What changed in this filing

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Item 1A. Risk Factors

2021-09-15 compared with 2020-10-13 · 679 added, 701 removed, 94 unchanged (94% of the section changed)

Risk Factors.

Investors should consider carefully

the following information about these risks before deciding to purchase any of our securities.

If any of the events or developments

described below actually occur, our business, results of operations and financial condition would likely suffer and investors may

lose all or part of their investment.

In addition, it is also possible that other risks and uncertainties that affect our business

may arise or become material in the future.

Investors should consider carefully the following

information about these risks before deciding to purchase any of our securities.

If any of the events or developments described below

actually occur, our business, results of operations and financial condition would likely suffer and investors may lose all or part of

their investment.

In addition, it is also possible that other risks and uncertainties that affect our business may arise or become material

in the future.

Risks Related to Our Business

We have a history of losses and may

not achieve profitability in the future.

Our Loan Agreement contains certain restrictions

that may limit our ability to operate our business.

As described further in this Annual Report we

entered into the Loan Agreement with SLR.

The terms of the Loan Agreement and the related collateral documents contain, and any future

indebtedness would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on us,

including restrictions on our ability, and the ability of our subsidiaries, to take actions that may be in our best interests, including,

among others, disposing of assets, entering into change of control transactions, mergers or acquisitions, incurring additional indebtedness,

granting liens on our assets, declaring and paying dividends, and agreeing to do any of the foregoing.

The loan facility requires us to

establish a restricted cash account for at least $5.0 million beginning no later than December 31, 2021.

Our ability to meet these and

other financial covenants can be affected by events beyond our control, including as a result of the economic downturn caused by the COVID-19

pandemic, and we may not be able to continue to meet these covenants.

A breach of any of these covenants or the occurrence of other events

(including a material adverse effect) specified in these agreements and/or the related collateral documents would result in an event of

default under such agreements.

Upon the occurrence of an event of default, SLR Investment, as collateral agent for the lenders, could

elect to declare all amounts outstanding, if any, under the Loan Agreement to be immediately due and payable and terminate all commitments

to extend further credit.

If we were unable to repay those amounts, SLR, as collateral agent for the lenders, could proceed against the

collateral granted to them to secure such indebtedness.

We have pledged substantially all of our assets as collateral under the loan documents

and the security interests will not be released until all obligations are repaid, including a requirement to pay an Exit Fee of $0.6 million

for certain fundamental transactions that may occur through April 13, 2031.

If SLR, as collateral agent for the lenders, accelerates the

repayment of borrowings, if any, we may not have sufficient funds to repay our existing debt.

We have a history of losses and may not

achieve profitability in the future.

We will need substantial additional capital to fund our operations.

If we fail to obtain

additional capital, we may be unable to sustain operations.

If we fail to obtain additional

capital, we may be unable to sustain operations.

We incurred net losses of $20.9 million and $20.3

million for the fiscal years ended June 30, 2021 and 2020, respectively.

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

seek partners for our product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable

than might otherwise be available.

In the absence of additional capital we may also be required to relinquish, license or otherwise

dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize our

business on terms that are less favorable than might otherwise be available.

If we are unable to secure additional capital, we

may be required to take additional measures to reduce costs in order to conserve our cash in amounts sufficient to sustain operations

and meet our obligations.

These measures could cause significant delays in the development of our product candidates.

Results of preclinical testing or

earlier clinical studies are not necessarily predictive of future results, therefore none of the product candidates we advance

into clinical studies may have favorable results in later clinical studies or receive regulatory approval.

Success in preclinical testing does not

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 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.

As of June 30, 2021, we had an accumulated deficit

of $168.1 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

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 seek partners for our product candidates at an earlier stage than

otherwise would be desirable and on terms that are less favorable than might otherwise be available.

In the absence of additional capital

we may also be required to relinquish, license or otherwise dispose of rights to technologies, product candidates or products that we

would otherwise seek to develop or commercialize our business on terms that are less favorable than might otherwise be available.

are unable to secure additional capital, we may be required to take additional measures to reduce costs in order to conserve our cash

in amounts sufficient to sustain operations and meet our obligations.

These measures could cause significant delays in the development

of our product candidates.

Results of preclinical testing or earlier

clinical studies are not necessarily predictive of future results, therefore none of the product candidates we advance into clinical studies

may have favorable results in later clinical studies or receive regulatory approval.

Success in preclinical testing does not ensure

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

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

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

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.

Beginning 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

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

economy may not occur until 2022 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 trials;

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 trials;

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.

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 States.

COVID-19 is currently impacting countries, communities

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.

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

trials that could adversely affect our financial position.

Many factors could affect the timing of

our clinical studies, if any, that we may conduct, including lack of Current Good Manufacturing Practice (“cGMP”) drug

product, slow patient recruitment, the proximity of patients to clinical sites, the eligibility criteria for the trial, competing

clinical trials and new drugs approved for the conditions we are investigating.

Other companies may be conducting clinical trials

or may announce plans for future trials that will be seeking patients with the same indications as those we are studying.

result of all of these factors, our trials may take longer to enroll patients than we anticipate.

Delays in patient enrollment

in the trials may increase our costs and slow down our product development and approval process.

Our product development costs

will also increase if we need to perform more or larger clinical trials than planned.

Any delays in completing our clinical trials

could adversely impact our cash position and ability to support ongoing operations.

Many factors could affect the timing of our clinical

studies, if any, that we may conduct, including lack of Current Good Manufacturing Practice (“

cGMP ”) drug product,

slow patient recruitment, the proximity of patients to clinical sites, the eligibility criteria for the trial, competing clinical trials

and new drugs approved for the conditions we are investigating.

Other companies may be conducting clinical trials or may announce plans

for future trials that will be seeking patients with the same indications as those we are studying.

As a result of all of these factors,

our trials may take longer to enroll patients than we anticipate.

Delays in patient enrollment in the trials may increase our costs and

slow down our product development and approval process.

Our product development costs will also increase if we need to perform more or

larger clinical trials than planned.

