Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures” as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and such information is accumulated and communicated to our management, including the individual that serves as both our Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.
As of the end of the period covered by this Annual Report, we carried out an evaluation, under the supervision and with the participation of senior management, including our Chief Executive Officer (our Principal Executive and Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). Based upon this evaluation, our Chief Executive Officer concluded that disclosure controls and procedures were effective as of the end of the period covered by this Annual Report.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorization of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
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Commission (COSO) in Internal Control—Integrated Framework (2013) . Based on that assessment under those criteria, our management has determined that, as of June 30, 2024, our internal control over financial reporting was effective.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended March 31, 2024, we identified a material weakness in the system of internal control that related to complex pre-funded warrant accounting. A material weakness is a deficiency, or combination of deficiencies, that creates a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected in a timely manner.
The material weakness identified by management related to our controls over the accounting for pre-funded warrants whereby we failed to initially recognize these pre-funded warrants as liabilities, along with the subsequent changes in fair value as non-cash expenses. As a result of this material weakness, we failed to timely identify material adjustments to our financial statements that were detected shortly before the filing of our Quarterly Report on Form 10-Q for the fiscal period ended March 31, 2024.
Our legacy processes included the timely identification of the relevant accounting technical pronouncements, other literature, consultation with third-party experts, and the preparation of a memorandum outlining our assessment of the factual background and our interpretation of the accounting requirements. With respect to pre-funded warrants issued on March 8, 2024, we improperly concluded that equity classification was permitted based on the facts that (i) the pre-funded warrants were only exercisable for 7% of our outstanding shares, (ii) the pre-funded warrants explicitly prohibit the holders from exercising if beneficial ownership would exceed 19.99%, and (iii) shareholder approval was only required if beneficial ownership exceeded 19.99%. Despite these terms, we determined that equity classification was not permitted, whereby we performed additional analysis as deemed necessary to ensure that the accompanying financial statements were revised and prepared in accordance with U.S. generally accepted accounting principles. Accordingly, a material weakness existed even though the correct accounting treatment was employed when we filed our Quarterly Report on Form 10-Q for the fiscal period ended March 31, 2024.
In June 2024, we completed a public underwritten offering, which included the issuance of pre-funded warrants. We engaged additional third-party specialists to determine the accounting treatment of the issued warrants to ensure that our warrant accounting policies and procedures are consistent across the organization and that we have adequate control over our Exchange Act reporting disclosures. As a result of these critical steps in our remediation efforts, we concluded that this material weakness in our internal control over financial reporting had been successfully remediated as of June 30, 2024.
Attestation Report of Independent Registered Public Accounting Firm
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to include an attestation report of our registered public accounting firm regarding internal control over financial reporting.
Item 9B. Other Information.
E x e c utive Compensation Matters
Daron Evans Employment Agreement
On September 18, 2024, the Company entered into an employment agreement with its Chief Financial Officer, Mr. Daron Evans (the “Employment Agreement”). Pursuant to the Employment Agreement effective September 15, 2024, Mr. Evans was granted an increase of $185,000 to his yearly salary, making his base salary $460,000 annually. Mr. Evans is entitled to employee benefits and an annual performance bonus of up to 40% of his base salary, in addition to a discretionary bonus. If Mr. Evans’ employment is terminated by the Company for Cause or by Mr. Evans without Good Reason then he is entitled to (i) accrued, but unpaid salary through the effective date of his termination, (ii) any reimbursements owed for business expenses validly incurred on or prior to his, (iii) any earned but unpaid bonuses or other incentive payments approved by the Board of Directors but not paid, and (iv) any accrued but unpaid benefits due and owing to Mr. Evans
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(the “Accrued Obligations”). Upon Mr. Evans’ termination without Cause, he will be entitled to the Accrued Obligations and a severance comprised of (i) 12 months’ salary, (ii) a pro-rata bonus payment equal to the pro-rata bonus amount of the bonus earned as of the date of termination without Cause, (iii) 12 months of COBRA premiums, collectively payable in equal monthly installments following his termination, and (iv) any granted but unvested stock options under any relevant Company stock option plan or agreement will have 12 months acceleration and an exercise period of 6 months following his termination. Further, if, within 12 months of a Change in Control Event Mr. Evans’ employment is terminated by the Company without Cause or by Mr. Evans with Good Reason, then he is entitled to receive the Accrued Obligations, and a severance comprised of (i) 18 months’ salary, (ii) a pro-rata bonus payment equal to the pro-rata bonus amount earned as of the date of termination, (iii) 18 months of COBRA premiums, collectively payable in equal monthly installments following the termination, and (iv) all of his granted but unvested stock options under any relevant company stock option plan or agreement will immediately vest and will also have an exercise period of 6 months following his termination without Cause. Mr. Evans and the Company had previously entered into an offer letter dated January 23, 2024 (the “Offer Letter”). The Employment Agreement replaces and supersedes in its entirety, any prior employment agreements or understandings between Mr. Evans and the Company including the Offer Letter. The definition of “Cause,” “Good Reason,” and “Change in Control Event” is found in the Employment Agreement, along with other material terms. The Employment Agreement is attached hereto as Exhibit 10.4.
