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Item 1A. Risk Factors

2023-09-14 compared with 2022-09-15 · 221 added, 160 removed, 202 unchanged (65% of the section changed)

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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

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.

Risks Related to Our Product Development and Commercialization

Any delays in the commencement or completion, or termination or suspension, of our future clinical trials, if any, could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.

Before obtaining approval from the government authorities or professional bodies with authority to grant regulatory approval for our drug candidates in a particular country, such as the European Medicines Agency (“EMA”), the Food and Drug Administration of the U.S.

Department of Health and Human Services (“FDA”) and analogous authorities in other jurisdictions outside of the United States (“Regulatory Authorities”), we must conduct extensive clinical studies to demonstrate safety and efficacy.

Clinical testing is expensive, time consuming and uncertain as to outcome.

Any delays in the commencement or completion of our ongoing, planned or future clinical trials could significantly increase our costs, slow down our development and approval process and jeopardize our ability to commence product sales and generate revenues.

We do not know whether our planned trials will begin on time or at all, or be completed on schedule, if at all.

The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to:

● Regulatory Authorities disagreeing as to the design or implementation of our clinical trials or with our recommended dose for any of our pipeline programs;

● obtaining Regulatory Authority authorization to commence a trial or reaching a consensus with such Regulatory Authorities on trial design;

● identifying and activating investigators and clinical trial sites to conduct trials;

● obtaining approval from one or more independent institutional review board (“IRB”) or Ethics Committee (“EC”) at each clinical trial site before each trial may be initiated;

● IRBs/ECs refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial;

● changes to clinical trial protocol;

● clinical sites deviating from trial protocol or dropping out of a trial;

● failing to manufacture or obtain sufficient quantities of drug candidate, or, if applicable, combination therapies for use in clinical trials;

● patients failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up;

● patients choosing an alternative treatment, or participating in competing clinical trials;

● lack of adequate funding to continue the clinical trial;

● patients experiencing severe or unexpected drug-related adverse effects;

● occurrence of serious adverse events in trials of the same class of agents conducted by other companies;

● selecting or being required to use clinical end points that require prolonged periods of clinical observation or analysis of the resulting data;

● a facility manufacturing our drug candidates, or any of their components, including without limitation, our own facilities being ordered by Regulatory Authorities to temporarily or permanently shut down due to violations of current good manufacture practices, regulations or other applicable requirements, or infections or cross-contaminations in the manufacturing process;

● lack of stability of our clinical trial material or any quality issues that arise with the clinical trial material;

● any changes to our manufacturing process that may be necessary or desired;

● our, or our third-party contractors, not performing data collection or analysis in a timely or accurate manner or improperly disclosing data prematurely or otherwise in violation of a clinical trial protocol;

● any third-party contractors becoming debarred or suspended or otherwise penalized by Regulatory Authorities or other government or regulatory bodies for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications;

● a clinical trial being suspended or terminated by us, by the IRBs/ECs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by Regulatory Authorities, due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by Regulatory Authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using the product under investigation, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial;

● changes in regulatory requirements and policies and our need to amend clinical trial protocols to comply with these changes and potentially resubmit our clinical trial protocols to IRBs/ECs for reexamination.

Delays in initiating a new phase of clinical trials resulting from action by FDA or any other Regulatory Authority would delay the approval obtainment and commercialization of our product candidates and our ability to generate revenue, which would have an adverse effect on our business.

For example, as discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Annual Report on Form 10-K, the FDA has re-imposed a human drug exposure limit equating to repeat doses of approximately 3 mg/kg per week, a limit which was previously removed during the RIZE study (the “New Restrictions”).

As is customary in pediatric drug development, there is a progression of the inclusion of younger participants as a program advances through different stages and continues to demonstrate a good safety profile and a prospect of benefit for children based on previous stages;

and the Company’s progression to include younger participants is dampened by the imposition of the New Restrictions by the FDA.

The Company and FDA have discussed potential solutions that could enable removal of the New Restrictions and as a result, the Company is pursuing some additional nonclinical studies to potentially address FDA’s concerns, in parallel with the initiation and advancement of the Phase 3 (“sunRIZE”) study outside of the U.S.

It is possible that the Company may not satisfy FDA’s nonclinical concerns, which will cause further delays and negatively impact the Company’s development plans for congenital hyperinsulinism (“HI”) in the U.S.

The clinical hold in the U.S.

on RZ358 may impact our development plans and may impact our ability to access the capital markets.

Our most advanced product candidate, RZ358, is currently under clinical hold in the U.S.