Any delays in completing our clinical trials could adversely impact our cash position and ability

to support ongoing operations.

Due to our reliance on contract research

organizations or other third parties to conduct clinical trials, we may not have complete control over the timing, conduct and

expense of our clinical trials.

organizations or other third parties to conduct clinical trials, we may not have complete control over the timing, conduct and expense

of our clinical trials.

We rely primarily on third parties to conduct

our clinical trials.

As a result, we will have less control over the conduct of the clinical trials, the timing and completion

of the trials, the required reporting of adverse events and the management of data developed through the trial than would be the

case if our own staff conducted all clinical trials.

Communicating with outside parties can also be challenging, potentially leading

to mistakes and difficulties in coordinating activities.

Outside parties may have staffing difficulties, may undergo changes in

priorities or may become financially distressed, adversely affecting their willingness or ability to conduct our trials.

experience unexpected increased costs that are beyond our control.

Problems with the timeliness or quality of the work of a contract

research organization may lead us to seek to terminate the relationship and use an alternative service provider.

However, making

this change may be costly and may delay our trials, and contractual restrictions may make such a change difficult or impossible.

Additionally, it may be impossible to find a replacement organization that can conduct our trials in an acceptable manner and at

an acceptable cost.

Adverse events in our clinical trials

may force us to stop development of our product candidates or prevent regulatory approval of our product candidates.

Our product candidates may produce serious

adverse events in patients during clinical trials.

These adverse events could interrupt, delay or halt clinical trials of our product

candidates and could result in the FDA, or other regulatory authorities requesting additional preclinical data or denying approval

of our product candidates for any or all targeted indications.

An institutional review board, independent data safety monitoring

board, the FDA, other regulatory authorities or the Company itself may suspend or terminate clinical trials at any time.

assure you that any of our product candidates will prove safe for human use.

We have never generated any revenues

and may never become profitable.

Since inception, we have not generated

We expect to continue to incur substantial operating losses for the next several years as we move our product candidates

into clinical trials and continue our research and development efforts.

To become profitable, we must successfully develop, manufacture

and market our product candidates, either alone or in conjunction with possible collaborators.

We may never have any revenue or

become profitable.

Our competitors may develop and market

drugs that are less expensive, more effective or safer than our product candidates.

As a result, we will have less control over the conduct of the clinical trials, the timing and completion of the

trials, the required reporting of adverse events and the management of data developed through the trial than would be the case if our

own staff conducted all clinical trials.

Communicating with outside parties can also be challenging, potentially leading to mistakes and

difficulties in coordinating activities.

Outside parties may have staffing difficulties, may undergo changes in priorities or may become

financially distressed, adversely affecting their willingness or ability to conduct our trials.

We may experience unexpected increased

costs that are beyond our control.

Problems with the timeliness or quality of the work of a contract research organization may lead us

to seek to terminate the relationship and use an alternative service provider.

However, making this change may be costly and may delay

our trials, and contractual restrictions may make such a change difficult or impossible.

Additionally, it may be impossible to find a

replacement organization that can conduct our trials in an acceptable manner and at an acceptable cost.

Adverse events in our clinical trials may

force us to stop development of our product candidates or prevent regulatory approval of our product candidates.

Our product candidates may produce serious adverse

events in patients during clinical trials.

These adverse events could interrupt, delay or halt clinical trials of our product candidates

and could result in the FDA, or other regulatory authorities requesting additional preclinical data or denying approval of our product

candidates for any or all targeted indications.

An institutional review board, independent data safety monitoring board, the FDA, other

regulatory authorities or the Company itself may suspend or terminate clinical trials at any time.

We cannot assure you that any of our

product candidates will prove safe for human use.

We have never generated any revenues and

may never become profitable.

Since inception, we have not generated any revenue.

We expect to continue to incur substantial operating losses for the next several years as we move our product candidates into clinical

trials and continue our research and development efforts.

To become profitable, we must successfully develop, manufacture and market our

product candidates, either alone or in conjunction with possible collaborators.

We may never have any revenue or become profitable.

Our competitors may develop and market drugs

that are less expensive, more effective or safer than our product candidates.

The pharmaceutical market is highly competitive.

It is possible that our competitors will develop and market products that are less expensive, more effective or safer than our

future products or that will render our products obsolete.

Other pharmaceutical and biotechnology companies may develop improved

formulations of the same drugs that compete with drug products we are developing.

We expect that competition from pharmaceutical

and biotechnology companies, universities and public and private research institutions will increase.

Many of these competitors

have substantially greater financial, technical, research and other resources than we do.

We may not have the financial resources,

technical and research expertise or marketing, distribution or support capabilities to successfully compete with these competitors.

After the completion of our clinical

studies, we cannot predict whether or when we will obtain regulatory approval to commercialize our product candidates and we cannot,

therefore, predict the timing of any future revenue from these product candidates.

Even if we achieve positive clinical results

and file for regulatory approval, we cannot commercialize any of our product candidates until the appropriate regulatory agencies

have reviewed and approved the applications for such product candidates.

We cannot assure that the regulatory agencies will complete

their review processes in a timely manner or that we will obtain regulatory approval for any product candidate we develop.

of regulatory requirements typically takes many years, is dependent upon the type, complexity and novelty of the product and requires

the expenditure of substantial resources.

In addition, we may experience delays or rejections based upon additional government

regulation from future legislation or administrative action or changes in FDA policy during the period of product development,

clinical studies and FDA regulatory review.

Even if our product candidates receive

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

regulatory approval is obtained

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

potentially costly post-approval studies or post-market surveillance.

For example, the label ultimately approved, if any, may include

restrictions on use.

It is possible that our competitors will develop and market products that are less expensive, more effective or safer than our future

products or that will render our products obsolete.

Other pharmaceutical and biotechnology companies may develop improved formulations

of the same drugs that compete with drug products we are developing.

We expect that competition from pharmaceutical and biotechnology

companies, universities and public and private research institutions will increase.

Many of these competitors have substantially greater

financial, technical, research and other resources than we do.