Other Executive Compensation matters
In addition to entering into the Employment Agreement, the Company agreed to grant stock options to Mr. Evans for 100,000 shares of common stock pursuant to the Company’s 2021 Equity Incentive Plan (the “Options”). The Compensation Committee will grant Mr. Evans the Options following the Company’s blackout period.
Additionally, Nevan Elam, the Company’s Chief Executive Officer and Chairman, was granted an increase in his base salary. Mr. Elam is now entitled to an annual base salary of $ 625,000.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by the Item is set forth in our 2024 Proxy Statement to be filed with the SEC within 120 days of June 30, 2024, and is incorporated by reference into this Annual Report on Form 10-K.
Item 11. Executive Compensation.
The information required by the Item is set forth in our 2024 Proxy Statement to be filed with the SEC within 120 days of June 30, 2024, and is incorporated by reference into this Annual Report on Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by Item 403 of Regulation S-K is set forth in our 2024 Proxy Statement to be filed with the SEC within 120 days of June 30, 2024, and is incorporated by reference into this Annual Report on Form 10-K.
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Item 13. Certain Relationships and Related Transactions and Director Independence.
The information required by the Item is set forth in our 2024 Proxy Statement to be filed with the SEC within 120 days of June 30, 2024, and is incorporated by reference into this Annual Report on Form 10-K.
Item 14. Principal Accounting Fees and Services.
The information required by the Item is set forth in our 2024 Proxy Statement to be filed with the SEC within 120 days of June 30, 2024, and is incorporated by reference into this Annual Report on Form 10-K.
PART IV
Item 15. Exhibit and Financial Statement Schedules.
(a)(1) Financial Statements
Reference is made to Item 8 of Part II for the Company’s consolidated financial statements filed as part of this Report.
(a)(2) Financial Statement Schedules
All financial statement schedules are omitted because they are not applicable, or the amounts are immaterial, not required, or the required information is presented in the financial statements and notes thereto included in Item 8 of Part II of this Report.
(a)(3) Exhibits
Certain of the agreements filed as exhibits to this Report contain representations and warranties by the parties to the agreements that have been made solely for the benefit of the parties to the agreement. These representations and warranties:
● may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which disclosures are not necessarily reflected in the agreements;
● may apply standards of materiality that differ from those of a reasonable investor; and
● were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date that these representations and warranties were made or at any other time. Investors should not rely on them as statements of fact.
The following exhibits of Rezolute, Inc. are filed or incorporated by reference as part of this Report. For exhibits that are incorporated by reference, we have indicated the document previously filed with the SEC in which the exhibit was included.
Exhibit
No.