It may take considerable time and expense to respond to the New Restrictions that have been placed on RZ358 by the FDA, and no assurance can be given that the FDA will remove the New Restrictions or that we will receive FDA approval for RZ358, in which case our business and prospects will likely suffer material adverse consequences.

In May 2023, based on historical rat toxicology found during an early RZ358 development program, the FDA affirmed its decision to impose the New Restrictions after the Company completed its multinational Phase 2b RIZE study conducted in participants 2 years of age and older, which consisted of the age restriction of 12 years and above for U.S.

patients, and to re-impose impose a human drug exposure limit equating to repeat doses of approximately 3 mg/kg per week, a limit which was previously removed during the RIZE study.

The New Restrictions delay the Company’s progression to include younger participants and consequentially delay the sunRIZE study in the U.S.

A clinical hold for RZ358 and sunRIZE continues to be in place in the U.S., and we do not know whether or when the clinical hold for the development of RZ358 will be lifted.

However, we currently expect to commence the sunRIZE study outside of the U.S.

as we have concluded our pre-sunRIZE regulatory and scientific advice meetings with Regulatory Authorities outside of the U.S.

and have reached agreements on the design of the sunRIZE study that will include participants 3 months of age and older.

Positive or promising results from clinical trials of RZ358 conducted in jurisdictions outside of the U.S.

may not be predictive of similar results, or may not be replicated, in clinical trials within the U.S.

Accordingly, even if we continue to observe the lack of adverse liver findings in the sunRIZE study outside of the U.S., it is not guaranteed that the FDA will accept such findings and lift the New Restrictions which could impact our development plans or ability to file for approval or market RZ358 in the U.S.

It may take a considerable period of time, the length of which is not certain at this time, and expense for us to fully address FDA’s concerns, if at all.

Even if we are able to fully respond to the FDA’s questions, the FDA may subsequently make additional requests that we would need to fulfill prior to the lifting of the New Restrictions.

It is possible that we will be unable to fully address the FDA’s concerns and as a result the New Restrictions may never be lifted, and we may never be able to begin the sunRIZE study or complete our clinical trials of RZ358 in the U.S.

Many of the factors that cause, or lead to, a delay in the commencement or completion of the sunRIZE study may also ultimately lead to the denial of regulatory approval from the FDA for RZ358.

If we don’t receive regulatory approval from the FDA for RZ358 our ability to raise capital and the terms of such raise could be impacted.

If we are unable to commercialize RZ358, need to limit the scope of our RZ358 program, or experience significant delays in development, our business, results of operations, financial condition, and our prospects will be adversely affected.

Results of preclinical testing or earlier clinical studies or approval from a Regulatory Authority for the next phase of clinical trials 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.

Even if our clinical studies produce promising results or a Regulatory Authority provided approval for the next phase of clinical trials, there is no assurance that such results will be replicated or exceeded in later clinical studies.

A number of companies in the biotechnology industry, including those with greater resources and experience, have suffered significant setbacks in clinical studies, even after seeing promising results in earlier preclinical and clinical studies.

We do not know whether 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 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.

If later stage clinical studies, such as the sunRIZE study to be conducted outside of the U.S., do not produce favorable results, our ability to achieve regulatory approval for 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 or other Regulatory Authority approval for our product candidates.

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 IRB/EC, 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 are exposed to additional risks as we conduct the sunRIZE study outside of the U.S.

and may not be successful in meeting the study’s primary endpoint.

We are initiating and advancing the sunRIZE study outside of the U.S.

The sunRIZE study may not produce positive results and meet its primary endpoint outside of the U.S.

We may need to commence and complete additional clinical trials that satisfy the specified primary endpoint criteria in order to obtain necessary regulatory approvals from the EMA for RZ358.

It is possible that we may not observe the lack of adverse liver findings in the sunRIZE study outside of the U.S., which could potentially impact the FDA’s decision regarding the New Restrictions.

Conducting clinical trials outside the U.S.

also exposes us to additional risks, including risks associated with:

● additional foreign regulatory requirements;

● foreign exchange fluctuations;

● compliance with foreign manufacturing, customs, shipment and storage requirements;

● potential political or economic instability in the jurisdictions where we initiate clinical trials;

● cultural differences in medical practice and clinical research;

● diminished protection of intellectual property in some countries.

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.

Even if we achieve positive clinical results and file for regulatory approval, we cannot commercialize any of our product candidates until the appropriate Regulatory Authorities have reviewed and approved the applications for such product candidates.