We may not have the financial resources, technical and research expertise

or marketing, distribution or support capabilities to successfully compete with these competitors.

After the completion of our clinical studies,

we cannot predict whether or when we will obtain regulatory approval to commercialize our product candidates and we cannot, therefore,

predict the timing of any future revenue from these product candidates.

Even if we achieve positive clinical results and

file for regulatory approval, we cannot commercialize any of our product candidates until the appropriate regulatory agencies have reviewed

and approved the applications for such product candidates.

We cannot assure that the regulatory agencies will complete their review processes

in a timely manner or that we will obtain regulatory approval for any product candidate we develop.

Satisfaction of regulatory requirements

typically takes many years, is dependent upon the type, complexity and novelty of the product and requires the expenditure of substantial

In addition, we may experience delays or rejections based upon additional government regulation from future legislation or

administrative action or changes in FDA policy during the period of product development, clinical studies and FDA regulatory review.

Even if our product candidates receive regulatory

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

regulatory approval is obtained for

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

costly post-approval studies or post-market surveillance.

For example, the label ultimately approved, if any, may include restrictions

Further, the FDA may require that long-term safety data may need to be obtained as a post-market requirement.

if the FDA or a foreign regulatory agency approves a product candidate, the approval may impose significant restrictions on the

indicated uses, conditions for use, labeling, advertising, promotion, marketing and/or production of such product and may impose

requirements for post-approval studies, including additional research and development and clinical trials.

The FDA and other agencies

also may impose various civil or criminal sanctions for failure to comply with regulatory requirements, including substantial monetary

penalties and withdrawal of product approval.

In addition, manufacturers of drug products

and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance

with current good manufacturing practices and regulations.

If we or a regulatory agency discovers previously unknown problems with

a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured,

a regulatory agency may impose restrictions on that product, the manufacturing facility or us, including requiring recall or withdrawal

of the product from the market or suspension of manufacturing.

If we, our product candidates or the manufacturing facilities for

our product candidates fail to comply with applicable regulatory requirements, a regulatory agency may:

FDA or a foreign regulatory agency approves a product candidate, the approval may impose significant restrictions on the indicated uses,

conditions for use, labeling, advertising, promotion, marketing and/or production of such product and may impose requirements for post-approval

studies, including additional research and development and clinical trials.

The FDA and other agencies also may impose various civil or

criminal sanctions for failure to comply with regulatory requirements, including substantial monetary penalties and withdrawal of product

In addition, manufacturers of drug products and

their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with

current good manufacturing practices and regulations.

If we or a regulatory agency discovers previously unknown problems with a product,

such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory

agency may impose restrictions on that product, the manufacturing facility or us, including requiring recall or withdrawal of the product

from the market or suspension of manufacturing.

If we, our product candidates or the manufacturing facilities for our product candidates

fail to comply with applicable regulatory requirements, a regulatory agency may:

issue warning letters or untitled letters;

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a product recall.

The occurrence of any event or penalty

described above may inhibit our ability to commercialize our products and generate revenue.

If any of our product candidates

for which we receive regulatory approval does not achieve broad market acceptance, the revenue that we generate from its sales,

if any, will be limited.

The occurrence of any event or penalty described

above may inhibit our ability to commercialize our products and generate revenue.

If any of our product candidates for which

we receive regulatory approval does not achieve broad market acceptance, the revenue that we generate from its sales, if any, will be

The commercial success of our product candidates

for which we obtain marketing approval from the FDA or other regulatory agencies will depend upon the acceptance of these products

by the medical community, including physicians, patients and payors.

The degree of market acceptance of any of our approved products

will depend on a number of factors, including:

for which we obtain marketing approval from the FDA or other regulatory agencies will depend upon the acceptance of these products by

the medical community, including physicians, patients and payors.

The degree of market acceptance of any of our approved products will

depend on a number of factors, including:

demonstration of clinical safety and efficacy compared to other products;

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sales and marketing strategies;

our ability to obtain and maintain sufficient third-party coverage or reimbursement from government

health care programs, including Medicare and Medicaid;

our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health

care programs, including Medicare and Medicaid;

the willingness of patients to pay out-of-pocket in the absence of third-party coverage.

If our product candidates are approved,

but do not achieve an adequate level of acceptance by physicians, health care payors and patients, we may not generate sufficient

revenue from these products, and we may not become or remain profitable.

In addition, our efforts to educate the medical community

and third-party payors on the benefits of our product candidates may require significant resources and may never be successful.

If our product candidates are approved, but do

not achieve an adequate level of acceptance by physicians, health care payors and patients, we may not generate sufficient revenue from

these products, and we may not become or remain profitable.

In addition, our efforts to educate the medical community and third-party

payors on the benefits of our product candidates may require significant resources and may never be successful.

Our manufacturing experience is limited.

The manufacture

of drugs for clinical trials and for commercial sale is subject to regulation by the FDA under cGMP regulations and by other regulators

The manufacture of

drugs for clinical trials and for commercial sale is subject to regulation by the FDA under cGMP regulations and by other regulators

under other laws and regulations.

We cannot assure you that we can successfully manufacture our products under cGMP regulations

or other laws and regulations in sufficient quantities for clinical trials or for commercial sale, or in a timely or economical

If our product candidates do not

meet safety or efficacy requirements, they will not receive regulatory approval and we will be unable to market them.

The process of drug development, regulatory

review and approval typically is expensive, takes many years and the timing of any approval cannot be accurately predicted.

we fail to obtain regulatory approval for our current or future product candidates, we will be unable to market and sell such products

and therefore may never be profitable.

As part of the regulatory approval process,

we must conduct preclinical studies and clinical trials for each product candidate to demonstrate safety and efficacy.

of preclinical studies and clinical trials that will be required varies depending on the product candidate, the indication being

evaluated, the trial results and regulations applicable to any particular product candidate.

The results of preclinical studies and

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 progress through

initial clinical trials.

