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Item 1. Legal Proceedings

2024-11-14 compared with 2024-05-15 · 150 added, 96 removed, 38 unchanged (87% of the section changed)

1 unchanged sentence

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.

22, 2023, the Court appointed a lead plaintiff in the Chow Action.

The lead plaintiff filed an amended complaint on December 15, 2023.

The Company has filed a motion to dismiss the amended complaint, but expresses no opinion as to the likelihood of a favorable outcome.

2022 and July 28, 2022, securities class action complaints (the former, the “Chow Action” and the latter, the “Manici

Action”) and together, the “Securities Class Action Litigation”) 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.

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.

On October 22, 2023, the Court appointed a lead plaintiff in the Chow Action.

lead plaintiff filed an amended complaint on December 15, 2023.

The Company has filed a motion to dismiss the amended complaint on March

The Court denied the Company’s motion to dismiss on June 28, 2024.

A mediation was held on September 17, 2024, after which

the parties signed a stipulation of settlement, dated November 8, 2024.

The plaintiff’s deadline to file a motion for preliminary

approval of the settlement is December 9, 2024.

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

The actions, filed on behalf of the Company, name Serhat Gümrükcü and certain of the Company’s current

and former directors as defendants.

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 former directors as

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.

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.

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

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

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 4, 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.

On June 28, 2024, the United States District Court for the Central District of California

denied defendants’ motion to dismiss the Securities Class Action Litigation.

On October 23, 2024, the court in the Koenig matter

stayed the case pending further order of the court.

The parties’ deadline to file a joint status report in the Koenig matter

is January 10, 2025.

On October 28, 2024, the court in the Solak matter stayed the case for ninety (90) days.

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.

Management is unable to determine the likelihood of a loss, including a possible range of losses, if any, arising

from this matter as of the reporting date.

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.

20, 2023, the Court stayed the Midler matter pending resolution of the defendants’ anticipated motion to dismiss in the Securities

Class Action Litigation.

On June 28, 2024, the United States District Court for the Central District of California denied defendants’

motion to dismiss the Securities Class Action Litigation.

On October 28, 2024, the court in the Midler matter stayed the case for ninety

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.

The Company intends to contest this matter but expresses no opinion

as to the likelihood of a favorable outcome.

Management is unable to determine the likelihood of a loss, including a possible range of

losses, if any, arising from this matter as of the reporting date.

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 Bio LLC (“G Tech”), SG & AW Holdings,

LLC, and Seraph Research Institute (“SRI”) (collectively, the “Defendants”).

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

On September 7, 2023, the court entered a case management order setting the final status conference, trial, and other intervening

Gümrükcü, William Anderson Wittekind (“Wittekind”), G Tech Bio, SG & AW Holdings, LLC, and SRI (collectively,

the “Defendants”).

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.

4, 2023, the Defendants answered the Company’s First Amended Complaint and G Tech and SRI filed a Cross-Complaint.

19 unchanged sentences

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.

Trial is currently scheduled to begin on July 15, 2024.

The Company denies the

allegations set forth in the Complaint and will continue to vigorously defend against the remaining claim.

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.

In the Verified

Complaint, Plaintiffs alleged 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

of process claim against all defendants and all claims against Mark Dybul and Henrik Grønfeldt-Sørensen, the Company’s

former Chief Executive Officer and former member of the Board of Directors, respectively.

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 November 7, 2024, the Court reset the trial date for May 6, 2025.

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.

In the Verified Complaint,

Plaintiffs alleged 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.

8 unchanged sentences

The Company filed a motion to dismiss

the FAC on December 18, 2023.

The Company denies Plaintiffs’ allegations and intends to vigorously defend against the claims.

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.

January 23, 2024, Weird Science and Wittekind filed a shareholder derivative action in the United States District Court for the

Central District of California against certain officers, directors, and investors of the Company, as well as other defendants.

Verified Stockholder Derivative Complaint (“Derivative Complaint”) alleges, among other claims, violations of Section

13(d) and 14(a) and Rules 10b-5(a), 10b-5(c) and 14a-9 of the Exchange Act of 1934.

