UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-54495 REZOLUTE, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 27-3440894 (State of other jurisdiction of incorpo ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-54495 REZOLUTE, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 27-3440894 (State of other jurisdiction of incorp ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended June 30, 2020 (Exact Name of Company as Specified in its Charter) Delaware 27-3440894 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 201 Redwood Shores Parkway, Suite 315 Redwood City, California 94065 (Address of principal executive offices) (Zip Code) ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-54495 REZOLUTE, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 27-3440894 (State of other jurisdiction of incorporat ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-54495 REZOLUTE, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 27-3440894 201 Redwood Shores Parkway, Suite 315, ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Rezolute, Inc. significantly improved its financial position in Q3 2019 through equity financing, boosting assets and equity [Unaudited Condensed Consolidated Financial Statements](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The company's balance sheet strengthened significantly in Q3 2019 due to equity financing, increasing cash and assets Condensed Consolidated Balance Sheet (in thousands) | Account | Sep 30, 2019 | June 30, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $22,104 | $11,573 | | Total current assets | $25,916 | $12,144 | | Total assets | $26,572 | $12,252 | | **Liabilities & Equity** | | | | Total current liabilities | $5,523 | $8,379 | | Total liabilities | $5,954 | $10,500 | | Total stockholders' equity | $20,618 | $1,752 | Condensed Consolidated Statement of Operations (in thousands) | Account | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Total research and development | $3,234 | $930 | | Total general and administrative | $1,945 | $1,655 | | Operating loss | ($5,179) | ($2,562) | | Net loss | ($5,080) | ($3,365) | | Net loss per common share | ($0.02) | ($0.05) | Condensed Consolidated Statement of Cash Flows (in thousands) | Activity | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($8,929) | ($1,432) | | Net cash provided by investing activities | $0 | $187 | | Net cash provided by financing activities | $22,571 | $0 | | Net increase (decrease) in cash | $13,642 | ($1,245) | | Cash, cash equivalents and restricted cash, end of period | $25,215 | $401 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Key notes highlight improved liquidity from recent financing, significant contractual obligations, and recent corporate actions - The company is a clinical-stage biopharmaceutical firm with three wholly-owned subsidiaries, operating as a single reportable segment[25](index=25&type=chunk)[30](index=30&type=chunk)[32](index=32&type=chunk) - Management believes its cash balance of **$25.2 million** is adequate to fund planned activities, including R&D and licensing obligations, at least through November 2020[53](index=53&type=chunk)[54](index=54&type=chunk) - In July and August 2019, the company raised gross proceeds of **$24.1 million** (**$22.6 million net**) by issuing approximately **83 million shares** of common stock at **$0.29 per share** in a private placement[74](index=74&type=chunk) - The company has a remaining payment obligation of **$3.6 million** to Xoma Corporation under a license agreement, due by March 2020, with recent financing triggering an early payment of **$3.4 million**[66](index=66&type=chunk) - In July 2019, the Board granted stock options for approximately **34.0 million shares** to officers and employees at an exercise price of **$0.29 per share**[80](index=80&type=chunk) - In October 2019, stockholders approved a proposal to authorize the Board of Directors to effect a reverse stock split at a ratio between **1-for-20** and **1-for-100**[114](index=114&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes the increased net loss to planned R&D, funded by recent financing, which improved liquidity and supports key objectives - The company's strategy is to build a metabolic-focused biotechnology company by in-licensing compounds targeting diseases with unmet needs, such as RZ358, RZ402, and AB101[125](index=125&type=chunk)[126](index=126&type=chunk) - Key objectives for fiscal year 2020 include initiating the Phase 2b clinical study for RZ358, advancing RZ402 towards an IND filing, completing the Phase 1 study for AB101, and uplisting the Common Stock to a national exchange[122](index=122&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Net loss widened to **$5.1 million** in Q3 2019, primarily due to increased R&D and G&A expenses Comparison of Results of Operations (in thousands) | Item | Q3 2019 | Q3 2018 | Change | | :--- | :--- | :--- | :--- | | Total research and development | $3,234 | $930 | $2,304 | | Total general and administrative | $1,945 | $1,655 | $290 | | Operating loss | ($5,179) | ($2,562) | ($2,617) | | Interest expense | $0 | ($911) | $911 | | Net loss | ($5,080) | ($3,365) | ($1,715) | - R&D expenses increased by **$2.3 million**, primarily due to a **$1.0 million** rise in clinical trial costs, a **$0.9 million** increase in R&D workforce compensation, and a **$0.4 million** increase in consulting services[145](index=145&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - G&A expenses increased by **$0.3 million**, mainly from a **$0.2 million** rise in professional fees and a **$0.1 million** increase in compensation and benefits[153](index=153&type=chunk) - Interest expense was zero in 2019, compared to **$0.9 million** in 2018, due to the conversion of Fiscal 2018 Notes to equity in January 2019[157](index=157&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity significantly improved to **$25.2 million** cash due to **$22.6 million** in equity financing, funding operations through November 2020 - The company secured net proceeds of approximately **$22.6 million** from the issuance of Common Stock in July and August 2019[163](index=163&type=chunk) - Planned spending through November 2020 includes **$3.6 million** for Xoma licensing obligations, **$10.5 million** for clinical programs, and **$8.9 million** for G&A and other costs[168](index=168&type=chunk) Cash Flow Summary (in thousands) | Activity | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($8,929) | ($1,432) | | Net cash provided by investing activities | $0 | $187 | | Net cash provided by financing activities | $22,571 | $0 | - The **$7.5 million** increase in cash used in operations was primarily driven by a **$4.9 million** decrease in license fees payable to Xoma and a **$1.0 million** decrease in accrued liabilities[172](index=172&type=chunk)[175](index=175&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company has indicated that this disclosure is not required as it qualifies as a smaller reporting company - Disclosure is not required for smaller reporting companies[182](index=182&type=chunk) [Controls and Procedures](index=35&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were ineffective as of Q3 2019 due to material weaknesses, with remediation efforts underway - Management determined that as of September 30, 2019, the company's internal control over financial reporting was not effective[183](index=183&type=chunk) - Material weaknesses identified include inadequate segregation of duties, potential for management override, insufficient internal review for complex accounting, and ineffective review controls over financial reporting[184](index=184&type=chunk) - The company has started mitigating these weaknesses by hiring more employees and engaging an external consulting firm[184](index=184&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company reported no legal proceedings during the period - As of the reporting date, there were no pending or threatened lawsuits expected to have a material effect on the Company[96](index=96&type=chunk)[187](index=187&type=chunk) [Risk Factors](index=36&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces a key risk regarding its NASDAQ uplisting, as failure to meet criteria could keep its stock on the less liquid OTCQB market - The company's ability to uplist its common stock to the NASDAQ Capital Market is contingent on meeting initial listing criteria[188](index=188&type=chunk) - Failure to uplist could result in the common stock continuing to trade on the less liquid OTCQB market, potentially depressing its value and tradability[189](index=189&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) No reportable unregistered equity securities were issued beyond those already disclosed in July and August 2019 Form 8-K filings - Issuances of unregistered shares were previously reported on Form 8-K filings in July and August 2019[190](index=190&type=chunk) [Exhibits](index=36&type=section&id=ITEM%206.%20EXHIBITS) The filing includes several exhibits, notably the Master Services Agreement with Genexine and Handok, and required CEO and CFO certifications - Filed exhibits include a Master Services Agreement with Genexine, Inc. and Handok, Inc., effective July 1, 2019, and various officer certifications[194](index=194&type=chunk)