We cannot assure that the Regulatory Authorities 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 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.

Even if US 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-approval surveillance.

In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action or changes in Regulatory Authority policy during the period of product development, clinical studies and regulatory review.

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-approval surveillance.

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

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

Even 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:

Even if the FDA or a foreign Regulatory Authority 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 Regulatory Authorities also may impose various civil or criminal sanctions for failure to comply with regulatory requirements, including substantial monetary penalties and withdrawal of product approval.

If we or a Regulatory Authority 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 Authority 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 Authority may:

issue warning letters or untitled letters;

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suspend any ongoing clinical studies;

refuse to approve pending applications or supplements to applications filed

refuse to approve pending applications or supplements to applications filed by us;

suspend or impose restrictions on operations, including costly new manufacturing requirements;

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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:

The FDA and other Regulatory Authorities 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;

and changes in regulatory agency approval policies or adoption of new regulations may require additional clinical trials or work on our end.

and changes in Regulatory Authority 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.

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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 US, to the satisfaction of the FDA and, with respect to approval in other countries, to the satisfaction of regulatory authorities in those countries, we must demonstrate that the product candidate is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate.

With respect to approval in the U.S., to the satisfaction of the FDA and, with respect to approval in other countries, to the satisfaction of Regulatory Authorities in those countries, we must demonstrate that the product candidate is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate.

Despite our efforts, our product candidates may not:

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or obtain favorable reimbursement.

We are not permitted to market any of our other product candidates in the US until we receive approval of a new drug application, or approval of a biologics license application, from the FDA, or in any foreign countries until we receive the requisite approval from such countries.

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.

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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.

Negative or inconclusive results or adverse medical events during a clinical study could also cause us, one or more IRBs/ECs at clinical trial sites, a Data Safety Monitoring Board or the FDA or other Regulatory Authority 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 discretion in the approval process and may decide that our data is insufficient to support a marketing application and require additional preclinical, clinical or other studies.

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.

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.

The FDA and equivalent foreign Regulatory Authorities have substantial discretion in the approval process and may decide that our data is insufficient to support a marketing application and require additional preclinical, clinical or other studies.

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.

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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.

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.

COVID-19 could continue to adversely impact our business, including our clinical trials.

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.

COVID-19 may continue to lead to business disruptions that could severely impact our 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;

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

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.

We incurred net losses of $41.1 million and $20.9 million for the fiscal years ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we had cash and cash equivalents of $150.4 million and an accumulated deficit of $209.2 million.

Cash used in our operating activities amounted to $39.6 million and $20.4 million for the fiscal years ended June 30, 2022 and 2021, respectively.

We expect that the amount of cash used in our operating activities will continue to increase for the next several years.

We expect to continue to incur operating losses for the foreseeable future as we develop and commercialize our product candidate pipeline, and we expect to need additional capital from external sources before we will be able to begin generating revenue, if ever.

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 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.

We have never generated any revenues and may never become profitable.

Since inception, we have not generated any meaningful 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.

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 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:

demonstration of clinical safety and efficacy compared to other products;

prevalence and severity of any adverse effects;

limitations or warnings contained in a product’s FDA-approved labeling;

availability of alternative treatments;

pricing and cost-effectiveness;

the effectiveness of our or any future collaborators’ 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;

and 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.

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 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 manner.

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.

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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.

In addition, third-party suppliers that we engage may be adversely impacted by COVID-19.

It is possible that our raw material suppliers may not be able to sell these raw materials at the times we need them or on commercially reasonable terms due to forces outside of our control including, but not limited to, inflation and global conflicts.

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

Our third-party manufacturers and suppliers may encounter delays in providing their services as a result of supply chain constraints.

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

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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.

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 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.

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.

Risks Related to Our Business

We could be negatively impacted and unable to raise capital on favorable terms or generate revenue if we are not successful with the sunRIZE study outside of the U.S.

and if the FDA does not lift the New Restrictions on RZ358.

RZ358 is our lead clinical asset.

We have expended considerable resources and efforts on the development of RZ358.

As we continue to pursue the development of RZ358, there is no guarantee that we will be able to successfully complete clinical trials for RZ358 outside of the U.S.

or that the FDA will lift the New Restrictions imposed on RZ358 within the U.S.

If we do not receive positive results from the sunRIZE study outside of the U.S.

or if the FDA continues to impose the New Restrictions by such time, our ability to raise additional capital, if at all, on favorable terms may be impeded by our inability to advance the development of our product candidates.

