Item 1. Legal Proceedings
Item 1. Legal Proceedings.
Securities Class Action Litigation .
On July 26, 2022 and July 28, 2022, securities class action complaints (the former, the “Chow Action” and the latter, the
“Manici Action”) were filed by purported stockholders of ours in the United States District Court for the Central District
of California against us and certain of our current and former officers and directors. The complaints allege, among other things, that
the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, by making
false and misleading statements and omissions of material fact in connection with the Company’s relationship with Serhat Gümrükcü
and its commercial prospects. The complaints seek unspecified damages, interest, fees, and costs. On November 22, 2022, the Manici Action
was voluntarily dismissed without prejudice, but the Chow action remains pending. The defendants did not respond to the complaint in the
Manici action and have not yet responded to the complaint in the Chow action. The Company intends to contest this matter but expresses
no opinion as to the likelihood of a favorable outcome.
Federal Derivative Litigation .
On September 22, 2022, Samuel E. Koenig filed a shareholder derivative action in the United States District Court for the Central District
of California. On January 19, 2023, John Solak filed a substantially similar shareholder derivative action in the United States District
Court for the District of Delaware. Both derivative actions recite similar underlying facts as those alleged in the Securities Class Action
Litigation. The actions filed on behalf of the Company, name Serhat Gümrükcü and certain of the Company’s current
and former directors as defendants. The actions also name the Company as a nominal defendant. The actions allege violations of Sections
14(a) and 20(a) of the Securities Exchange Act of 1934 and also set out claims for breach of fiduciary duty, contribution, and indemnification,
aiding and abetting, and gross mismanagement. Plaintiffs do not quantify any alleged injury, but seek damages, disgorgement, restitution,
and other costs and expenses. On January 24, 2023, the United States District Court for the Central District of California stayed the
Koenig matter pending resolution of the defendants’ anticipated motion to dismiss in the Securities Class Action Litigation. On
April 6, 2023, the United States District Court for the District of Delaware stayed the Solak matter pending resolution of the defendants’
anticipated motion to dismiss in the Securities Class Action Litigation. The defendants have not yet responded to either complaint. The
Company intends to contest these matters but expresses no opinion as to the likelihood of favorable outcomes.
State Derivative Litigation .
On October 20, 2022, Susan Midler filed a shareholder derivative action in the Superior Court of California, Los Angeles County, reciting
similar underlying facts as those alleged in the Securities Class Action Litigation. The action, filed on behalf of the Company, names
Serhat Gümrükcü and certain of the Company’s current and former directors as defendants. The action also names the
Company as a nominal defendant. The action sets out claims for breaches of fiduciary duty, contribution, and indemnification, aiding and
abetting, and gross mismanagement. Plaintiff does not quantify any alleged injury, but seeks damages, disgorgement, restitution, and other
costs and expenses. On January 20, 2023, the Court stayed the Midler matter pending resolution of the defendants’ anticipated motion
to dismiss in the Securities Class Action Litigation. The Court also set a status conference for November 6, 2023. The defendants have
not yet responded to the complaint. The Company intends to contest this matter but expresses no opinion as to the likelihood of a favorable
outcome.
On October 21, 2022, the Company filed a Complaint in the Superior Court of
the State of California for the County of Los Angeles against Serhat Gümrükcü, Wittekind, G Tech, SG & AW, and SRI.
The Complaint alleges that the defendants engaged in a “concerted, deliberate scheme to alter, falsify, and misrepresent to the
Company the results of multiple studies supporting its [Hepatitis B] and SARS-CoV-2/influenza pipelines.” Specifically, “Defendants
manipulated negative results to reflect positive outcomes from various studies, and even fabricated studies out of whole cloth.”
As a result of the defendants’ conduct, the Company claims that it “paid approximately $25 million to Defendants and third-parties
that it would not otherwise have paid.” On April 21, 2023, defendants Wittekind, G Tech, SG & AW, and SRI filed a demurrer with
respect to some, but not all, of the Company’s claims, as well as a motion to strike.
On December 28, 2022, the Company received a demand
letter on behalf of Weird Science LLC (“Weird Science”), William Anderson Wittekind, the William Anderson Wittekind 2020 Annuity
Trust, the William Anderson Wittekind 2021 Annuity Trust, the Dybul 2020 Angel Annuity Trust, and the Ty Mabry 2021 Annuity Trust alleging
that the Company breached the February 16, 2018 Investor Rights Agreement between the Company, Weird Science, and RS Group ApS. Specifically,
the demand letter alleges that the Company “breached its obligations under the Investor Rights Agreement to provide the requisite
thirty days’ notice” to Holders of Registrable Securities in connection with SEC Form S-3 filings on July 13, 2020 and February
11, 2022 and demands over $64 million in damages. The Company denies these allegations and intends to vigorously defend against this claim.
On March 1, 2021, former Enochian BioSciences Chief
Financial Officer, Robert Wolfe and his company, Crossfield, Inc., filed a Complaint in the U.S. District Court for the District of Vermont
against the Company, Enochian BioSciences Denmark ApS, and certain directors and officers. In the Complaint, Mr. Wolfe and Crossfield,
Inc. asserted claims for abuse of process and malicious prosecution, alleging, inter alia, that the Company lacked probable cause to file
and prosecute an earlier action, and sought millions of dollars of compensatory damages, as well as punitive damages. The allegations
in the Complaint relate to an earlier action filed by the Company and Enochian BioSciences Denmark ApS in the Vermont Superior Court,
Orange Civil Division. On March 3, 2022, the court partially granted the Company’s motion to dismiss, dismissing the abuse of process
claim against all defendants and all claims against Mark Dybul and Henrik Grønfeldt-Sørensen. On November 29, 2022, the
Company filed a motion for summary judgment with respect to the sole remaining claim of malicious prosecution. The Company denies the
allegations set forth in the Complaint and will continue to vigorously defend against the remaining claim.
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Item 1A. Risk Factors.
Risk factors that may affect our
business and financial results are discussed within Item 1A ”Risk Factors” of our annual report for the fiscal year ended
June 30, 2022, on Form 10-K (“2022 Form 10-K”) filed with the SEC on February 27, 2023. There have been no material
changes to the disclosures relating to this item from those set forth in our 2022 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
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