REZOLUT | --- | --- | --- | --- | |---------------------------------------------------------------------|-------|-------------------|-------| | | | | | | Corporate | | | | | Presentation | | | | | 4Q 2019 | | | | | TRANSFORMATIVE THERAPIES TARGETING RARE AND METABOLIC DISEASES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Copyright 2019. 1 | | Forward-Looking Statements Statements in this presentation that are not descriptions of historical facts are forward-looking statements relating to ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Rezolute, Inc. is a clinical-stage biotechnology company focused on developing therapies for rare and metabolic diseases, with a pipeline including RZ358, RZ402, and AB101 - Rezolute is a clinical-stage biotechnology company developing therapies for rare and metabolic diseases[12](index=12&type=chunk) - The company faces competition for its key programs: RZ358 (from Zealand Pharma, Xeris Pharma, Hanmi), RZ402 (from KalVista, Verseon, Thrombogenics), and AB101 (from Sanofi, Novo Nordisk, Eli Lilly)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - As of June 30, 2019, the company had **19 full-time employees** and one contract employee[35](index=35&type=chunk) Product Pipeline Summary | Program | Indication | Development Stage | Key Milestone/Plan | | :--- | :--- | :--- | :--- | | **RZ358** | Congenital Hyperinsulinism (CHI) | Phase 2b | Anticipate dosing first patient in 2019. Orphan status in US & EU | | **RZ402** | Diabetic Macular Edema (DME) | Preclinical | Plan to file an IND in mid-2020 | | **AB101** | Type 1 & 2 Diabetes Mellitus | Phase 1 | Anticipate top-line results later in 2019; evaluate out-licensing | Research and Development Expenses | Fiscal Year | R&D Expense (USD) | | :--- | :--- | | 2019 | $19.1 million | | 2018 | $17.3 million | [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks across business operations, intellectual property, and common stock, including a history of net losses, capital needs, and potential clinical trial failures [Risks Related to Our Business](index=8&type=section&id=Risks%20Related%20to%20Our%20Business) The company has a history of significant net losses and an accumulated deficit, requiring substantial additional capital, and faces risks from clinical trial failures, third-party reliance, and material weaknesses in internal controls - The company has a history of losses, with net losses of **$30.4 million in FY2019** and **$29.9 million in FY2018**, and an accumulated deficit of **$126.9 million** as of June 30, 2019. It will need substantial additional capital to continue operations[39](index=39&type=chunk) - The company has never generated any revenue and expects to incur substantial operating losses for the foreseeable future[45](index=45&type=chunk) - The company relies on contract research organizations (CROs) and other third parties to conduct clinical trials, which reduces control over timing, conduct, and expense[42](index=42&type=chunk) - Material weaknesses in internal controls were identified in the fiscal 2019 audit, resulting from an inability to segregate duties, lack of controls to prevent employee override, and insufficient review of complex accounting issues and financial reporting[76](index=76&type=chunk)[77](index=77&type=chunk) [Risks Related to Our Intellectual Property](index=17&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) The company's intellectual property position is at risk due to reliance on in-licensed compounds, potential infringement of third-party patents, and the possibility of costly litigation to defend its IP rights - The company's product candidates are developed using compounds in-licensed from third parties, such as a monoclonal antibody from Xoma Corporation and a kallikrein inhibitor portfolio from ActiveSite Pharmaceuticals, which require future milestone and royalty payments[82](index=82&type=chunk) - The company may not be aware of all third-party patents or applications that could impact its ability to commercialize its products, potentially leading to infringement claims and the need for licenses[84](index=84&type=chunk) - The pharmaceutical industry is characterized by extensive litigation over intellectual property. The company may face costly legal proceedings that could result in substantial monetary damages or prevent the commercialization of its products[89](index=89&type=chunk)[90](index=90&type=chunk) [Risks Related to Our Common Stock](index=19&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) The company's common stock carries significant risks, including concentrated ownership by two shareholders, potential for substantial dilution, limited trading liquidity on the OTCQB, and 'penny stock' classification - Two stockholders, Handok, Inc. and Genexine, Inc. (H&G), collectively own approximately **64%** of the company's common stock, giving them significant control over stockholder matters and board decisions[95](index=95&type=chunk)[96](index=96&type=chunk) - As of July 31, 2019, there are an aggregate of **94.3 million shares** that may be issued upon exercise of outstanding stock options and warrants, which could cause substantial dilution to existing stockholders[97](index=97&type=chunk) - The common stock is traded on the OTCQB with a limited public market, which could make it difficult for investors to liquidate their shares[99](index=99&type=chunk) - The common stock may be considered a 'penny stock' (price less than $5.00), subjecting it to SEC rules that impose additional requirements on broker-dealers and can reduce trading activity[103](index=103&type=chunk) [Unresolved Staff Comments](index=21&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) This section is not required for smaller reporting companies - Not required for smaller reporting companies[105](index=105&type=chunk) [Properties](index=21&type=section&id=Item%202.