We cannot assure you that the data collected from the preclinical studies and clinical trials of our product

candidates will be sufficient to support approval by FDA or a foreign regulatory authority.

In addition, the continuation of a

particular study after review by an independent data safety monitoring board does not necessarily indicate that our product candidate

will achieve the clinical endpoint.

The FDA and other regulatory agencies can

delay, limit or deny approval for many reasons, including:

We cannot assure you that we can successfully manufacture our products under cGMP regulations or

other laws and regulations in sufficient quantities for clinical trials or for commercial sale, or in a timely or economical

If our product candidates do not meet safety

or efficacy requirements, they will not receive regulatory approval and we will be unable to market them.

The process of drug development, regulatory review

and approval typically is expensive, takes many years and the timing of any approval cannot be accurately predicted.

If we fail to obtain

regulatory approval for our current or future product candidates, we will be unable to market and sell such products and therefore may

never be profitable.

As part of the regulatory approval process, we

must conduct preclinical studies and clinical trials for each product candidate to demonstrate safety and efficacy.

The number of preclinical

studies and clinical trials that will be required varies depending on the product candidate, the indication being evaluated, the trial

results and regulations applicable to any particular product candidate.

The results of preclinical studies and initial

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

Product candidates in

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

We cannot assure you that the data collected from the preclinical studies and clinical trials of our product candidates will be sufficient

to support approval by the FDA or a foreign regulatory authority.

In addition, the continuation of a particular study after review by an independent

data safety monitoring board does not necessarily indicate that our product candidate will achieve the clinical endpoint.

The FDA and other regulatory agencies can delay,

limit or deny approval for many reasons, including:

a product candidate may not be safe or effective;

our manufacturing processes or facility may not meet the applicable requirements;

changes in regulatory agency approval policies or adoption of new regulations may require additional

clinical trials or work on our end.

Any delay in, or failure to receive or

maintain, approval for any of our products could prevent us from ever generating meaningful revenues or achieving profitability.

Our product candidates are prone to the

risks of failure inherent in drug development.

Before obtaining regulatory approvals for the commercial sale of any product candidate

for a target indication, we must demonstrate safety in preclinical studies and effectiveness with substantial evidence gathered

in well-controlled clinical studies.

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

changes in regulatory agency approval policies or adoption of new regulations may require additional clinical

trials or work on our end.

Any delay in, or failure to receive or maintain,

approval for any of our products could prevent us from ever generating meaningful revenues or achieving profitability.

Our product candidates are prone to the risks

of failure inherent in drug development.

Before obtaining regulatory approvals for the commercial sale of any product candidate for a

target indication, we must demonstrate safety in preclinical studies and effectiveness with substantial evidence gathered in well-controlled

clinical studies.

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 may

offer therapeutic benefit or other improvements over existing, comparable therapeutics;

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obtain favorable reimbursement.

We are not permitted to market any of our

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.

We have not submitted a

new drug application or biologics license application or received marketing approval for any of our product candidates.

Preclinical testing and clinical studies

are long, expensive and uncertain processes.

We may spend several years completing our testing for any particular product candidate,

and failure can occur at any stage.

Negative or inconclusive results or adverse medical events during a clinical study could also

cause us or the FDA to terminate a clinical study or require that we repeat it or conduct additional studies.

Additionally, data

obtained from a clinical study is susceptible to varying interpretations and the FDA or other regulatory authorities may interpret

the results of our clinical studies less favorably than we do.

We are not permitted to market any of our 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.

We have not submitted a new drug application

or biologics license application or received marketing approval for any of our product candidates.

Preclinical testing and clinical studies are

long, expensive and uncertain processes.

We may spend several years completing our testing for any particular product candidate, and

failure can occur at any stage.

Negative or inconclusive results or adverse medical events during a clinical study could also cause

us or the FDA to terminate a clinical study or require that we repeat it or conduct additional studies.

Additionally, data obtained

from a clinical study is susceptible to varying interpretations and the FDA or other regulatory authorities may interpret the

results of our clinical studies less favorably than we do.

The FDA and equivalent foreign regulatory agencies have substantial

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Any failure or delay by our third-party

suppliers on which we rely or intend to rely to provide materials necessary to develop and manufacture our drug products may delay

or impair our ability to commercialize our product candidates.

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.

suppliers on which we rely or intend to rely to provide materials necessary to develop and manufacture our drug products may delay 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.

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.

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

raw materials that we use to manufacture our drugs.

Such suppliers may not sell these raw materials at the times we need them or

on commercially reasonable terms.

We do not have any control over the process or timing of the acquisition of these raw materials

by our manufacturers.

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 “

could continue to adversely impact our business, including our clinical trials.”

There are a small number of suppliers for raw

materials that we use to manufacture our drugs.

Such suppliers may not sell these raw materials at the times we need them or on commercially

reasonable terms.

We do not have any control over the process or timing of the acquisition of these raw materials by our manufacturers.

Moreover, we currently do not have any agreements for the commercial production of these raw materials.

we generally do not begin a clinical study unless we believe we have a sufficient supply of a product candidate to complete the

clinical study, any significant delay in the supply of raw material components needed to produce a product candidate for a clinical

study due to the need to replace a third-party manufacturer could considerably delay completion of our clinical studies, product

testing and potential regulatory approval of our product candidates.

If we or our manufacturers are unable to purchase these raw

materials after regulatory approval has been obtained for our product candidates, the commercial launch of our product candidates

would be delayed or there would be a shortage in supply of such product candidates, which would impair our ability to generate

revenues from the sale of our product candidates.

If we successfully commercialize any of

our product candidates, we may be required to establish commercial manufacturing capabilities of larger scale.

In addition, as

our drug development pipeline increases and matures, we will have a greater need for clinical study and commercial manufacturing

We have no experience manufacturing pharmaceutical products on a commercial scale and we may need to rely on third-party

manufacturers with capacity for increased production scale to meet our projected needs for commercial manufacturing, the satisfaction

of which on a timely basis may not be met.

We face potential product liability

exposure, and, if successful claims are brought against us, we may incur substantial liability.