Changes in financial accounting standards or policies have affected, and in the future may affect, our reported financial condition or results of operations;

there are inherent limitations to our system of internal controls;

changes in corporate governance policies and practices may impact our business .

We prepare our consolidated financial statements in conformity with GAAP.

The preparation of our financial statements in accordance with GAAP requires that we make estimates and assumptions that affect the recorded amounts of assets, liabilities and net income during the reporting period.

A change in the facts and circumstances surrounding those estimates could result in a change to our estimates and could impact our future operating results.

GAAP is subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to interpret and create accounting policies.

A change in those policies can have a significant effect on our reported results and may affect our reporting of transactions which are completed before a change is announced.

In general, changes to accounting rules or challenges to our interpretation or application of the rules by regulators may have a material adverse effect on our reported financial results or on the way we conduct business.

Our system of internal and disclosure controls and procedures was designed to provide reasonable assurance of achieving its objectives.

However, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been or will be detected.

As a result, there can be no assurance that our system of internal and disclosure controls and procedures will be successful in preventing all errors, theft and fraud, or in informing management of all material information in a timely manner.

Finally, corporate governance, public disclosure and compliance practices continue to evolve based upon continuing legislative action, SEC rulemaking and policy positions taken by large institutional stockholders and proxy advisors.

As a result, the number of rules, regulations and standards applicable to us may become more burdensome to comply with, could increase scrutiny of our practices and policies by these or other groups and increase our legal and financial compliance costs and the amount of time management must devote to governance and compliance activities.

For example, the SEC has recently proposed rules requiring that issuers provide significantly increased disclosures concerning cybersecurity matters and the impact of climate changes on their business and has adopted rules requiring public companies to adopt more stringent executive compensation clawback policies.

Increasing regulatory burdens and corporate governance requirements could also make it more difficult for us to attract and retain qualified members of our Board of Directors and qualified executive officers.

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 will be unable to sustain operations.

We incurred net losses of $51.2 million and $41.1 million for the fiscal years ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, we had an accumulated deficit of $261.0 million.

Cash used in our operating activities amounted to $44.5 million and $39.6 million for the fiscal years ended June 30, 2023 and 2022, respectively.

We expect that the amount of cash used in our operating activities will continue to increase for the next several years.

As of June 30, 2023, we had cash and cash equivalents of $16.0 million and investments in marketable debt securities of $102.3 million that is expected to provide us with adequate capital resources to fund planned activities at least through the third quarter of calendar year 2025.

Since our inception, we have not generated meaningful revenue.

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.

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

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

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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.

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;

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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 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.

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.

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.

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.

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:

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 have adequate financial or other resources to complete the development and commercialization of our product candidates;

or 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 may not be able to use a significant portion of our net operating loss carryforwards, which could adversely affect our profitability.

Federal and state laws impose substantial restrictions on the utilization of net operating loss (“NOL”) carryforwards in the event that certain ownership changes occur as defined in Section 382 of the Internal Revenue Code (“IRC”).

Due to our recent financing activities, we experienced ownership changes that have resulted in significant limitations on the future use of our NOL carryforwards.

As of June 30, 2022, we have US federal NOL carryforwards of approximately $145.1 million, of which $33.4 million is expected to expire without any opportunity for utilization due to the limitations set forth in IRC Section 382.

Assuming that further IRC Section 382 ownership changes do not occur, the remaining $111.7 million of NOL carryforwards consist of approximately (i) $12.8 million that is not currently subject to any limitations or expiration dates, and (ii) $98.9 million that will become available for utilization in amounts ranging from $1.2 million to $4.1 million annually.

It is possible that any future ownership changes, could result in further limitations 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 connection with the audit of our fiscal 2022 consolidated financial statements, we noted a material weakness in our internal controls, as a result of our inability to segregate duties to prevent employees from overriding the internal control system.

While we have hired additional personnel and implemented more robust accounting software, we have been unable to fully remediate this material weakness.

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.

Any failure to remediate the material weakness discussed above and to implement required new or improved controls, could harm our operating results or cause us to fail to meet our reporting obligations.

Failure to achieve and maintain an effective internal control environment could cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price.

Due to our financing activities, we experienced ownership changes that have resulted in significant limitations on the future use of our NOL carryforwards.

As of June 30, 2023, we have US federal NOL carryforwards of approximately $153.2 million, of which $33.4 million will expire without any opportunity for utilization due to the limitations set forth in IRC Section 382.