%20Properties) In 2019, the company entered into two new leases: one for its headquarters in Redwood City, California, and another for ancillary office space in Bend, Oregon - Entered into a lease for new headquarters at 201 Redwood Shores Parkway, Redwood City, CA, for approximately **3,500 sq. ft.** at a monthly rent of **~$21,000**, expiring March 2022[106](index=106&type=chunk) - Entered into a lease for ancillary office space in Bend, Oregon, for approximately **1,500 sq. ft.** at a monthly rent of **~$2,700**, expiring February 2021[107](index=107&type=chunk) [Legal Proceedings](index=21&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no applicable legal proceedings - Not Applicable[108](index=108&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[109](index=109&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock is quoted on the OTCQB under the symbol 'RZLT', with limited trading, and as of September 5, 2019, had 386 holders of record, with no plans for cash dividends - The company's common stock is quoted on the OTCQB market under the trading symbol 'RZLT'[112](index=112&type=chunk) - As of September 5, 2019, there were **386 holders of record** of the company's common stock[115](index=115&type=chunk) - The company has never paid cash dividends and does not plan to in the foreseeable future[116](index=116&type=chunk) Quarterly Common Stock Prices (Fiscal Years 2019 & 2018) | Fiscal Quarter | 2019 High (USD) | 2019 Low (USD) | 2018 High (USD) | 2018 Low (USD) | | :--- | :--- | :--- | :--- | :--- | | First Quarter | $0.51 | $0.30 | $1.20 | $0.86 | | Second Quarter | $0.40 | $0.09 | $1.18 | $0.65 | | Third Quarter | $0.38 | $0.09 | $0.99 | $0.45 | | Fourth Quarter | $0.36 | $0.12 | $0.63 | $0.36 | Equity Compensation Plan Information as of June 30, 2019 (shares in thousands) | Plan | Shares to be Issued Upon Exercise (thousands) | Weighted Average Exercise Price (USD) | Securities Available For Future Issuance (thousands) | | :--- | :--- | :--- | :--- | | **Approved by security holders:** | | | | | 2015 Non-Qualified Stock Option Plan | 2,695 | $2.01 | 4,155 | | 2016 Non-Qualified Stock Option Plan | 8,980 | $1.12 | 19,020 | | **Total** | **13,865** | **$1.60** | **23,175** | [Selected Financial Data](index=23&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is not required as the company is a smaller reporting company - The company is a smaller reporting company and is not required to provide information under this item[120](index=120&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Result%20of%20Operations) The company has not generated revenue and expects continued losses, but recent financings provided sufficient capital to fund operations through September 2020, despite increased R&D expenses and a net loss of **$30.4 million** in FY2019 [Recent Developments](index=23&type=section&id=Recent%20Developments) In 2019, the company secured significant funding through private placements, including **$25.0 million** in January and an additional **$24.1 million** in July/August, supporting its development strategy for fiscal year 2020 - In January 2019, the company closed a **$25.0 million** private placement with Handok, Inc. and Genexine, Inc. (H&G)[123](index=123&type=chunk) - In July and August 2019, the company received an additional cash infusion of **$24.1 million** from H&G and other investors, with net proceeds of approximately **$22.6 million** after costs[123](index=123&type=chunk)[124](index=124&type=chunk) - Key objectives for fiscal year 2020 include: (i) initiating the Phase 2b clinical study for RZ358, (ii) completing toxicology studies for RZ402 to enable an IND filing, and (iii) completing the Phase 1 study for AB101 and exploring partnerships[125](index=125&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) For fiscal year 2019, the company reported a net loss of **$30.4 million**, primarily driven by a **$4.3 million** rise in interest expense, despite a **$2.8 million** decrease in total operating expenses Consolidated Statements of Operations Summary (in thousands) | | 2019 (thousands) | 2018 (thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total operating expenses** | $25,944 | $28,734 | $(2,790) | -9.7% | | *Research and development* | $19,079 | $17,280 | $1,799 | 10.4% | | *General and administrative* | $6,820 | $9,100 | $(2,280) | -25.1% | | **Operating loss** | $(25,944) | $(28,734) | $2,790 | -9.7% | | **Total non-operating expense** | $(4,502) | $(1,128) | $(3,374) | 299.1% | | **Net loss** | **$(30,446)** | **$(29,862)** | **$(584)** | **2.0%** | - R&D expenses increased by **$1.8 million (10.4%)** in FY2019, primarily due to a **$7.8 million** increase in licensing costs related to the RZ358 agreement with Xoma, partially offset by a **$6.0 million** aggregate decrease in other R&D costs following a 2018 workforce reduction[150](index=150&type=chunk)[154](index=154&type=chunk) - G&A expenses decreased by **$2.3 million (25.1%)** in FY2019, mainly due to a **$2.4 million** decrease in compensation and benefits, which included a **$2.0 million** reduction in stock-based compensation expense[157](index=157&type=chunk) - Interest expense increased by **$4.3 million** to **$5.0 million** in FY2019, primarily due to the Fiscal 2018 Notes being outstanding for a longer period and the recognition of a **$2.2 million** beneficial conversion feature upon their conversion[161](index=161&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2019, the company had **$11.6 million** in cash, supplemented by **$22.6 million** from subsequent financings, which management believes is adequate to fund operations through September 2020, despite significant contractual obligations - As of June 30, 2019, the company had **$11.6 million** in cash and cash equivalents and working capital of **$3.8 million**[170](index=170&type=chunk) - In July and August 2019, the company received net proceeds of approximately **$22.6 million** from equity financings, which management believes is adequate to fund planned activities through September 2020[174](index=174&type=chunk)[175](index=175&type=chunk)[179](index=179&type=chunk) Cash Flow Summary (in thousands) | Activity | 2019 (thousands) | 2018 (thousands) | | :--- | :--- | :--- | | Net cash used in Operating activities | $(15,304) | $(14,113) | | Net cash provided by Investing activities | $231 | $1,732 | | Net cash provided by Financing activities | $25,000 | $9,540 | Contractual Obligations as of June 30, 2019 (in thousands) | Obligation | Total (thousands) | Due in 2020 (thousands) | Due in 2021 (thousands) | Due in 2022 (thousands) | | :--- | :--- | :--- | :--- | :--- | | Operating lease obligations | $717 | $275 | $272 | $170 | | Payables to Xoma | $8,500 | $6,500 | $2,000 | - | | Convertible note payable | $10 | $10 | - | - | | Employment agreements | $2,524 | $2,524 | - | - | | **Total** | **$11,751** | **$9,309** | **$2,272** | **$170** | [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not required as the company is a smaller reporting company - The company is a smaller reporting company and is not required to provide information under this item[199](index=199&type=chunk) [Financial Statements and Supplementary Data](index=38&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal years 2019 and 2018, showing a significant increase in cash and assets due to financing activities, and a net loss of **$30.4 million** in 2019 [Consolidated Balance Sheets](index=41&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheet as of June 30, 2019, shows substantial improvement in financial position, with cash and equivalents increasing to **$11.6 million** and total assets to **$12.3 million**, leading to positive stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2019 (thousands) | June 30, 2018 (thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $11,573 | $1,646 | | Total current assets | $12,144 | $2,008 | | Total assets | $12,252 | $2,503 | | Total current liabilities | $8,379 | $6,248 | | Total liabilities | $10,500 | $6,464 | | Total stockholders' equity (deficit) | $1,752 | $(3,961) | [Consolidated Statements of Operations](index=42&type=section&id=Consolidated%20Statements%20of%20Operations) For fiscal year 2019, the company reported a net loss of **$30.4 million**, or **($0.37)** per share, with no revenue, and increased non-operating expenses offsetting decreased operating expenses Consolidated Statement of Operations Highlights (in thousands, except per share data) | Account | Year Ended June 30, 2019 (thousands) | Year Ended June 30, 2018 (thousands) | | :--- | :--- | :--- | | Research and development | $19,079 | $17,280 | | General and administrative | $6,820 | $9,100 | | **Operating loss** | **$(25,944)** | **$(28,734)** | | **Net loss** | **$(30,446)** | **$(29,862)** | | Net loss per common share (USD) | $(0.37) | $(0.54) | [Consolidated Statements of Cash Flows](index=44&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For fiscal year 2019, net cash used in operating activities was **$15.3 million**, while net cash provided by financing activities was a substantial **$25.0 million**, resulting in a net increase of **$9.9 million** in cash Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Year Ended June 30, 2019 (thousands) | Year Ended June 30, 2018 (thousands) | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | $(15,304) | $(14,113) | | Net Cash Provided By Investing Activities | $231 | $1,732 | | Net Cash Provided by Financing Activities | $25,000 | $9,540 | | **Net increase (decrease) in cash** | **$9,927** | **$(2,841)** | | **Cash at end of fiscal year** | **$11,573** | **$1,646** | [Note 13 — Subsequent