as of suchdate. The unaudited condensed pro forma statements of operations for the year ended September 30, 2013 and the nine months ended June 30,2014 were prepared as if the acquisition was effective on October 1, 2012. The unaudited condensed pro forma financial statements should be read in conjunction with the financial statements of CitiusPharmaceuticals, LLC included herein and the financial statements of Trail One, Inc. included in its annual report on Form 10-K for the yearended September 30, 2013 and its unaudited financial statements included in its quarterly report on Form 10-Q for the nine months ended June30, 2014. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the future financial positionor future results of operation of the combined business after the acquisition of Citius Pharmaceuticals, LLC by Trail One, Inc. or of thefinancial position or results of operations of the combined business that would have actually occurred had the acquisition been effected as ofthe dates described above. The acquisition will be accounted for as a reverse acquisition wherein Citius will be treated as the acquirer foraccounting purposes since it will control the combined business.

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TRAIL ONE, INC.CONDENSED PRO FORMA BALANCE SHEET JUNE 30, 2014 (Unaudited)

Trail One,

Inc.

CitiusPharmaceuticals,

LLC Pro Forma

Adjustments Notes

Pro FormaBalance

Sheet ASSETS Current Assets

Cash and cash equivalents $ - $ 23,443 $ 1,630,835 (D) $ 1,654,278 Deferred offering costs - 25,000 (25,000) (E) -

Total Current Assets - 48,443 1,605,835 1,654,278 Other Assets

Trademarks - 5,401 - 5,401 Total Assets $ - $ 53,844 $ 1,605,835 $ 1,659,679 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities

Accounts payable $ 1,481 $ 136,774 $ (1,481) (G) $ 136,774 Accrued interest 674 202,849 (188,595) (A)

(674) (G) 14,254 Notes payable 29,196 600,000 (29,196) (G) 600,000 Subordinated convertible promissory note - 350,000 (350,000) (A) - Due to related party - 56,134 - 56,134

Total Current Liabilities 31,351 1,345,757 (569,946) 807,162 Convertible promissory notes - 1,685,000 (1,685,000) (A) - Derivative warrant liability - - 1,531,896 (H) 1,531,896 Total Liabilities 31,351 3,030,757 (723,050) 2,339,058 Stockholders’ Equity

Preferred stock - $0.001 par value per share; 10,000,000 sharesauthorized;

no shares issued and outstanding - - - - Common stock - $0.001 par value per share; 90,000,000 shares

authorized; 90,000,000 shares authorized pro forma; 18,000,000 shares issued and outstanding at June

30, 2014, 30,025,286 shares issued and outstanding pro

forma 18,000 - (13,000) (B) 21,625 (C) 3,400 (D) 30,025

Additional paid-in capital 62,532 - 13,000 (B) 4,750,770 (C) 1,627,435 (D) (25,000) (E) (111,883) (F) 31,351 (G) (1,531,896) (H) 4,816,309

Members' contributions - 2,548,800 2,223,595 (A) (4,772,395) (C) -

Accumulated deficit (111,883) (5,525,713) 111,883 (F) - (5,525,713)

Total Stockholders’ Equity (Deficit) (31,351) (2,976,913) 2,328,885 (679,379) Total Liabilities and Stockholders’ Equity (Deficit) $ - $ 53,844 $ 1,605,835 $ 1,659,679

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TRAIL ONE, INC.CONDENSED PRO FORMA STATEMENT OF OPERATIONS FOR TRAIL ONE, INC.'s YEAR ENDED SEPTEMBER 30, 2013AND CITIUS PHARMACEUTICALS, LLC's YEAR ENDED DECEMBER 31, 2013 (Unaudited)

Trail One,

Inc.

CitiusPharmaceuticals,

LLC Pro Forma

Adjustments Notes

Pro FormaStatement ofOperations

Revenues $ - $ - $ - $ - Operating Expenses

General and administrative 28,118 690,396 - 718,514 Research and development - 492,136 - 492,136

Total Operating Expenses 28,118 1,182,532 - 1,210,650

Operating Loss (28,118) (1,182,532) - (1,210,650) Other Expense

Interest expense (3,251) (105,471) (108,722)Total OtherExpense (3,251) (105,471) - (108,722)

Loss before Income Taxes (31,369) (1,288,003) - (1,319,372)

Income tax benefit - - - - Net Loss $ (31,369) $ (1,288,003) $ - $ (1,319,372) Basic and Diluted Net Loss Per Common Share $ (0.04) Weighted Average Number of Common Shares Outstanding

Trail One, Inc. - Historical as adjusted for the reverseacquisition 5,000,000

Shares issued to Citius Pharmaceuticals, LLC members (C) 21,625,219 Shares issued in Citius Pharmaceuticals' private placement (D) 3,400,067 Pro Forma basic and diluted 30,025,286

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TRAIL ONE, INC.CONDENSED PRO FORMA STATEMENT OF OPERATIONS FOR TRAIL ONE, INC.'s NINE MONTHS ENDED JUNE 30,2014AND CITIUS PHARMACEUTICALS, LLC's NINE MONTHS ENDED JUNE 30, 2014 (Unaudited)

Trail One,

Inc.