Although we generally do not begin

a clinical study unless we believe we have a sufficient supply of a product candidate to complete the clinical study, any significant

delay in the supply of raw material components needed to produce a product candidate for a clinical study due to the need to replace a

third-party manufacturer could considerably delay completion of our clinical studies, product testing and potential regulatory approval

of our product candidates.

If we or our manufacturers are unable to purchase these raw materials after regulatory approval has been obtained

for our product candidates, the commercial launch of our product candidates would be delayed or there would be a shortage in supply of

such product candidates, which would impair our ability to generate revenues from the sale of our product candidates.

If we successfully commercialize any of our product

candidates, we may be required to establish commercial manufacturing capabilities of larger scale.

In addition, as our drug development

pipeline increases and matures, we will have a greater need for clinical study and commercial manufacturing capacity.

We have no experience

manufacturing pharmaceutical products on a commercial scale and we may need to rely on third-party manufacturers with capacity for increased

production scale to meet our projected needs for commercial manufacturing, the satisfaction of which on a timely basis may not be met.

We face potential product liability exposure,

and, if successful claims are brought against us, we may incur substantial liability.

The use of our product candidates in clinical

studies and the sale of any products for which we obtain marketing approval expose us to the risk of product liability claims.

Product liability claims might be brought against us by consumers, health care providers, pharmaceutical companies or others selling

or otherwise coming into contact with our products.

If we cannot successfully defend ourselves against product liability claims,

we could incur substantial liabilities.

In addition, regardless of merit or eventual outcome, product liability claims may result

liability claims might be brought against us by consumers, health care providers, pharmaceutical companies or others selling or otherwise

coming into contact with our products.

If we cannot successfully defend ourselves against product liability claims, we could incur substantial

In addition, regardless of merit or eventual outcome, product liability claims may result in:

impairment of our business reputation;

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for our active clinical programs.

This product liability insurance coverage for our clinical studies may not be sufficient to reimburse

us for all expenses or losses we may suffer.

Moreover, insurance coverage is becoming increasingly expensive, and, in the future,

we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due

to liability.

If and when we obtain marketing approval for any of our product candidates, we intend to expand our insurance coverage

to include the sale of commercial products;

however, we may be unable to obtain this product liability insurance on commercially

reasonable terms.

On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated

adverse effects.

A successful product liability claim, or series of claims, brought against us could cause our stock price to decline

and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.

If we use hazardous and biological

materials in a manner that causes injury or violates applicable law, we may be liable for damages.

Our research and development activities

involve the controlled use of potentially hazardous substances, including toxic chemical and biological materials.

held liable for any contamination, injury or other damages resulting from these hazardous substances.

In addition, our operations

produce hazardous waste products.

While third parties are responsible for disposal of our hazardous waste, we could be liable under

environmental laws for any required cleanup of sites at which our waste is disposed.

Federal, state, foreign and local laws and

regulations govern the use, manufacture, storage, handling and disposal of these hazardous materials.

If we fail to comply with

these laws and regulations at any time, or if they change, we may be subject to criminal sanctions and substantial civil liabilities,

which may harm our business.

Even if we continue to comply with all applicable laws and regulations regarding hazardous materials,

we cannot eliminate the risk of accidental contamination or discharge and our resultant liability for any injuries or other damages

caused by these accidents.

If we are unable to establish sales

and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable

to generate any revenue.

We currently do not have dedicated staff

for the sale, marketing and distribution of drug products.

The cost of establishing and maintaining such a staff may exceed the

cost-effectiveness of doing so.

In order to market any products that may be approved by the FDA, we must build our sales, marketing,

managerial and other non-technical capabilities or make arrangements with third parties to perform these services.

If we are unable

to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be

able to generate product revenue and may not become profitable.

We will be competing with many companies that currently have extensive

and well-funded marketing and sales operations.

Without an internal team or the support of a third party to perform marketing and

sales functions, we may be unable to compete successfully against these more established companies.

This product liability insurance coverage for our clinical studies may not be sufficient to

reimburse us for all expenses or losses we may suffer.

Moreover, insurance coverage is becoming increasingly expensive, and, in the

future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses

due to liability.

If and when we obtain marketing approval for any of our product candidates, we intend to expand our insurance

coverage to include the sale of commercial products;

however, we may be unable to obtain this product liability insurance on

commercially reasonable terms.

On occasion, large judgments have been awarded in class action lawsuits based on drugs that had

unanticipated adverse effects.

A successful product liability claim, or series of claims, brought against us could cause our stock

price to decline and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.

If we use hazardous and biological materials

in a manner that causes injury or violates applicable law, we may be liable for damages.

Our research and development activities involve

the controlled use of potentially hazardous substances, including toxic chemical and biological materials.

We could be held liable for

any contamination, injury or other damages resulting from these hazardous substances.

In addition, our operations produce hazardous waste

While third parties are responsible for disposal of our hazardous waste, we could be liable under environmental laws for any

required cleanup of sites at which our waste is disposed.

Federal, state, foreign and local laws and regulations govern the use, manufacture,

storage, handling and disposal of these hazardous materials.

If we fail to comply with these laws and regulations at any time, or if they

change, we may be subject to criminal sanctions and substantial civil liabilities, which may harm our business.

Even if we continue to

comply with all applicable laws and regulations regarding hazardous materials, we cannot eliminate the risk of accidental contamination

or discharge and our resultant liability for any injuries or other damages caused by these accidents.

If we are unable to establish sales and

marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate

We currently do not have dedicated staff for the

sale, marketing and distribution of drug products.

The cost of establishing and maintaining such a staff may exceed the cost-effectiveness

In order to market any products that may be approved by the FDA, we must build our sales, marketing, managerial and other

non-technical capabilities or make arrangements with third parties to perform these services.

If we are unable to establish adequate sales,

marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and

may not become profitable.

We will be competing with many companies that currently have extensive and well-funded marketing and sales

Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete

successfully against these more established companies.

Guidelines and recommendations published

by various organizations may adversely affect the use of any products for which we may receive regulatory approval.

Government agencies issue regulations and

guidelines directly applicable to us and to our product candidates.

In addition, professional societies, practice management groups,

private health or science foundations and organizations involved in various diseases from time to time publish guidelines or recommendations

to the medical and patient communities.

These various sorts of recommendations may relate to such matters as product usage and

use of related or competing therapies.

For example, organizations like the American Diabetes Association have made recommendations

about therapies in the diabetes therapeutics market.

Changes to these recommendations or other guidelines advocating alternative

therapies could result in decreased use of any products for which we may receive regulatory approval, which may adversely affect

our results of operations.

Government agencies issue regulations and guidelines

directly applicable to us and to our product candidates.

In addition, professional societies, practice management groups, private health

or science foundations and organizations involved in various diseases from time to time publish guidelines or recommendations to the medical

and patient communities.

These various sorts of recommendations may relate to such matters as product usage and use of related or competing

For example, organizations like the American Diabetes Association have made recommendations about therapies in the diabetes

therapeutics market.

Changes to these recommendations or other guidelines advocating alternative therapies could result in decreased use

of any products for which we may receive regulatory approval, which may adversely affect our results of operations.

We are at an early stage of development

as a company and we do not have, and may never have, any products that generate revenues.

We are at an early stage of development

as a proprietary pharmaceutical company and we do not have any commercial products.

Our existing product candidates will require

extensive additional clinical evaluation, regulatory review, significant marketing efforts and substantial investment before they

generate any revenues.

Our efforts may not lead to commercially successful products, for a number of reasons, including:

We are at an early stage of development as a proprietary

pharmaceutical company and we do not have any commercial products.

Our existing product candidates will require extensive additional clinical

evaluation, regulatory review, significant marketing efforts and substantial investment before they generate any revenues.

may not lead to commercially successful products, for a number of reasons, including:

our product candidates may not prove to be safe and effective in clinical trials;

we may not be able to obtain regulatory approvals for our product candidates or approved uses may

be narrower than we seek;

we may not be able to obtain regulatory approvals for our product candidates or approved uses may be narrower

than we seek;

we may not have adequate financial or other resources to complete the development and commercialization

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any products that are approved may not be accepted or reimbursed in the marketplace.

We do not expect to be able to market any

of our product candidates for a number of years.

If we are unable to develop, receive approval for, or successfully commercialize

any of our product candidates, we will be unable to generate significant revenues.

If our development programs are delayed, we

may have to raise additional capital or reduce or cease our operations.

Initially, we expect to derive all of our

revenues, if any, from current product candidates.

As we cannot currently enter the market nor guarantee out-licensing partnerships,

it is uncertain whether these candidates will achieve and sustain high levels of demand and market acceptance.

Our success will

depend to a substantial extent on our ability to successfully commercialize, market and / or partner our products.

Failure of consumers

or potential partners to accept would significantly adversely affect our revenues and profitability.

We do not expect to be able to market any of our

product candidates for a number of years.

If we are unable to develop, receive approval for, or successfully commercialize any of our

product candidates, we will be unable to generate significant revenues.

If our development programs are delayed, we may have to raise

additional capital or reduce or cease our operations.

Initially, we expect to derive all of our revenues,

if any, from current product candidates.

As we cannot currently enter the market nor guarantee out-licensing partnerships, it is uncertain

whether these candidates will achieve and sustain high levels of demand and market acceptance.

Our success will depend to a substantial

extent on our ability to successfully commercialize, market and / or partner our products.

Failure of consumers or potential partners

to accept would significantly adversely affect our revenues and profitability.

We may not be able to use a significant

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 ("NOL") carryforwards or other tax attributes in any taxable

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

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.

generally occurs if one or more

shareholders or groups of shareholders 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.

Two shareholders may exercise significant voting control over the Company.

These shareholders 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 ”.

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

If we are unable to successfully

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

It is possible

that any future ownership changes or issuances of our capital stock, could have a material effect on 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 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 2021

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.

consolidated financial statements, we noted material weaknesses in our internal controls, as a result of (i) our inability to segregate

duties to prevent employees from overriding the internal control system, and (ii) ineffective treasury controls over review of outstanding

authorized shares and requirements for all securities and contracts to issue common shares to ensure adequate authorized shares exist.

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 of duties.

Additionally, during our fiscal year ended June 30, 2021, we hired a Vice President of Finance to

further improve segregation of duties.

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

We cannot 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

may be affected by different local politics, business and cultural factors, different regulatory requirements and prohibitions

between jurisdictions.

We intend to seek regulatory approval in

foreign countries for all of our potential products prior to commercialization.

Pharmaceutical therapies are subject to rigorous

preclinical testing and clinical trials and other pre-market approval requirements by regulatory authorities in foreign countries.

Operations outside the United States may be affected by different local business and cultural factors, different regulatory requirements

and prohibitions between jurisdictions, including the Foreign Corrupt Practices Act and local laws prohibiting corrupt payments,

and changes in regulatory requirements for financing activities.

Our Certificate of Incorporation

provides that the Court of Chancery of the State of Delaware is the exclusive forum for certain litigation that may be initiated

by our stockholders, including claims under the Securities Act, which could limit our stockholders’

ability to obtain a favorable

judicial forum for disputes with us or our directors, officers or employees.

Our Certificate of Incorporation provides

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

and financial condition.

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

Act of 1933, as amended, or the respective rules and regulations promulgated thereunder.

Operations outside the United States may

be affected by different local politics, business and cultural factors, different regulatory requirements and prohibitions between jurisdictions.

We intend to seek regulatory approval in foreign

countries for all of our potential products prior to commercialization.

Pharmaceutical therapies are subject to rigorous preclinical testing

and clinical trials and other pre-market approval requirements by regulatory authorities in foreign countries.

Operations outside the

United States may be affected by different local business and cultural factors, different regulatory requirements and prohibitions between

jurisdictions, including the Foreign Corrupt Practices Act and local laws prohibiting corrupt payments, and changes in regulatory requirements

for financing activities.