Events](index=65&type=section&id=Note%2013%20%E2%80%94%20SUBSEQUENT%20EVENTS) Subsequent to fiscal year-end, the company raised approximately **$22.6 million** in net proceeds from equity financings, leading to an early payment to Xoma and significant stock option grants to officers and employees - In July and August 2019, the company raised net proceeds of **$22.6 million** through private placements, including the exercise of a call option by H&G for **$20.0 million**[367](index=367&type=chunk) - On July 31, 2019, the Board of Directors granted stock options for an aggregate of approximately **34.0 million shares** of Common Stock to certain officers and employees at an exercise price of **$0.29 per share**[378](index=378&type=chunk) - In August 2019, the Board of Directors approved a reverse stock split, subject to stockholder approval, at a ratio between **20-to-1** and **100-to-1**[384](index=384&type=chunk) Unaudited Pro Forma Balance Sheet as of June 30, 2019 (in thousands) | | Historical (thousands) | Unaudited Pro Forma (thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash, cash equivalents and restricted cash | $11,573 | $30,789 | | Total assets | $12,252 | $31,468 | | **Liabilities and Stockholders' Equity** | | | | Total liabilities | $10,500 | $7,109 | | Total stockholders' equity | $1,752 | $24,359 | | Total liabilities and stockholders' equity | $12,252 | $31,468 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=69&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no disagreements with its accountants on accounting and financial disclosure - None[386](index=386&type=chunk) [Controls and Procedures](index=69&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were not effective as of June 30, 2019, due to identified material weaknesses - Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2019[387](index=387&type=chunk) - Management determined that the company's internal control over financial reporting was not effective as of June 30, 2019, due to material weaknesses[391](index=391&type=chunk) - Identified material weaknesses include: (1) inadequate segregation of duties, (2) lack of measures to prevent employees from overriding internal controls, (3) a single employee responsible for complex accounting without internal review, and (4) ineffective review controls over financial reporting[392](index=392&type=chunk) [Other Information](index=70&type=section&id=Item%209B.%20Other%20Information) This section is not applicable - Not applicable[395](index=395&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=71&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Following a change of control in February 2019, the Board consists of three non-independent members, with the full Board assuming committee functions, and the company has adopted a code of ethics - The Board of Directors consists of three members: Young-Jin Kim (Chairman), Young Chul Sung, Ph.D., and Nevan C. Elam (CEO)[399](index=399&type=chunk) - Subsequent to February 16, 2019, none of the current Board members are considered 'independent' under Nasdaq Listing Rules, and the full Board has assumed the functions of the Audit, Compensation, and Nominating committees[411](index=411&type=chunk)[414](index=414&type=chunk)[417](index=417&type=chunk) - The company has adopted a code of business conduct and ethics applicable to all employees, officers, and directors[409](index=409&type=chunk) [Executive Compensation](index=76&type=section&id=Item%2011.%20Executive%20Compensation) This section details the compensation for the three Named Executive Officers (NEOs) for fiscal year 2019, including salary, bonus, and stock option awards, along with outstanding equity and employment agreement terms Summary Compensation Table for Fiscal Year 2019 | Name and Position | Salary (USD) | Bonus (USD) | Stock Option Awards (USD) | All Other Compensation (USD) | Total (USD) | | :--- | :--- | :--- | :--- | :--- | :--- | | Nevan Elam, CEO | $453,333 | $258,750 | - | $20,163 | $732,246 | | Sankaram Mantripragada, CSO | $350,000 | $181,125 | - | $31,269 | $562,394 | | Keith Vendola, CFO | $330,000 | $8,044 | $395,723 | $1,605 | $735,372 | - As of June 30, 2019, CEO Nevan Elam had **6,590,000** outstanding stock options, CSO Sankaram Mantripragada had **3,195,000**, and CFO Keith Vendola had **1,000,000**[430](index=430&type=chunk) - Employment agreements for executive officers include severance benefits payable upon termination without 'Cause' or resignation for 'Good Reason', which can include multiples of base salary and accelerated vesting of stock options[440](index=440&type=chunk)[441](index=441&type=chunk)[442](index=442&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=79&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of September 5, 2019, Handok, Inc. and Genexine, Inc. each beneficially owned **31.1%** of the common stock, giving them significant control, while directors and executive officers as a group owned **4.6%** Beneficial Ownership as of September 5, 2019 | Name of Beneficial Owner | Position | Beneficial Ownership (shares) | Percent of Class | | :--- | :--- | :--- | :--- | | Handok, Inc. | Stockholder | 91,300,933 | 31.1% | | Genexine, Inc. | Stockholder | 91,300,933 | 31.1% | | Directors and executive officers as a group (5 people) | - | 14,050,979 | 4.6% | [Certain Relationships and Related Transactions, and Director Independence](index=80&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company discloses significant related party transactions, primarily with its controlling shareholders H&G, and notes that none of its current directors qualify as 'independent' under NASDAQ listing rules - In July 2019, controlling shareholders Handok, Inc. and Genexine, Inc. (H&G) purchased an aggregate of **69.0 million shares** for **$20.0 million**, increasing their collective ownership to **64%**[449](index=449&type=chunk) - The company engaged in transactions with former director Dr. David Welch, including the conversion of **$1.0 million** in convertible notes into approximately **5.3 million shares** of common stock and the modification of a warrant[450](index=450&type=chunk)[451](index=451&type=chunk)[452](index=452&type=chunk) - The company has determined that as of the date of the report, none of its directors qualify as 'independent' in accordance with NASDAQ Stock Market listing requirements[454](index=454&type=chunk) [Principal Accounting Fees and Services](index=82&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The company paid its principal accountant, Plante & Moran, PLLC, total audit fees of **$142,035** for fiscal year 2019 and **$180,489** for fiscal year 2018, with all services pre-approved by the board Accounting Fees | Fee Category | 2019 (USD) | 2018 (USD) | | :--- | :--- | :--- | | Audit fees | $142,035 | $180,489 | | Audit-related fees | - | - | | Tax fees | - | - | | All other fees | - | - | | **Total** | **$142,035** | **$180,489** | Part IV [Exhibits and Financial Statement Schedules](index=83&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the exhibits filed with or incorporated by reference into the Form 10-K, including corporate governance documents, material contracts, and Sarbanes-Oxley certifications, with all financial statement schedules omitted - All financial statement schedules are omitted because they are not applicable, immaterial, or the required information is already presented in the financial statements and notes[460](index=460&type=chunk) - A list of exhibits is provided, including the Certificate of Incorporation, bylaws, license agreements with Xoma and ActiveSite, financing agreements with Lincoln Park and H&G, equity incentive plans, and Sarbanes-Oxley certifications[463](index=463&type=chunk)[464](index=464&type=chunk) [Form 10-K Summary](index=86&type=section&id=Item%2016.%20Form%2010-K%20Summary) This section is not applicable - Not applicable[466](index=466&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 17(a)(2)(B) of the Securities Act. ¨ Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ¨ Yes x No Securities registered pursuant to Section 12(b) of the A ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements for the quarterly period ended December 31, 2018, reflecting a significant net loss and deteriorating capital position with a substantial working capital deficit [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of December 31, 2018, shows a significant decline in total assets to **$0.46 million** from **$2.50 million**, with total liabilities increasing to **$10.24 million** from **$6.46 million**, worsening the stockholders' deficit to **$9.79 million** Condensed Consolidated Balance Sheet Data (as of Dec 31, 2018 vs. June 30, 2018) | Balance Sheet Item | Dec 31, 2018 | June 30, 2018 | | :--- | :--- | :--- | | Cash | $258,188 | $1,645,872 | | Total Current Assets | $422,278 | $2,007,787 | | Total Assets | $455,662 | $2,502,882 | | Total Current Liabilities | $2,976,210 | $6,248,014 | | Total Liabilities | $10,243,356 | $6,463,637 | | Total Stockholders' Deficit | ($9,787,694) | ($3,960,755) | [Unaudited Condensed Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss of **$4.2 million** for the three months and **$7.5 million** for the six months ended December 31, 2018, an improvement from prior-year periods due to reduced R&D and G&A expenses, partially offset by increased interest expense Statement of Operations Summary (Three and Six Months Ended Dec 31) | Metric | Q4 2018 | Q4 2017 | H2 2018 | H2 2017 | | :--- | :--- | :--- | :--- | :--- | | Total Research and Development | $1,309,093 | $3,413,088 | $2,239,002 | $7,723,726 | | Total General and Administrative | $1,851,856 | $2,337,870 | $3,483,976 | $4,744,362 | | Operating Loss | ($3,160,949) | ($5,750,958) | ($5,722,978) | ($12,468,088) | | Net Loss | ($4,161,432) | ($5,718,587) | ($7,526,665) | ($12,403,200) | | Net Loss Per Share | ($0.07) | ($0.11) | ($0.12) | ($0.23) | [Unaudited Condensed Consolidated Statement of