CitiusPharmaceuticals,

LLC Pro Forma

Adjustments Notes

Pro FormaStatement ofOperations

Revenues $ - $ - $ - $ - Operating Expenses

General and administrative 16,004 105,624 - 121,628 Research and development - 437,397 - 437,397

Total Operating Expenses 16,004 543,021 - 559,025

Operating Loss (16,004) (543,021) - (559,025) Other Expense

Interest expense (663) (109,246) - (109,909)Total Other Expense (663) (109,246) - (109,909)

Loss before Income Taxes (16,667) (652,267) - (668,934)

Income tax benefit - - - - Net Loss $ (16,667) $ (652,267) $ - $ (668,934) Basic and Diluted Net Loss Per Common Share $ (0.02) Weighted Average Number of Common Shares Outstanding

Trail One, Inc. - Historical as adjusted for the reverseacquisition 5,000,000

Shares issued to Citius Pharmaceutical, LLC members (C) 21,625,219 Shares issued in Citius Pharmaceuticals private placement (D) 3,400,067 Pro Forma basic and diluted 30,025,286

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Notes to the Unaudited Condensed Pro Forma Financial Statements On September 12, 2014, Trail One, Inc. acquired all of the outstanding membership interests of Citius Pharmaceuticals, LLC and CitiusPharmaceuticals, LLC became a wholly-owned subsidiary of Trail One, Inc. As a result of the acquisition, the former members of CitiusPharmaceuticals, LLC received an aggregate of 21,625,219 shares of Trail One, Inc. common stock in connection with the acquisition of the21,625,219 outstanding membership interests of Citius Pharmaceuticals, LLC., the private placement investors received 3,400,067 shares ofTrail One, Inc., and together they held approximately 83.3% of the issued and outstanding common stock of Trail One, Inc. immediately afterthe acquisition. Accounting principles generally accepted in the United States generally require that a company whose security holders retainthe majority voting interest in the combined business be treated as the acquirer for financial reporting purposes. The acquisition wasaccounted for as a reverse acquisition whereby Citius Pharmaceuticals, LLC was deemed to be the accounting acquirer.

(A) To record the July 31, 2014 conversion by Citius Pharmaceuticals, LLC of the $2,035,000 convertible promissory notes and accruedinterest of $196,058 into 3,667,886 member interests of Citius Pharmaceuticals, LLC. Accrued interest was $188,595 as of June 30,2014.

(B) To record the reverse stock split at a ratio of approximately 0.65:1 which reduced the shares from 18,000,000 to 11,250,000. After the

reverse stock split certain shareholders cancelled 6,250,000 shares. After the reverse stock split and the cancellation, there were5,000,000 shares issued and outstanding.

(C) To record the issuance of 21,625,219 shares of common stock in connection with the acquisition of all of the 21,625,219 outstanding

membership interests of Citius Pharmaceuticals, LLC. Following the acquisition, Citius Pharmaceuticals, LLC will operate as awholly-owned subsidiary of Trail One, Inc.

(D) To record the sale of 3,400,067 Units of Trail One, Inc. in connection with the reverse acquisition for a purchase price of $0.60 per

Unit. Each Unit consists of one share of Trail One, Inc. and a five-year warrant to purchase one share of Trail One, Inc. at an exerciseprice of $0.60 per share. Net proceeds of the offering were $1,630,835 after deducting the placement agent’s fee of $204,004, a non-accountable expense allowance of $61,201, and $144,000 of other offering expenses paid at the closing.

(E) To net the $25,000 of deferred offering costs at June 30, 2014 against the proceeds of the 2014 private placement of the Units.

(F) To eliminate Trail One, Inc.’s accumulated deficit in conjunction with the reverse acquisition.

(G) To eliminate Trail One, Inc.’s liabilities that are not being assumed by Citius Pharmaceuticals, LLC in the reverse acquisition.

(H) To record the $1,531,896 derivative warrant liability for the fair value of the 3,400,067 warrants included in the Units sold to

investors, the 680,013 warrants underlying the placement agent’s Unit warrants and the 1,000,000 warrants issued for investmentbanking services.

(I) No adjustments were made to the pro forma statements of operations for the change in the fair value of the derivative warrant

liability as if the acquisition occurred on October 1, 2012. The change in fair value was not material for the year ended September30, 2013 and the nine months ended June 30, 2014.

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