The Derivative Complaint also includes claims of

breach of fiduciary duty, corporate waste, unjust enrichment, and contribution/indemnification.

Weird Science and Wittekind seek

unspecified compensatory, exemplary and punitive damages and certain injunctive relief.

Simultaneously with the Derivative

Complaint, Weird Science and Wittekind filed an emergency Ex Parte Application for Temporary Restraining Order

(“Application”) asking the Court to enjoin a special meeting of the Company’s stockholders noticed for January 25,

As the basis for the Application, Weird Science and Wittekind recited many of the same allegations as in the Derivative

The Court denied the Application on January 24, 2024.

The defendants have not yet responded to the Derivative Complaint.

The Company denies the allegations in the Derivative Complaint and intends to vigorously defend against the claims asserted

the FAC on December 18, 2023 and a hearing is scheduled for November 15, 2024.

The Company denies Plaintiffs’ allegations and intends

to vigorously defend against the claims.

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”).

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.

On January 19, 2024, Weird Science

and Wittekind sent the Board of Directors a letter demanding it take corrective actions with respect to twenty-one issues identified therein.

On February 27, 2024, Weird Science and Wittekind sent the Board of Directors a supplemental letter that expanded their demand for corrective

actions to twenty-six issues.

In response to these demand letters, the Board of Directors initially formed a Special Committee (“Special

Committee”) of independent directors on February 29, 2024.

The Special Committee retained Stradling Yocca Carlson & Rauth LLP

as its counsel to investigate the issues identified in the demand letters.

The Special Committee’s investigation is ongoing.

On January 23, 2024, Weird Science

and Wittekind filed a shareholder derivative action in the United States District Court for the Central District of California against

certain officers, directors, and investors of the Company, as well as other defendants, in connection with, inter alia , Weird Science

and Wittekind’s demand for corrective action.

Plaintiffs filed an amended complaint on June 21, 2024.

The First Amended Verified

Stockholder Derivative Complaint (“Derivative Complaint”) alleges, among other claims, violations of Section 13(d) and 14(a)

and Rules 10b-5(a), 10b-5(c) and 14a-9 of the Exchange Act of 1934.

The Derivative Complaint also includes claims of breach of fiduciary

duty, corporate waste, unjust enrichment, and contribution/indemnification.

Weird Science and Wittekind seek unspecified compensatory,

exemplary, and punitive damages and certain injunctive relief.

The Derivative Complaint names the Company as a nominal defendant.

19, 2024, certain of the director defendants, who had agreed to waive service of the summons and Derivative Complaint, filed a motion

to dismiss the Derivative Complaint on a variety of procedural and substantive grounds.

A hearing on the motion dismiss was held on October

3, 2024 and the court subsequently took the motion under submission.

On October 22, 2024, the plaintiffs filed a notice of certain subsequent

events that they allege relate to their pending motion to dismiss.

On October 29, 2024, the court granted the director defendants’

motion to dismiss and dismissed the Derivative Complaint without prejudice, but also without leave to amend.

On June 21, 2024, the Company filed

suit against Weird Science, Wittekind, and certain trusts in connection with the February 16, 2018 merger involving the Company and two

companies closely associated with Gumrukcu.

In the complaint, the Company alleges that Gumrukcu and others deliberately and fraudulently

concealed a murder-for-hire scheme from the Company in order to induce the Company to enter into the merger agreement, which resulted

in the defendants receiving shares and compensation.

The Company asserts claims for fraudulent concealment, equitable fraud, unjust enrichment,

and civil conspiracy and seeks, inter alia , equitable relief, including, but not limited to, return to the Company any shares received

in connection with the merger, and damages.

On October 1, 2024, the defendants moved to dismiss the complaint.

Risk Factors.

As a “smaller

reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide the

information required by this Item.

Unregistered Sales of Equity Securities and Use of Proceeds.

Defaults Upon Senior Securities.

Mine Safety Disclosures.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings