What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2020-10-13 compared with 2019-09-10 · 336 added, 322 removed, 459 unchanged (59% of the section changed)

15 unchanged sentences

million for the fiscal years ended June 30, 2020 and 2019, respectively.

As of June 30, 2019, we had an accumulated

deficit of $126.9 million.

Our operations consume substantial amounts of cash and we expect that our cash used in our operating

activities will continue to increase for the next several years.

We expect to continue to incur losses for the foreseeable future

as we develop and commercialize our pipeline, and we must raise additional capital from external sources in order to sustain our

operations beyond the next year.

If we are unable to raise additional capital, we may have to significantly delay, scale back or

discontinue one or more of our drug development or research and development programs.

As of June 30, 2020, we had an

accumulated deficit of $147.2 million.

Our operations consume substantial amounts of cash and we expect that our cash used

in our operating activities will continue to increase for the next several years.

We expect to continue to incur losses for the

foreseeable future as we develop and commercialize our pipeline, and we must raise additional capital from external sources in

order to sustain our operations beyond the next year.

If we are unable to raise additional capital, we may have to significantly

delay, scale back or discontinue one or more of our research and development programs.

We may be required to cease operations or

13 unchanged sentences

ensure that clinical studies will generate adequate data to demonstrate the efficacy and safety of an investigational drug or biologic.

Even if our clinical studies, if any, produce promising results, there is no assurance that such results will be replicated or

exceeded in later clinical studies.

A number of companies in the biotechnology industry, including those with greater resources

and experience, have suffered significant setbacks in clinical studies, even after seeing promising results in earlier preclinical

and clinical studies.

We do not know whether the Study or any other clinical studies that we may conduct will demonstrate adequate

efficacy and safety to justify the continuing advancement of a program.

If later stage clinical studies do not produce favorable

results, our ability to achieve regulatory approval for any of our product candidates may be adversely impacted.

Even if we believe

that our product candidates have performed satisfactorily in preclinical testing and clinical studies, we may still fail to obtain

FDA approval for our product candidates.

Even if our clinical studies produce promising results, there is no assurance that such results will be replicated or exceeded

in later clinical studies.

A number of companies in the biotechnology industry, including those with greater resources and experience,

have suffered significant setbacks in clinical studies, even after seeing promising results in earlier preclinical and clinical

We do not know whether our clinical studies will demonstrate adequate efficacy and safety to justify the continuing advancement

of a program.

If later stage clinical studies do not produce favorable results, our ability to achieve regulatory approval for

any of our product candidates may be adversely impacted.

Even if we believe that our product candidates have performed satisfactorily

in preclinical testing and clinical studies, we may still fail to obtain FDA approval for our product candidates.

COVID-19 could continue to adversely impact our business,

including our clinical trials.

in March 2020, COVID-19 has resulted in an economic environment that is unfavorable for many businesses to conduct operations

and to pursue new debt and equity financings.

economy had been largely shut down by mass quarantines and government mandated

stay-in-place orders to halt the spread of the virus.

While these orders have been relaxed, a full recovery of the U.S.

may not occur until 2021 or later.

The extent to which COVID-19 may continue to impact our business and clinical trials

will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic

spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries,

business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain

and treat the disease.

As COVID-19 continues to spread around the globe, we will likely experience disruptions that could

severely impact our business and clinical trials, including:

delays or difficulties in enrolling patients or maintaining scheduled study visits in our clinical

delays or difficulties in clinical site initiation, including difficulties in recruiting clinical

site investigators and clinical site staff;

diversion of healthcare resources away from the conduct of clinical trials, including the diversion

of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations

on travel imposed or recommended by federal or state governments, employers and others;

limitations in employee resources that would otherwise be focused on the conduct of our business

or our clinical trials, including because of sickness of employees or their families, the desire of employees to avoid contact

with large groups of people or as a result of the governmental imposition of “shelter in place”

or similar working

restrictions;

delays in receiving approval from local regulatory authorities to initiate our planned clinical

delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials;

interruption in global shipping that may affect the transport of clinical trial materials, such

as investigational drug product used in our clinical trials;

changes in local regulations as part of a response to the COVID-19 outbreak which may require us

to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical

trials altogether;

delays in necessary interactions with local regulators, ethics committees and other important agencies

and contractors due to limitations in employee resources or forced furlough of government employees;

refusal of the FDA to accept data from clinical trials in affected geographies outside the United

COVID-19 is currently impacting countries,

communities and markets.

We require ongoing access to the capital markets to fund our future capital requirements.

To the extent

that our access to the capital markets is adversely affected by COVID-19, we may need to consider alternative sources of funding

for our operations and for working capital, any of which could increase our cost of capital.

We may experience delays in our clinical

79 unchanged sentences

regulatory approval, they may still face future development and regulatory hurdles.

Even if US regulatory approval is obtained

regulatory approval is obtained

for a particular drug candidate, the FDA may still impose significant restrictions on marketing, indicated uses and/or require

69 unchanged sentences

initial clinical trials of our product candidates do not necessarily predict the results of later-stage clinical trials.

candidates in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through

candidates in later stages of clinical trials may fail to show the desired safety and efficacy despite having progress through

initial clinical trials.

17 unchanged sentences

in well-controlled clinical studies.

With respect to approval in the US, to the satisfaction of the FDA and, with respect to approval

in other countries, to the satisfaction of regulatory authorities in those countries, we must demonstrate that the product candidate

is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate.

With respect to approval in the U.S., to the satisfaction of the FDA and, with respect to

approval in other countries, to the satisfaction of regulatory authorities in those countries, we must demonstrate that the product

candidate is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls

are adequate.

Despite our efforts, our product candidates

6 unchanged sentences

We are not permitted to market any of our

other product candidates in the US until we receive approval of a new drug application, or approval of a biologics license application,

other product candidates in the U.S.

until we receive approval of a new drug application, or approval of a biologics license application,

from the FDA, or in any foreign countries until we receive the requisite approval from such countries.

16 unchanged sentences

or impair our ability to commercialize our product candidates.

We rely upon a small number of third-party

suppliers for the manufacture of certain raw materials that are necessary to formulate our drug products for preclinical and clinical

testing purposes.

rely upon a small number of third-party suppliers for the manufacture of certain raw materials that are necessary to formulate

our drug products for preclinical and clinical testing purposes.

We intend to continue to rely on them in the future.

We also expect to rely upon third parties to produce materials

required for the commercial production of our product candidates if we succeed in obtaining necessary regulatory approvals.

we are unable to arrange for third-party sources, or do so on commercially unreasonable terms, we may not be able to complete development

of or market our product candidates.

We also expect

to rely upon third parties to produce materials required for the commercial production of our product candidates if we succeed

in obtaining necessary regulatory approvals.

If we are unable to arrange for third-party sources, or do so on commercially unreasonable

terms, we may not be able to complete development of or market our product candidates.

In addition, third-party suppliers that

we engage may be adversely impacted by COVID-19 as discussed above under “

COVID-19 could continue to adversely

impact our business, including our clinical trials.”

There are a small number of suppliers for

128 unchanged sentences

portion of our net operating loss carryforwards, which could adversely affect our profitability.

federal and state net

operating loss carryforwards due to prior period losses, which could expire unused and be unavailable to offset future income

tax liabilities, which could adversely affect our profitability.

In addition, under Section 382 of the Internal Revenue Code

of 1986, as amended (the “Code”), our ability to utilize net operating loss carryforwards or other tax attributes

in any taxable year may be limited if we experience an “ownership change.”

A Section 382 “ownership

change”

generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock

increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year

Similar rules may apply under state tax laws in the United States.

As a result of recent issuances of

shares of our Common Stock to Handok and Genexine, they can exercise significant control, which could limit your ability to

influence the outcome of key transactions, including any future change of control.”

Due to our recent financing

activities, we experienced a change of control that is expected to result in significant limitations to the future use of our

NOL carryforwards.

We are in the process of quantifying the extent of the Section 382 limitations, which could result in our

inability to utilize a significant portion of our net operating loss carryforwards that were generated prior to any change of

federal and state net operating

loss carryforwards due to prior period losses, which could expire unused and be unavailable to offset future income tax liabilities,

which could adversely affect our profitability.

In addition, under Section 382 of the Internal Revenue Code of 1986, as amended

(the “Code”), our ability to utilize net operating loss ("NOL") carryforwards or other tax attributes in any taxable

year may be limited if we experience an “ownership change.”

A Section 382 “ownership change”

occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more

than 50 percentage points over their lowest ownership percentage within a rolling three-year period.

Similar rules may apply

under state tax laws in the United States.

As a result of recent issuances of shares of our Common Stock, two

stockholders effectively control the Company.

These stockholders can exercise significant control, which could limit your ability

to influence the outcome of key transactions, including any future change of control ”.

Due to our recent

financing activities, we experienced a change of control that is expected to result in significant limitations to the future use

of our NOL carryforwards.

We are in the process of quantifying the extent of the Section 382 limitations, which could result

in our inability to utilize a significant portion of our NOL carryforwards that were generated prior to any change

It is possible that any future ownership changes or issuances of our capital stock, could have a material effect on

the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our future

profitability.

the use of our NOL carryforwards or other tax attributes, which could adversely affect our future profitability.

If we are unable to successfully

remediate the material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting

remediate the material weakness in our internal control over financial reporting, the accuracy and timing of our financial reporting

may be adversely affected, which may adversely affect investor confidence in us and, as a result, the value of our Common Stock.

In connection with the audit of our fiscal

2019 consolidated financial statements, we noted material weaknesses in our controls, principally as a result of our inability

to segregate duties due to reductions in our employees during 2018, not having measures that would prevent the employees from overriding

the internal control system, one employee was responsible for complex accounting issues without additional reviews within the Company,

and the Company did not have effective review controls over financial reporting and related disclosures in accordance with U.S.

GAAP and SEC rules and regulations.

During the second half of the fiscal year ended June 30, 2019, we began mitigating these weaknesses

through hiring additional employees and engaging a consulting firm to supplement our technical accounting and financial reporting

A material weakness is a deficiency or

combination of deficiencies in internal control over financial reporting that results in more than reasonable possibility that

a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

also begun evaluating and implementing additional procedures to improve the segregation of duties.

We cannot assure that these

or other measures will fully remediate the deficiencies or material weaknesses described above.

We also cannot assure you that

we have identified all of our existing significant deficiencies and material weaknesses, or that we will not in the future have

additional significant deficiencies or material weaknesses.

2020 consolidated financial statements, we noted a material weakness in our controls, principally as a result of our inability

to segregate duties to prevent employees from overriding the internal control system.

A material weakness is a deficiency, or combination

of deficiencies, in internal control over financial reporting that results in a more than reasonable possibility that a material

misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

During our fiscal year

ended June 30, 2020, we hired a Director of Accounting and we implemented additional procedures to improve our segregation

However, without hiring additional personnel we have been unable to fully remediate this material weakness.

provide assurance that these or other measures will eventually result in the elimination of the material weakness described above.

We also cannot assure you that in the future we will not have additional significant deficiencies or material weaknesses.

Operations outside the United States

15 unchanged sentences

that the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum

for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim for breach of a fiduciary

duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim

arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws or (iv)

any action asserting a claim governed by the internal affairs doctrine.

The choice of forum provision may limit a stockholder’s

ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees

or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents.

Stockholders who do

bring a claim in the Court of Chancery could face additional litigation costs in pursuing any such claim, particularly if they

do not reside in or near the State of Delaware.

The Court of Chancery may also reach different judgments or results than would

other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the

action, and such judgments or results may be more favorable to us than to our stockholders.

Alternatively, if a court were to find

the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we

may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business

for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim for breach of a

fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting

a claim arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws

or (iv) any action asserting a claim governed by the internal affairs doctrine.

The choice of forum provision may limit a

stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors,

officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents.

Stockholders who do bring a claim in the Court of Chancery could face additional litigation costs in pursuing any such claim, particularly

if they do not reside in or near the State of Delaware.

The Court of Chancery may also reach different judgments or results than

would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring

the action, and such judgments or results may be more favorable to us than to our stockholders.

Alternatively, if a court were

to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action,

we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business

and financial condition.

Notwithstanding the foregoing, the exclusive provision shall not preclude or contract the scope of exclusive

Notwithstanding the foregoing, the exclusive provision does not preclude or contract the scope of exclusive

federal or concurrent jurisdiction for actions brought under the Securities Exchange Act of 1934, as amended, or the Securities

9 unchanged sentences

For example, in 2017 we in-licensed (i) a fully human

monoclonal antibody from Xoma Corporation as well as (ii) a kallikrein inhibitor portfolio from ActiveSite Pharmaceuticals and

in consideration for such licenses, we will owe milestone payments and royalties as we progress product candidates through development.

monoclonal antibody from Xoma Corporation as well as (ii) plasma kallikrein inhibitor portfolio from ActiveSite Pharmaceuticals

and in consideration for such licenses, we will owe milestone payments and royalties as we progress product candidates through

As we learn more about the mechanisms of

12 unchanged sentences

our product candidate.

US patent applications filed after November 29, 2000 are confidential in the US Patent and Trademark Office

for the first 18 months after such applications’

earliest priority date, and patent offices in other countries often publish

patent applications for the first time six months or more after filing.

Furthermore, we may not be aware of published or granted

conflicting patent rights.

Any conflicts resulting from patent applications and patents of others could significantly reduce the

coverage of our patents and limit our ability to obtain meaningful patent protection.

patent applications filed after November 29, 2000 are confidential in the U.S.

Patent and Trademark

Office for the first 18 months after such applications’

earliest priority date, and patent offices in other countries often

publish patent applications for the first time six months or more after filing.

Furthermore, we may not be aware of published or

granted conflicting patent rights.

Any conflicts resulting from patent applications and patents of others could significantly reduce

the coverage of our patents and limit our ability to obtain meaningful patent protection.

If others obtain patents with conflicting

16 unchanged sentences

patents for which we have secured exclusive rights, as well as our ability to maintain adequate protection of other intellectual

property for our technologies, product candidates and any future products in the US and other countries.

property for our technologies, product candidates and any future products in the U.S.

and other countries.

If we or our licensors

3 unchanged sentences

The laws of some foreign

countries do not protect our proprietary rights to the same extent as the laws of the US, and we may encounter significant problems

countries do not protect our proprietary rights to the same extent as the laws of the U.S., and we may encounter significant problems

in protecting our proprietary rights in these countries.

19 unchanged sentences

viable products, will provide us with any competitive advantages or will not be challenged by third parties;

we will develop additional proprietary technologies or product candidates that are patentable;

the patents of others will not have an adverse effect on our business.

We may be unable to adequately prevent

disclosure of trade secrets and other proprietary information.

We rely on trade secrets to protect our

proprietary know-how and technological advances, especially where we do not believe patent protection is appropriate or obtainable.

will develop additional proprietary technologies or product candidates that are patentable;

patents of others will not have an adverse effect on our business.

may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

rely on trade secrets to protect our proprietary know-how and technological advances, especially where we do not believe patent

protection is appropriate or obtainable.

However, trade secrets are difficult to protect.

We rely in part on confidentiality agreements with our employees, consultants,

outside scientific collaborators, sponsored researchers and other advisors to protect our trade secrets and other proprietary information.

These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the

event of unauthorized disclosure of confidential information.

In addition, others may independently discover our trade secrets

and proprietary information.

Costly and time-consuming litigation could be necessary to enforce and determine the scope of our

proprietary rights.

Failure to obtain or maintain trade secret protection could enable competitors to use our proprietary information

to develop products that compete with our products or cause additional, material adverse effects upon our competitive business

Litigation regarding patents, patent

applications and other proprietary rights may be expensive and time consuming.

If we are involved in such litigation, it could

cause delays in bringing product candidates to market and harm our ability to operate.

Our commercial success will depend in part

on our ability to manufacture, use, sell and offer to sell our product candidates and proposed product candidates without infringing

patents or other proprietary rights of third parties.

Although we are not currently aware of any litigation or other proceedings

or third-party claims of intellectual property infringement related to our product candidates, the pharmaceutical industry is characterized

by extensive litigation regarding patents and other intellectual property rights.

Other parties may obtain patents in the future

and allege that the use of our technologies infringes these patent claims or that we are employing their proprietary technology

without authorization.

Likewise, third parties may challenge or infringe upon our or our licensors’

We rely in part on confidentiality agreements

with our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to protect our trade

secrets and other proprietary information.

These agreements may not effectively prevent disclosure of confidential information

and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information.

In addition, others

may independently discover our trade secrets and proprietary information.

Costly and time-consuming litigation could be necessary

to enforce and determine the scope of our proprietary rights.

Failure to obtain or maintain trade secret protection could enable

competitors to use our proprietary information to develop products that compete with our products or cause additional, material

adverse effects upon our competitive business position.

regarding patents, patent applications and other proprietary rights may be expensive and time consuming.

If we are involved in

such litigation, it could cause delays in bringing product candidates to market and harm our ability to operate.

commercial success will depend in part on our ability to manufacture, use, sell and offer to sell our product candidates and proposed

product candidates without infringing patents or other proprietary rights of third parties.

Although we are not currently aware

of any litigation or other proceedings or third-party claims of intellectual property infringement related to our product candidates,

the pharmaceutical industry is characterized by extensive litigation regarding patents and other intellectual property rights.

Other parties may obtain patents in the future and allege that the use of our technologies infringes these patent claims or that

we are employing their proprietary technology without authorization.

Likewise, third parties may challenge or infringe upon our

or our licensors’

existing or future patents.

Proceedings involving our patents or patent applications or those of others could result in adverse decisions regarding the patentability

of our inventions relating to our product candidates or the enforceability, validity or scope of protection offered by our patents

relating to our product candidates.

Even if we are successful in these proceedings,

we may incur substantial costs and divert management’s time and attention in pursuing these proceedings.

If we are unable

to avoid infringing the patent rights of others, we may be required to seek a license, defend an infringement action or challenge

the validity of the patents in court.

Proceedings involving our patents or patent applications or those of others

could result in adverse decisions regarding the patentability of our inventions relating to our product candidates or the enforceability,

validity or scope of protection offered by our patents relating to our product candidates.

if we are successful in these proceedings, we may incur substantial costs and divert management’s time and attention in

pursuing these proceedings.

If we are unable to avoid infringing the patent rights of others, we may be required to seek a license,

defend an infringement action or challenge the validity of the patents in court.

Patent litigation is costly and time-consuming.

We may not have sufficient resources to bring

these actions to a successful conclusion.

In addition, if we do not obtain a license, develop or obtain non-infringing technology,

fail to defend an infringement action successfully or have our patents declared invalid, we may incur substantial monetary damages;

We may not have sufficient resources to bring these actions to a successful conclusion.

In addition, if we do not obtain a license,

develop or obtain non-infringing technology, fail to defend an infringement action successfully or have our patents declared invalid,

we may incur substantial monetary damages;

encounter significant delays in bringing our product candidates to market;

or be precluded from participating in the manufacture,

use or sale of our product candidates or methods of treatment requiring licenses.

If our patent and other intellectual

property protection is inadequate, future sales and profits may never materialize or competitors could force our products completely

out of the market.

Patents which prevent the manufacture or

sale of our products may be issued to others.

We may have to license those patents and pay significant fees or royalties to the

owners of the patents in order to keep marketing our products.

or be precluded

from participating in the manufacture, use or sale of our product candidates or methods of treatment requiring licenses.

our patent and other intellectual property protection is inadequate, future sales and profits may never materialize or competitors

could force our products completely out of the market.

which prevent the manufacture or sale of our products may be issued to others.

We may have to license those patents and pay significant

fees or royalties to the owners of the patents in order to keep marketing our products.

This would cause profits on sales to suffer.

We have been granted patents or licensed

patents in the US, but patent applications that have been, or may in the future be, filed by us may not result in the issuance

of additional patents.

The scope of any patent issued may not be sufficient to protect our technology.

The laws of foreign jurisdictions

in which we intend to sell our products may not protect our rights to the same extent as the laws of the US.

In addition to patent protection, we also

rely on trade secrets, proprietary know-how and technology advances.

We enter into confidentiality agreements with our employees

and others, but these agreements may not be effective in protecting our proprietary information.

Others may independently develop

substantially equivalent proprietary information or obtain access to our know-how.

Litigation, which is expensive, may be necessary

to enforce or defend our patents or proprietary rights and may not end favorably for us.

We may also choose to initiate litigation

against other parties who we come to believe are infringing these patents.

If such litigation is unsuccessful or if the patents

are invalidated or canceled, we may have to write off the related intangible assets and such an event could significantly reduce

our earnings.

Any of our licenses, patents or other intellectual property may be challenged, invalidated, canceled, infringed or

circumvented and may not provide any competitive advantage to us.

If we are required to impair our

long-lived assets, our financial condition and results could be negatively affected.

If we are unable to further successfully

develop products using our patents that were purchased, we may experience events which could cause our long-lived assets to be

If we evaluate our long-lived assets and deem that there is an impairment, we are required to recognize an impairment

loss related to the assets.

Risks Related to Our Common Stock

As a result of recent issuances of shares of our Common

Stock, two stockholders effectively control the Company.

These stockholders can exercise significant control, which could limit

your ability to influence the outcome of key transactions, including any future change of control.

During the six-month period ended June

30, 2019, we entered into a purchase agreement related to our Series AA Financing whereby we issued an aggregate of 113.6 million

shares of our Common Stock to Handok, Inc.

and Genexine, Inc.

(collectively, “H&G”), and an aggregate of 34.9 million

shares of our Common Stock to the former holders of our convertible debt.

As disclosed in our Current Report on Form 8-K filed

with the SEC on July 30, 2019, we entered into a second purchase agreement whereby H&G purchased approximately 69.0 million

shares of our common stock at a price per share of $0.29 for aggregate net proceeds of $20.0 million.

As a result of these other

recent issuances, our total outstanding shares of common stock increased by 218.0 million shares from 62.2 million shares as of

December 31, 2018, to 280.2 million shares as of July 30, 2019.

Since January 2019, H&G have each purchased an aggregate of

89.8 million shares of our Common Stock resulting in ownership of approximately 32%.

A change in control of Rezolute has occurred

since H&G collectively own 64% of our Common Stock.

As a result these recent issuances of our

Common Stock, H&G have significant influence over all matters that require approval by our stockholders, including the election

of directors and approval of significant corporate transactions.

Our Board of Directors currently consists of three members, including

one representative from each of Handok and Genexine who collectively control potential actions by the Board.

Accordingly, future

corporate actions might be taken even if other stockholders oppose them.

This concentration of ownership might also have the effect

of delaying or preventing a change of control of our company that other stockholders may view as beneficial.

Investors may experience dilution

if we issue additional shares of common stock.

As of June 30, 2019, there are up to 83.0

million shares of our Common Stock that may be issued pursuant to outstanding warrants and stock option agreements, as well as

future grants under our stock option plans.

Such potential issuances include (i) outstanding warrants to purchase up to 46.0 million

shares of our Common Stock at a weighted average exercise price of $1.34 per share, (ii) outstanding stock options to purchase

up to 13.9 million shares of our Common Stock at a weighted average exercise price of $1.60 per share, and (iii) approximately

23.2 million shares that are reserved for future grants under our active stock option plans.

On July 31, 2019, our Board of Directors

authorized an additional 15.0 million shares for issuance under the newly formed 2019 Non Qualified Stock Option Plan that is subject

to stockholder approval.

Additionally, the Board of Directors granted stock options to certain officers and employees for an aggregate

of 34.0 million shares at an exercise price of $0.29 per share.

Accordingly, as of July 31, 2019, we have an aggregate of 94.3

million shares that may be issued upon exercise of outstanding stock options and warrants, and 4.2 million shares that are reserved

for future grans under our active stock option plans.

In general, our stockholders do not have

preemptive rights to any common stock issued by us in the future.

Therefore, stockholders may experience dilution of their equity

investment if we issue additional shares of common stock in the future.

This includes shares issuable under equity incentive plans,

or if we issue securities that are convertible into shares of our common stock.

Given that we will we require additional capital,

we intend to raise funds in the future by issuing common stock that will cause substantial incremental dilution to our stockholders.

There is a limited trading market

for our common stock, which could make it difficult to liquidate an investment in our common stock, in a timely manner.

Our common stock is currently traded on

Because there is a limited public market for our common stock, investors may not be able to liquidate their investment

whenever desired.

We cannot assure that an active trading market for our common stock will ever develop and the lack of an active

public trading market means that investors may be exposed to increased risk.

In addition, if we failed to meet the criteria set

forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other

than established customers and accredited investors.

Consequently, such regulations may deter broker-dealers from recommending

or selling our common stock, which may further affect its liquidity.

With a limited trading market for

our common stock, the trading price can be impacted by naked short selling.

Our stock price has been under downward

pressure for over a year and we have been puzzled as to why there would be consistent downward pressure on our stock even in the

face of positive news about the Company and our prospects.

Following some investigation and with the assistance of outside advisors,

we believe we are the target of naked short selling.

Naked short selling is when an investor sells short shares that they do not

possess and have not confirmed their ability to possess.

If the trade associated with the short does not take place within the

clearing time period and the short-seller does not tender shares to the buyer, the trade is considered a “failure to deliver.”

Naked short selling, a practice that is

prohibited by the SEC's Regulation SHO, reduces the value of companies and stockholders' investments by artificially pushing a

company’s stock price down.

For smaller companies like ours that are looking to raise working capital, it makes the process

Upon tracking our trading activity, we have determined that approximately 44% of our daily trading volume is short selling

and we believe that the short sellers have been lax at complying with Regulation SHO since early 2013.

There are no assurances

that we will be able to curb the naked short selling of our stock.

If securities analysts do not publish

research or reports about our business or if they downgrade us or our sector, the price of our common stock could decline.

The trading market for our common stock

will depend in part on research and reports that industry or financial analysts publish about us or our business.

We do not control

these analysts.

Furthermore, if one or more of the analysts who cover us downgrades us or the industry in which we operate or the

stock of any of our competitors, the price of our common stock will likely decline.

If one or more of these analysts ceases coverage

altogether, we could lose visibility, which could also lead to a decline in the price of the common stock.

The market price and trading volume

of our Common Stock may be volatile, which may adversely affect its market price.

The market price of our Common Stock could

be subject to significant fluctuations due to factors such as:

actual or anticipated fluctuations in our financial condition or results of operations;

limited trading activity;

success or failure of our operating strategies and our perceived prospects;

have been granted patents or licensed patents in the United States, but patent applications that have been, or may in the future

be, filed by us may not result in the issuance of additional patents.

The scope of any patent issued may not be sufficient to

protect our technology.

The laws of foreign jurisdictions in which we intend to sell our products may not protect our rights to

the same extent as the laws of the United States.

addition to patent protection, we also rely on trade secrets, proprietary know-how and technology advances.

We enter into confidentiality

agreements with our employees and others, but these agreements may not be effective in protecting our proprietary information.

Others may independently develop substantially equivalent proprietary information or obtain access to our know-how.

which is expensive, may be necessary to enforce or defend our patents or proprietary rights and may not end favorably for us.

We may also choose to initiate litigation against other parties who we come to believe are infringing these patents.

If such litigation

is unsuccessful or if the patents are invalidated or canceled, we may have to write off the related intangible assets and such

an event could significantly reduce our earnings.

Any of our licenses, patents or other intellectual property may be challenged,

invalidated, canceled, infringed or circumvented and may not provide any competitive advantage to us.

Related to Our Common Stock

stockholders may exercise significant voting control over the Company.

These stockholders have the ability to exercise significant

control, which could limit your ability to influence the outcome of key transactions, including any future change of control.

January 2019 and July 2019, we entered into purchase agreements whereby we issued an aggregate of approximately 1.8

million shares of our Common Stock to each of Handok, Inc.

(“Handok”) and Genexine, Inc.

(“Genexine”).

On June 26, 2020, Handok entered into a 10b5-1 purchasing plan (the “10b5-1 Plan”) with JMP Securities.

to the terms of the 10b5-1 Plan, Handok has purchased on the open market an aggregate of approximately 172,000 shares of our Common

Stock through September 30, 2020.

As a result of these issuances, Handok owned approximately 34% and Genexine owned approximately

31% of our outstanding Common Stock as of September 30, 2020.

Under the 10b5-1 Plan Handok has the ability to continue to

acquire shares of our Common Stock on the open market.

a result of these recent issuances of our Common Stock, Handok and Genexine have significant influence over all matters that

require approval by our stockholders, including the election of directors and approval of significant corporate transactions.

Our Board of Directors currently consists of five members, including one representative from Handok.

Due to the significant

voting power held by each of Handok and Genexine, future corporate actions can be approved if these two stockholders cast

identical votes for a stockholder proposal, even if other stockholders oppose them.

This concentration of ownership might

also have the effect of delaying or preventing a change of control of our company that other stockholders may view as

ability to uplist our Common Stock to the Nasdaq Capital Market is contingent on us meeting applicable initial listing criteria.

to a private placement completed on October 9, 2020,

we are required to use commercially reasonable efforts to uplist our shares of Common Stock to the Nasdaq Stock Market, a

national securities exchange.

We have an active application in place for our Common Stock to be listed on the Nasdaq Capital

Each exchange requires companies desiring to list their Common Stock to meet certain listing criteria including total

number of stockholders, Board of Directors independence, minimum stock price, total value of public float, and in some cases

total stockholders' equity and market capitalization.

Our failure to meet such applicable listing criteria could prevent us

from listing our Common Stock on this exchange.

In the event we are unable to uplist our Common Stock, our Common Stock will

continue to trade on the OTCQB market, which is generally considered less liquid and more volatile than a national securities

Our failure to uplist our Common Stock could make it more difficult for you to trade our Common Stock, could

prevent our Common Stock from trading on a frequent and liquid basis and could result in the price of our Common Stock not

reflecting the value of our Common Stock.

addition, if we failed to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers

who sell our securities to persons other than established customers and accredited investors.

Consequently, such regulations may

deter broker-dealers from recommending or selling our Common Stock, which may further affect its liquidity.

may experience dilution if we issue additional shares of Common Stock.

of June 30, 2020, there are up to 1.6 million shares of our Common

Stock that may be issued pursuant to outstanding warrants and stock option agreements.

Such potential issuances include (i) outstanding

warrants to purchase up to 0.6 million shares of our Common Stock at a weighted average exercise price of $57.46 per share, and

(ii) outstanding stock options to purchase up to 1.0 million shares of our Common Stock at a weighted average exercise price

of $33.06 per share.

We also have approximately 36,000 shares that are reserved for future grants under our active stock option

Additionally, we issued warrants to purchase 0.8 million shares of our Common Stock that are exercisable at $19.50 per

share in connection with a private placement completed on October 9, 2020.

general, our stockholders do not have preemptive rights to any Common Stock issued by us in the future.

Therefore, stockholders

may experience dilution of their equity investment if we issue additional shares of Common Stock in the future.

This includes

shares issuable under equity incentive plans, or if we issue securities that are convertible into shares of our Common Stock.

Given that we will we require additional capital, we intend to raise funds in the future by issuing Common Stock that will cause

substantial incremental dilution to our stockholders.

a limited trading market for our Common Stock, the trading price can be impacted by naked short selling.

stock price was under downward pressure for over a year and we were puzzled as to why there would be consistent downward pressure

on our stock even in the face of positive news about the Company and our prospects.

Following some investigation and with the

assistance of outside advisors, we believed we were the target of naked short selling.

Naked short selling is when an investor

sells short shares that they do not possess and have not confirmed their ability to possess, and is a practice that is prohibited

by the SEC's Regulation SHO.

It can reduce the value of companies and stockholders' investments by artificially pushing a company’s

stock price down.

discussed above, in June 2020 Handok entered into a 10b5-1 plan whereby an

aggregate of approximately 172,000 shares of our Common Stock were purchased on the open market through September 30, 2020.

As a result of these purchases, after giving effect to the Reverse Stock Split the daily closing price of our Common Stock has

been as high as $27.40 per share and naked short selling of our Common Stock seems to be reduced or eliminated.

However, we cannot

assure you that naked short selling of our Common Stock will not cause future reductions in the price of our Common Stock.

securities analysts do not publish research or reports about our business or if they downgrade us or our sector, the price of

our Common Stock could decline.

trading market for our Common Stock will depend in part on research and reports that industry or financial analysts publish about

us or our business.

We do not control these analysts.

Furthermore, if one or more of the analysts who cover us downgrades us or

the industry in which we operate or the stock of any of our competitors, the price of our Common Stock will likely decline.

one or more of these analysts ceases coverage altogether, we could lose visibility, which could also lead to a decline in the

price of the Common Stock.

market price and trading volume of our Common Stock may be volatile, which may adversely affect its market price.

market price of our Common Stock could be subject to significant fluctuations

due to factors such as:

or anticipated fluctuations in our financial condition or results of operations;

trading activity;

or failure of our operating strategies and our perceived prospects;

realization of any

of the risks described in this section;

failure to be covered by securities analysts or failure to meet the expectations of securities

decline in the stock prices of peer companies;

discount in the trading multiple of our Common Stock relative to that of common stock of certain

failure to be covered by securities analysts

or failure to meet the expectations of securities analysts;

in the stock prices of peer companies;

in the trading multiple of our Common Stock relative to that of Common Stock of certain

of our peer companies due to perceived risks associated with our smaller size.

As a result, shares of our Common Stock

may trade at prices significantly below the price an investor paid to acquire them.

Furthermore, declines in the price of our common

stock may adversely affect the Company’s ability to conduct future offerings or to recruit and retain key employees.

Our Common Stock may be considered

a “penny stock.”

Trades of our common stock are subject

to Rule 15g-9 promulgated by the SEC under the Exchange Act, which imposes certain requirements on broker-dealers who sell securities

subject to the rule to persons other than established customers and accredited investors.

For transactions covered by the rule,

broker-dealers must make a special suitability determination for purchasers of the securities and receive the purchaser’s

written agreement to the transaction prior to sale.

The SEC also has other rules that regulate broker-dealer practices in connection

with transactions in “penny stocks.”

Penny stocks generally are equity securities with a price of less than $5.00 (other

than securities listed on a national securities exchange, provided that current price and volume information with respect to transactions

in that security is provided by the exchange or system).

The penny stock rules require a broker-dealer, prior to a transaction

in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that

provides information about penny stocks and the nature and level of risks in the penny stock market.

The broker-dealer also must

provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson

in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.

The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally

or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s

confirmation.

These disclosure requirements have the effect of reducing the level of trading activity in the secondary market for

our common stock.

As a result of the foregoing, investors may find it difficult to sell their shares.

We have no current plan to pay dividends

on our Common Stock and investors may lose the entire amount of their investment.

We have no current plans to pay dividends

on our Common Stock.

Therefore, investors will not receive any funds absent a sale of their shares.

We cannot assure investors

of a positive return on their investment.

a result, shares of our Common Stock may trade at prices significantly

below the price an investor paid to acquire them.

Furthermore, declines in the price of our Common Stock may adversely affect

the Company’s ability to conduct future offerings or to recruit and retain key employees.

Common Stock may be considered a “penny stock.”

trades of our Common Stock were subject to Rule 15g-9 promulgated by the SEC under the Exchange Act, which imposes certain

requirements on broker-dealers who sell securities subject to the rule to persons other than established customers and accredited

For transactions covered by the rule, broker-dealers must make a special suitability determination for purchasers of

the securities and receive the purchaser’s written agreement to the transaction prior to sale.

The SEC also has other rules that

regulate broker-dealer practices in connection with transactions in “penny stocks.”

Penny stocks generally are equity

securities with a price of less than $5.00, other than securities listed on a national securities exchange, provided that current

price and volume information with respect to transactions in that security is provided by the exchange or system.

The penny stock

rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a

standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level

of risks in the penny stock market.

The broker-dealer also must provide the customer with current bid and offer quotations for

the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements

showing the market value of each penny stock held in the customer’s account.

The bid and offer quotations and the broker-dealer

and salesperson compensation information must be given to the customer orally or in writing prior to effecting the transaction

and must be given to the customer in writing before or with the customer’s confirmation.

These disclosure requirements have

the effect of reducing the level of trading activity in the secondary market for our Common Stock.

As a result of our Reverse

Stock Split, we believe that our Common Stock will no longer be deemed a penny stock.

However, we cannot assure you that we will

maintain our Common Stock price or that we will not become subject to the penny stock rules in the future.

have no current plan to pay dividends on our Common Stock and investors may lose the entire amount of their investment.

have no current plans to pay dividends on our Common Stock.

investors will not receive any funds absent a sale of their shares.

We cannot assure investors of a positive return on their investment.

UNRESOLVED STAFF COMMENTS.

Not required for smaller reporting companies.

required for smaller reporting companies.

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-K

Item 1A. Risk Factors