Assuming that further IRC Section 382 ownership changes do not occur, the remaining $119.8 million of NOL carryforwards consist of approximately (i) $17.1 million that never expire and are currently available to offset taxable income, (ii) $7.9 million that are currently available to offset taxable income but if not utilized will expire in 2031 through 2035, (iii) $13.4 million that becomes available through 2038 and that expire by June 30, 2038 if not utilized, and (iv) $81.4 million that never expire.

With respect to $81.4 million of NOL carryforwards that never expire, this amount will become available in varying annual amounts for an aggregate of approximately $15.6 million through fiscal year 2038, and $1.2 million annually thereafter.

It is possible that any future ownership changes could result in further limitations on the use of our NOL carryforwards or other tax attributes, which could adversely affect our future financial position, profitability and cash flows.

If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.

We are subject to Section 404 of The Sarbanes-Oxley Act of 2002 (“Section 404”), and the related rules of the SEC which generally require our management and independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting.

Section 404 requires an annual management assessment of the effectiveness of our internal control over financial reporting.

Effective April 27, 2020, the SEC adopted amendments to the “accelerated filer” and “large accelerated filer” definitions in Rule 12b-2 under the Securities and Exchange Act of 1934.

The amendments exclude from the “accelerated filer” and “large accelerated filer” definitions an issuer that is eligible to be a smaller reporting company and that had annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available.

We determined that our Company does not meet the accelerated or large accelerated filer definitions as of June 30, 2023.

For so long as we remain a smaller reporting company and a non-accelerated filer, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to public companies, including, but not limited to, not being required as a non-accelerated filer to comply with the auditor attestation requirements of Section 404(b).

An independent assessment by our independent registered public accounting firm of the effectiveness of internal control over financial reporting could detect problems that our management’s assessment might not.

Undetected material weaknesses in our internal control over financial reporting could lead to financial statement restatements and require us to incur the expense of remediation.

Although we have determined that our internal control over financial reporting was effective as of June 30, 2023, we cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future.

Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows.

If we are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.

Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

Operations outside the United States may be affected by different local politics, business and cultural factors, different regulatory requirements and prohibitions between jurisdictions.

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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.

We could recognize losses on securities held in our securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate.

As of June 30, 2023, the fair value of the investments in our marketable debt securities portfolio was approximately $102.3 million.

Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities.

For example, fixed-rate securities acquired by us are generally subject to decreases in market value when interest rates rise.

Additional factors include, but are not limited to, rating agency downgrades of the securities or our own analysis of the value of the security, defaults by the issuer with respect to the underlying securities, and continued instability in the credit markets.

Any of the foregoing factors could cause other-than-temporary impairment in future periods and result in realized losses.

The process for determining whether impairment is other-than-temporary usually requires difficult, subjective judgments about the future financial performance of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security.

As of June 30, 2023, we had $351,000 in net unrealized losses in our marketable debt securities.

Unrealized losses in our marketable debt securities portfolio may increase in the future due to the aforementioned economic factors.

While our goal is to hold each security until maturity, that may not be possible in light of our policy to preserve capital and liquidity and because investment in securities with unrealized losses has a diminished utility as a source of liquidity prior to maturity.

Selling securities with an unrealized loss would result in the realization of such losses, which could have an adverse effect on our financial condition and results of operations.

The collapse of certain banks and potentially other financial institutions may adversely impact us.

On March 10, 2023, Silicon Valley Bank (“SVB”) was shut down, followed on March 11, 2023 by Signature Bank and on May 1, 2023 by First Republic Bank whereby, the Federal Deposit Insurance Corporation was appointed as receiver for each of those banks.

As a result, there have been reports of instability at other banks across the globe.

Despite the steps taken to date by U.S.

agencies to protect depositors, the follow-on effects of the events surrounding the failures of SVB, Signature Bank, and First Republic Bank and the pressure on other banks are unknown.

Such effects could include failures of other financial institutions to which we face direct or more significant exposure, and the extent of the impacts relating to financial institution instability or failure is uncertain.

Our investment portfolio did not and currently does not contain any securities of SVB, and we did not have any deposit accounts with SVB.

We are monitoring the situation and intend to minimize any disruptions to our operations should they arise.

However, there may be risks that we have not yet identified, and we cannot guarantee that we will be able to avoid negative consequences directly or indirectly from the foregoing events or other impacts on financial institutions.

Unfavorable global and regional economic, political and health conditions could adversely affect our business, financial condition or results of operations.

Our business could be adversely affected by global or regional economic, political and health conditions.

Various macroeconomic factors could adversely affect our business, financial condition and results of operations, including changes in inflation, interest rates and overall economic conditions and uncertainties, including those resulting from political instability, trade disputes between nations and the current and future conditions in the global financial markets.

For example, beginning in fiscal year ended June 30, 2023, much of the world, including the U.S.

and the E.U., began to experience inflation levels not seen in more than 30 years.

As a result, prices for many of our inputs have risen, in some cases dramatically.

If inflation stays at elevated levels or increases, we may not be able to mitigate the impact of the increased costs we will bear, which could have an impact on our results of operations and financial condition.

A global financial crisis or global or regional political and economic instability, wars, terrorism, civil unrest, outbreaks of disease (for example, COVID-19), and other unexpected events, such as supply chain constraints or disruptions, could cause extreme volatility in the capital and credit markets and disrupt our business.

Business disruptions could include, among others, disruptions to our commercial activities, including due to supply chain or distribution constraints or challenges, clinical enrollment, clinical site availability, patient accessibility, and conduct of our clinical trials, as well as temporary closures of the facilities of suppliers or contract manufacturers in the biotechnology supply chain.

In addition, during certain crises and events, patients may prioritize other items over certain or all of their treatments and/or medications, which could have a negative impact on our commercial sales.

A severe or prolonged economic downturn, political disruption or adverse health conditions could result in a variety of risks to our business, including our ability to raise capital when needed on acceptable terms, if at all.

Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the political or economic climate and financial market conditions could adversely impact our business.

Certain Provisions of Nevada law may have anti-takeover effects.

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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.

US patent applications filed after November 29, 2000 are confidential in the US Patent and Trademark Office for the first 18 months after such applications’ earliest priority date, and patent offices in other countries often publish patent applications for the first time six months or more after filing.

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.

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If our or our licensors’ 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 on our and our licensors’ ability to obtain additional patents and protect our existing patent positions, particularly those patents for which we have secured exclusive rights, as well as our ability to maintain adequate protection of other intellectual property for our technologies, product candidates and any future products in the US and other countries.

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 US, and we may encounter significant problems in protecting our proprietary rights in these countries.

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.

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Risks Related to Our Common Stock

Exercise or conversion of stock options and other convertible securities will dilute shareholder’s percentage of ownership.

In addition to the PFWs, we have issued stock options and other warrants to purchase shares of our common stock.

Exercise or conversion of warrants, stock options and other convertible securities will dilute shareholder’s percentage of ownership.

In addition to pre-funded warrants (“PFWs”), we have issued stock options and other warrants to purchase shares of our common stock.

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

The exercise, conversion or exchange of stock options, warrants and convertible securities will dilute the percentage ownership of our shareholders.

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

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

The holders of these securities may be expected to exercise or convert such stock 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.

Our common stock may be delisted from the Nasdaq Capital Market (“Nasdaq”) if we fail to comply with continued listing standards.

Our common stock may be delisted from the Nasdaq Capital Market if we fail to comply with continued listing standards.

Our common stock is currently traded on Nasdaq under the symbol “RZLT”.

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

$1.00 minimum closing bid price;

$1.00 minimum closing bid price (the “Share Price Condition”);

shareholders’ equity of at least $2.5 million;

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and 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.

In order to obtain the initial listing of our shares for trading on the Nasdaq Capital Market in November 2020, we effected a reverse stock split in the ratio of 50 shares for 1 share in order to comply with the Share Price Criteria.

If the trading price for our shares decreases below $1.00 per share in the future, Nasdaq could delist our shares if the trading price does not subsequently increase above $1.00 per share during prescribed periods and under prescribed conditions set forth in Nasdaq’s listing rules.

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 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;

and economic and other external factors.

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 (i) limited trading activity on our common stock, (ii) positive or negative results achieved in our clinical activities, including regulatory determinations, (iii) our ability to obtain financing, (iv) additions or departures of key personnel, (v) the specific terms associated with new debt or equity financings, (vi) our ability to execute our business plan, (vii) loss of any strategic relationship, and (viii) 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.

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Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock.

For example, for the fiscal year ended June 30, 2023, we became subject to Internal Revenue Code Section 174 that requires capitalization of the vast majority of research and development costs whereas under prior tax law substantially all of these costs were deductible in the year incurred.

Section 174 provides that such newly-capitalized costs may be amortized and become deductible over a period of 5 years for U.S.

based costs and 15 years for foreign- based costs.

It cannot be predicted whether, when, in what form, or with what effective dates, new tax laws or regulations may be enacted under existing or new tax laws.

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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