Description
1.1
Underwriting Agreement, dated as of June 13, 2024, by and between the Company and Jefferies LLC (incorporated by reference to Exhibit 1.1 of the Company’s Form 8-K filed on June 14, 2024)
1.2
Underwriting Agreement, dated as of October 12, 2021, by and between the Company and Oppenheimer & Co., Inc. (incorporated by reference to Exhibit 1.1 of the Company's Form 8-K filed on October 13, 2021)
1.3
Underwriting Agreement, dated as of May 1, 2022, by and between the Company and Jefferies LLC (incorporated by reference to Exhibit 1.1 of the Company’s Form 8-K filed on May 4, 2022)
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2.1
Agreement and Plan of Merger dated as of June 18, 2021, by and between Rezolute, Inc. and Rezolute Nevada Merger Corporation (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K filed on June 21, 2021)
3.1
Delaware Certificate of Merger, effective as of June 18, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed on June 21, 2021)
3.2
Nevada Articles of Merger, effective as of June 18, 2021 (incorporated by reference to Exhibit 3.3 of the Company’s Form 8-K filed on June 21, 2021 )
3.3
Amended and Restated Articles of Incorporation of Rezolute Nevada Merger Corporation (incorporated by reference to Exhibit 3.3 of the Company’s Form 8-K filed on June 21, 2021)
3.4
Certificate of Amendment, as filed with the Secretary of State of the State of Nevada on June 16, 2022 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed on June 17, 2022)
3.5
Amended and Restated Bylaws of Rezolute Nevada Merger Corporation ( incorporated by reference to Exhibit 3.4 of the Company’s Form 10-K filed on September 15, 2021 )
4.1
Description of Securities *
10.1
Amended and Restated Employment Agreement of Nevan Elam, dated January 8, 2023 (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q filed on May 11, 2023)
10.2
Amended and Restated Employment Agreement of Brian Roberts, dated January 8, 2023 (incorporated by reference to Exhibit 10.2 of the Company’s Form 10-Q filed on May 11, 2023)
10.3
Offer Letter for Daron Evans, dated January 23, 2024 ( Incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on January 29, 2024)
10.4
Employment Agreement of Daron Evans, dated September 15, 2024*
10.5
AntriaBio, Inc. 2015 Non Qualified Stock Option Plan (incorporated by reference to Exhibit 10.5 of the Company’s Form 8-K filed on February 24, 2015)
10.6
AntriaBio, Inc. 2016 Non Qualified Stock Option Plan (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on November 4, 2016)
10.7
AntriaBio, Inc. 2016 Non Qualified Stock Option Plan, as Amended (incorporated by reference to Exhibit 10.25 of the Company’s Form 10-K filed on September 21, 2017 )
10.8
Rezolute, Inc. First Amendment to the 2016 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit C to the Company’s Schedule 14A definitive proxy statement filed on April 5, 2019 )
10.9
2019 Non Qualified Stock Option Plan (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed on August 6, 2019)
10.10
Rezolute, Inc. Amended and Restated 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.23 of the Company’s Form 10-K filed on September 15, 2022)
10.11
Rezolute, Inc. 2022 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 4.2 of the Registration Statement on Form S-8 filed on November 7, 2022)
10.12
2021 Incentive Compensation Plan Amendment ( incorporated by reference to Appendix A of the Company’s Schedule 14A definitive proxy statement filed on April 15, 2024 )
10.13
Development and License Agreement with ActiveSite Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on August 7, 2017)
10.14
License Agreement with XOMA (US) LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q filed on February 14, 2018)
10.15
Amendment No. 2 to the Stock Purchase Agreement with XOMA (US) LLC (incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q filed on February 14, 2019)
10.16
Amendment No. 2 to the License Agreement with XOMA (US) LLC (incorporated by reference to Exhibit 10.2 of the Company's Form 10-Q filed on February 14, 2019)
10.17
Amendment No. 3 to the License Agreement with XOMA (US) LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q filed on May 14, 2020)
10.18
License Agreement with Handok, Inc. entered into on September 15, 2020 (incorporated by reference to Exhibit 10.21 of the Company’s Form 10-K filed on October 13, 2020)
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10.19
Registration Rights Agreement, dated as of October 8, 2020, by and between Rezolute, Inc., and the Investors identified therein ( incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on October 13, 2020 )
10.20
Loan and Security Agreement, dated as of April 14, 2021 by and among Rezolute, Inc., SLR Investment Corp, as collateral agent and lender, and the other lenders named therein (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q filed on May 17, 2021)
10.21
Exit Fee Agreement, dated as of April 14, 2021 by and among Rezolute, Inc., SLR Investment Corp, as collateral agent and lender, and the other lenders named therein (incorporated by reference to Exhibit 10.2 of the Company’s Form 10-Q filed on May 17, 2021)
10.22
Form of Subscription Agreement, dated October 12, 2021 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on October 13, 2021)
10.23
Registration Rights Agreement, dated as of May 4, 2022, by and between Rezolute, Inc., and the purchasers identified therein ( incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on May 4, 2022 )
10.24
Placement Agency Agreement, dated as of May 1, 2022, by and between the Company and Jefferies LLC ( incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on May 4, 2022 )
10.25
Form of Amended and Restated Securities Purchase Agreement, dated as of July 22, 2022 (incorporated by reference to Exhibit 10.22 of the Company’s Form 10-K filed on September 15, 2022)
10.26
Open Market Sale Agreement by and between Rezolute, Inc. and Jefferies, LLC ( incorporated by reference to Exhibit 1.2 of the Registration Statement on Form S-3 filed on November 14, 2023 )
10.27
Form of Financing Warrant (incorporated by reference to Exhibit 4.1 of the Company's Form 8-K filed on April 3, 2018 )
10.28
Form of Common Stock Purchase Warrant by and between the Company and the Investor identified therein ( incorporated by reference to Exhibit 4.1 the Company’s Form 8-K filed on October 13, 2020 )
10.29
Form of Pre-Funded Warrant to Purchase Common Stock ( Incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on October 13, 2021 )
10.30
Form of Class A Pre-Funded Warrant ( incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on May 4, 2022 )
10.31
Form of Class B Pre-Funded Warrant ( incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K filed on May 4, 2022 )
10.32
Form of Exchange Warrant ( incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on March 14, 2024 )
10.33
Form of Securities Exchange Agreement ( incorporated by reference to Exhibit 4.2 of the Company’s Form 8-k filed on March 14, 2024 )
10.34
Form of Pre-funded Warrant to Purchase Common Stock (in corporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on June 14, 2024 )
10.35
Form of Pre-funded Warrant to Purchase Common Stock (in corporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on June 14, 2024 )
10.36
Form of Securities Purchase Agreement, dated June 25, 2024, by and between Rezolute, Inc., and the purchasers identified therein*
10.37
Registration Rights Agreement, dated June 25, 2024, by and between Rezolute, Inc., and the purchasers identified therein*
14.1
Rezolute, Inc. Code of Ethics, as amended and restated as of May 30, 2023 (incorporated by reference to Exhibit 14.1 of the Company’s Form 8-K filed on June 2, 2023)
21.1
Listing of Subsidiaries *
23.1
Consent of Grant Thornton, LLP*
23.2
Consent of Plante & Moran, PLLC*
31.1
Certifications of Chief Executive Officer and Principal Financial Officer as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
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32.1
Certifications of Chief Executive Officer and Principal Financial Officer as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
97
Clawback Policy*
101.INS
Inline XBRL Instance Document*
101.SCH
Inline XBRL Taxonomy Extension Schema*
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase*
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase*
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase*
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase*
104
Cover Page Interactive Data File, formatted in Inline XBRL (included as Exhibit 101)
* Filed herewith.
In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.
Item 16. Form 10-K Summary.
Not applicable
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
REZOLUTE, INC.
Date: September 19, 2024
By:
/s/ Nevan Charles Elam
Nevan Charles Elam
Acting Chair of the Board of Directors and Chief Executive Officer
(Principal Executive and Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date: September 19, 2024
By:
/s/ Nevan Charles Elam
Nevan Charles Elam
Acting Chair of the Board of Directors and Chief Executive Officer (Principal Executive and Financial Officer)
Date: September 19, 2024
By:
/s/ Gil Labrucherie
Gil Labrucherie
Director
Date: September 19, 2024
By:
/s/ Nerissa Kreher
Nerissa Kreher
Director
Date: September 19, 2024
By:
/s/ Philippe Fauchet
Philippe Fauchet
Director
Date: September 19, 2024
By:
/s/ Young-Jin Kim
Young-Jin Kim
Director
Date: September 19, 2024
By:
/s/ Wladimir Hogenhuis
Wladimir Hogenhuis
Director
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