Certain Provisions of Nevada law may have

anti-takeover effects.

Certain provisions of Nevada law applicable to

us could also delay or make more difficult a merger, tender offer or proxy contest involving us, including Sections

78.411 through 78.444 of the Nevada Revised Statutes, which prohibit a Nevada corporation from engaging in any business combination with

any "interested shareholder"

(as defined in the statute) for a period of two years unless certain conditions are met.

our senior management is entitled to certain payments upon a change in control.

Risks Related to Our Intellectual Property

Our current patent positions and

license portfolio may not include all patent rights needed for the full development and commercialization of our product candidates.

We cannot be sure that patent rights we may need in the future will be available to license on commercially reasonable terms, or

We typically develop our product candidates

using compounds that we have acquired or in-licensed, including the original composition of matter patents and patents that claim

the activities and methods for such compounds’

Our current patent positions and license

portfolio may not include all patent rights needed for the full development and commercialization of our product candidates.

be sure that patent rights we may need in the future will be available to license on commercially reasonable terms, or at all.

We typically develop our product candidates using

compounds that we have acquired or in-licensed, including the original composition of matter patents and patents that claim the activities

and methods for such compounds’

production and use.

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

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

action and new methods of manufacture and use of these product candidates, we may file additional patent applications for these

new inventions, or we may need to ask our licensors to file them.

We may also need to license additional patent rights or other

rights on compounds, treatment methods or manufacturing processes because we learn that we need such rights during the continuing

development of our product candidates.

Although our patents may prevent others

from making, using or selling similar products, they do not ensure that we will not infringe the patent rights of third parties.

We may not be aware of all patents or patent applications that may impact our ability to make, use or sell any of our product candidates

or proposed product candidates.

For example, because we sometimes identify the mechanism of action or molecular target of a given

product candidate after identifying its composition of matter and therapeutic use, we may not be aware until the mechanism or target

is further elucidated that a third party has an issued or pending patent claiming biological activities or targets that may cover

our product candidate.

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

claims, we may need to obtain licenses to these patents or to develop or obtain alternative technology.

We may not be able to obtain any licenses

or other rights to patents, technology or know-how from third parties necessary to conduct our business as described in this Annual

Report and such licenses, if available at all, may not be available on commercially reasonable terms.

Any failure to obtain such

licenses could delay or prevent us from developing or commercializing our drug candidates or proposed product candidates, which

would harm our business.

Litigation or patent interference proceedings may be necessarily brought against third parties, as discussed

below, to enforce any of our patents or other proprietary rights or to determine the scope and validity or enforceability of the

proprietary rights of such third parties.

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

As we learn more about the mechanisms of action

and new methods of manufacture and use of these product candidates, we may file additional patent applications for these new inventions,

or we may need to ask our licensors to file them.

We may also need to license additional patent rights or other rights on compounds, treatment

methods or manufacturing processes because we learn that we need such rights during the continuing development of our product candidates.

Although our patents may prevent others from making,

using or selling similar products, they do not ensure that we will not infringe the patent rights of third parties.

We may not be aware

of all patents or patent applications that may impact our ability to make, use or sell any of our product candidates or proposed product

For example, because we sometimes identify the mechanism of action or molecular target of a given product candidate after

identifying its composition of matter and therapeutic use, we may not be aware until the mechanism or target is further elucidated that

a third party has an issued or pending patent claiming biological activities or targets that may cover our product candidate.

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 claims, we may need to obtain licenses to these patents or to

develop or obtain alternative technology.

We may not be able to obtain any licenses or other

rights to patents, technology or know-how from third parties necessary to conduct our business as described in this Annual Report and

such licenses, if available at all, may not be available on commercially reasonable terms.

Any failure to obtain such licenses could delay

or prevent us from developing or commercializing our drug candidates or proposed product candidates, which would harm our business.

or patent interference proceedings may be necessarily brought against third parties, as discussed below, to enforce any of our patents

or other proprietary rights or to determine the scope and validity or enforceability of the proprietary rights of such third parties.

If our or our licensors’

positions do not adequately protect our product candidates or any future products, others could compete with us more directly,

which would harm our business.

patent positions

do not adequately protect our product candidates or any future products, others could compete with us more directly, which would harm

our business.

Our commercial success will depend in part

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and other countries.

If we or our licensors

do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive

advantage we may have, which could materially harm our business, negatively affect our position in the marketplace, limit our ability

to commercialize our product candidates and delay or render impossible our achievement of profitability.

The laws of some foreign

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.

The patent positions of biotechnology and

pharmaceutical companies, including our own patent position, involve complex legal and factual questions, and, therefore, validity

and enforceability cannot be predicted with certainty.

If we or our licensors do

not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any

competitive advantage we may have, which could materially harm our business, negatively affect our position in the marketplace,

limit our ability to commercialize our product candidates and delay or render impossible our achievement of profitability.

of some foreign 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.

The patent positions of biotechnology and pharmaceutical

companies, including our own patent position, involve complex legal and factual questions, and, therefore, validity and enforceability

cannot be predicted with certainty.

Patents may be challenged, deemed unenforceable, invalidated or circumvented.

We and our licensors will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that

our proprietary technologies, product candidates and any future products are covered by valid and enforceable patents or are effectively

maintained as trade secrets.

The degree of future protection for our

proprietary rights is uncertain, and we cannot ensure that:

we or our licensors were the first to make the inventions covered by each of our pending patent

applications;

In addition, the coverage

claimed in a patent application can be significantly reduced before the patent is issued, and patent scope can be reinterpreted by the

courts after issuance.

Moreover, many jurisdictions permit third parties to challenge issued patents in administrative proceedings, which

may result in further narrowing or even cancellation of patent claims.

We cannot predict whether the patent applications we are currently

pursuing will issue as patents in any particular jurisdiction or whether the claims of any patents, if issued, will provide sufficient

protection from competitors.

We and our licensors will be able to protect our proprietary rights from unauthorized use by third parties

only to the extent that our proprietary technologies, product candidates and any future products are covered by valid and enforceable

patents or are effectively maintained as trade secrets.

The degree of future protection for our proprietary

rights is uncertain, and we cannot ensure that:

we or our licensors were the first to make the inventions covered by each of our pending patent applications;

we or our licensors were the first to file patent applications for these inventions;

others will not independently develop similar or alternative technologies or duplicate any of our

technologies;

others will not independently develop similar or alternative technologies or duplicate any of our technologies;

any of our or our licensors’

2 unchanged sentences

patents will be valid or enforceable;

any patents issued to us or our licensors and collaborators will provide a basis for commercially

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

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

any patents issued to us or our licensors and collaborators will provide a basis for commercially 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.

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

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’

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.

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.

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.

Even if we are successful in these

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

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.

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.

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

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.

This would cause profits on sales to suffer.

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 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.

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.

We 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

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.

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

Risks Related to Our Common Stock

Two shareholders may exercise significant voting control over

These shareholders 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.

Between 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.

Subject 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 June 30, 2021.

Handok terminated the 10b5-1 Plan

As a result of these issuances, Handok owned approximately 24% and Genexine owned approximately 22% of our outstanding common

stock as of June 30, 2021.

As a result of these issuances of our common stock,

Handok and Genexine have significant influence over all matters that require approval by our shareholders, including the election of directors

and approval of significant corporate transactions.

Our Board of Directors currently consists of six members, including one representative

Due to the significant voting power held by each of Handok and Genexine, future corporate actions can be approved if these

two shareholders cast identical votes for a shareholder proposal, even if other shareholders oppose them.

This concentration of ownership

might also have the effect of delaying or preventing a change of control of our company that other shareholders may view as beneficial.

Exercise or conversion of warrants and other

convertible securities will dilute shareholder’s percentage of ownership.

We have issued convertible securities,

options and warrants to purchase shares of our common stock to our officers, directors, consultants and certain shareholders.

future, we may grant additional options, warrants and convertible securities.

The exercise, conversion or exchange of options,

warrants or convertible securities, including for other securities, will dilute the percentage ownership of our shareholders.

dilutive effect of the exercise or conversion of these securities may adversely affect our ability to obtain additional capital.

holders of these securities may be expected to exercise or convert such options, warrants and convertible securities at a time when

we would be able to obtain additional equity capital on terms more favorable than such securities or when our common stock is

trading at a price higher than the exercise or conversion price of the securities.

The exercise or conversion of outstanding

warrants, options and convertible securities will have a dilutive effect on the securities held by our shareholders.

We have in the

past, and may in the future, exchange outstanding securities for other securities on terms that are dilutive to the securities held

by other shareholders not participating in such exchange.

Our common stock may be delisted from The

Nasdaq Capital Market (“Nasdaq”) if we fail to comply with continued listing standards.

Our common stock is currently traded on Nasdaq

under the symbol “RZLT”.

If we fail to meet any of the continued listing standards of Nasdaq, our common stock could be delisted

The continued listing standards include specifically enumerated criteria, such as:

$1.00 minimum closing bid price;

Shareholders’

equity of $2.5 million;

500,000 shares of publicly-held common stock with a market value of at least $1 million;

300 round-lot shareholders;

Compliance with Nasdaq’s corporate governance requirements, as well as additional or more stringent

criteria that may be applied in the exercise of Nasdaq’s discretionary authority.

Our stock price may be volatile.

The market price of our common stock is likely

to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including

the following:

our ability to obtain working capital financing;

additions or departures of key personnel;

sales of our common stock;

our ability to execute our business plan;

operating results that fall below expectations;

loss of any strategic relationship;

regulatory developments;

economic and other external factors.

In addition, the securities markets have from

time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies.

These market fluctuations may also materially and adversely affect the market price of our common stock.

We have never paid nor do we expect in the

near future to pay cash dividends.

We have never paid cash dividends on our capital

stock and do not anticipate paying any cash dividends on our common stock for the foreseeable future.

While it is possible that we may

declare a dividend after a large settlement, investors should not rely on such a possibility, nor should they rely on an investment in

us if they require income generated from dividends paid on our capital stock.

Any income derived from our common stock would only come

from rise in the market price of our common stock, which is uncertain and unpredictable.

Offers or availability for sale of a substantial

number of shares of our common stock may cause the price of our common stock to decline.

If our shareholders sell substantial amounts of

our common stock in the public market upon the expiration of any statutory holding period or lockup agreements, under Rule 144, or issued

upon the exercise of outstanding warrants or other convertible securities, it could create a circumstance commonly referred to as an “overhang”

and in anticipation of which the market price of our common stock could fall.

The existence of an overhang, whether or not sales have

occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related

securities in the future at a time and price that we deem reasonable or appropriate.

The shares of our restricted common stock will be

freely tradable upon the earlier of:

(i) effectiveness of a registration statement covering such shares and (ii) the date on which such

shares may be sold without registration pursuant to Rule 144 (or other applicable exemption) under the Securities Act of 1933, as amended

Securities Act ”).

Investor relations activities and supply

and demand factors may affect the price of our common stock.

We expect to utilize various techniques such as

non-deal road shows and investor relations campaigns in order to generate investor awareness.

These campaigns may include personal, video

and telephone conferences with investors and prospective investors in which our business practices are described.

We may provide compensation

to investor relations firms and pay for newsletters, websites, mailings and email campaigns that are produced by third parties based upon

publicly-available information concerning us.

We do not intend to review or approve the content of such analysts’

reports or other

materials based upon analysts’

own research or methods.

Investor relations firms should generally disclose when they are compensated

for their efforts, but whether such disclosure is made or complete is not under our control.

In addition, investors may, from time to

time, also take steps to encourage investor awareness through similar activities that may be undertaken at the expense of the investors.

Investor awareness activities may also be suspended or discontinued which may impact the trading market of our common stock.

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.

Unresolved Staff Comments.

required for smaller reporting companies.

Not 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