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 the Company in the United States District Court for the Central District
of California against the Company and certain of the Company’s 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 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.
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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, William Anderson Wittekind (“Wittekind”), G Tech, SG & AW Holdings, LLC, 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 Holdings, LLC, 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 September 6, 2023, the court denied
in part and granted in part the pending motions. On September 7, 2023, the court entered a case management order setting the final status
conference, trial, and other intervening deadlines. We will continue to pursue our claims against these defendants.
On March 1, 2021, the Company’s
former 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, Renovaro 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 Renovaro 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. On August 24,
2023, the court denied the motion for summary judgment. On September 7, 2023, the Company moved for reconsideration of the court’s
order. The Company denies the allegations set forth in the Complaint and will continue to vigorously defend against the remaining claim.
On June
7, 2023, Weird Science LLC (“Weird Science”), 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 (collectively, the “Trusts”)
(collectively, “Plaintiffs”) filed a Verified Complaint against the Company in the Court of Chancery of Delaware. Plaintiffs
allege that the Company breached the February 16, 2018 Investor Rights Agreement between the Company, Weird Science, and RS Group ApS
(the “Investor Rights Agreement”). According to the Verified Complaint, the Investor Rights Agreement required the Company
to (i) notify all “Holders” of “Registrable Securities” at least 30 days prior to filing a registration statement
and (ii) afford such Holders an opportunity to have their Registrable Securities included in such registration statement. Plaintiffs allege
that the Company breached these registration rights by failing to provide the required notice in connection with S-3 registration statements
filed by the Company on July 13, 2020 and February 11, 2022. Plaintiffs seek compensatory damages, pre- and post-judgment interest, costs,
and attorneys’ fees. The Company denies Plaintiffs’ allegations and intends to vigorously defend against the claim.
On August 24, 2023, counsel on
behalf of Weird Science, Wittekind, individually, and Wittekind, as trustee of the Trusts served a demand to inspect the Company’s
books and records (the “Demand”) pursuant to Delaware General Corporation Law, § 220 (“Section 220”).
The Demand seeks the Company’s books and records in connection with various issues identified in the Demand. The Company takes its
obligations under Section 220 seriously and, to the extent that the requests are proper under Section 220, intends to comply with those
obligations.
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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, 2023, on Form 10-K (“2023 Form 10-K”) filed with the SEC on October 2, 2023. There have been no material
changes to the disclosures relating to this item from those set forth in our 2023 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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