Stockholders' Deficit](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Stockholders%27%20Deficit) For the six months ended December 31, 2018, the stockholders' deficit increased from **$4.0 million** to **$9.8 million**, primarily driven by a net loss of **$7.5 million** partially offset by **$1.7 million** in stock-based compensation Reconciliation of Stockholders' Deficit (For the Six Months Ended Dec 31, 2018) | Description | Amount | | :--- | :--- | | Balance, June 30, 2018 | ($3,960,755) | | Stock-based compensation | $1,693,369 | | Net loss | ($7,526,665) | | **Balance, December 31, 2018** | **($9,787,694)** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended December 31, 2018, net cash used in operating activities was **$3.1 million**, an improvement from the prior year, with investing activities providing **$0.2 million** and financing activities providing **$1.5 million**, resulting in a **$1.4 million** cash decrease to **$0.26 million** Cash Flow Summary (Six Months Ended Dec 31) | Cash Flow Activity | 2018 | 2017 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($3,082,823) | ($8,052,651) | | Net Cash Provided By (Used In) Investing Activities | $195,139 | ($5,816) | | Net Cash Provided by Financing Activities | $1,500,000 | $4,440,000 | | **Net decrease in cash** | **($1,387,684)** | **($3,618,467)** | | **Cash at end of period** | **$258,188** | **$868,071** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes highlight substantial doubt about the company's going concern status due to significant losses and deficits, mitigated by a **$25.0 million** Series AA Preferred Stock financing in January 2019, which also triggered convertible note conversions and an amended license agreement with XOMA requiring substantial cash payments - The company's financial statements as of December 31, 2018, reflect conditions that raise substantial doubt about its ability to continue as a going concern, citing a net loss of **$7.5 million** for the six-month period, a working capital deficit of **$2.6 million**, and an accumulated deficit of **$101.7 million**[47](index=47&type=chunk) - Subsequent to the quarter end, in January 2019, the company closed a **$25.0 million** Series AA Preferred Stock financing, providing net proceeds of approximately **$17.6 million** after a **$5.9 million** license payment, intended to advance clinical programs[48](index=48&type=chunk)[49](index=49&type=chunk) - In January 2019, the license agreement with XOMA was amended to replace equity issuance with cash payments, including an immediate **$5.9 million** payment (paid in Feb 2019) and five future payments totaling **$8.5 million**[96](index=96&type=chunk)[98](index=98&type=chunk) - The closing of the Series AA financing in January 2019 triggered the conversion of **$5.34 million** in principal of Fiscal 2018 Notes plus accrued interest into Series AA preferred stock[63](index=63&type=chunk)[106](index=106&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=24&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) The MD&A details the company's operational and financial results, emphasizing a strategic shift away from in-house manufacturing, which led to significantly lower operating expenses, and highlights the critical **$25.0 million** private placement closed in January 2019, while noting that substantial doubt about the company's ability to continue as a going concern remains as further funding will be required in late 2019 - In calendar year 2019, the company's objectives are to initiate a Phase 2 clinical program for RZ358, complete toxicology studies for RZ402 to enable an IND filing, and complete the ongoing Phase 1 study for AB101[116](index=116&type=chunk) - The company has ceased in-house manufacturing and research, closing its Colorado facilities in December 2018 to focus on its clinical development strategy[118](index=118&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) For the three and six months ended December 31, 2018, net losses decreased to **$4.2 million** and **$7.5 million** respectively, driven by sharp reductions in R&D and G&A expenses following the termination of manufacturing activities and workforce reduction, though partially offset by **$2.2 million** in interest from convertible notes Change in Operating Expenses (Six Months Ended Dec 31, 2018 vs 2017) | Expense Category | H2 2018 | H2 2017 | Change | | :--- | :--- | :--- | :--- | | Research & Development | $2.2M | $7.7M | ($5.5M) | | General & Administrative | $3.5M | $4.7M | ($1.2M) | - The decrease in R&D costs was primarily due to the termination of manufacturing activities, which led to lower compensation (**$2.1M** decrease), clinical trial costs (**$1.6M** decrease), and license costs (**$1.1M** decrease) for the six-month period[136](index=136&type=chunk)[137](index=137&type=chunk) - Non-operating expense increased by **$1.9 million** for the six-month period, mainly due to a **$2.2 million** increase in interest expense from the Fiscal 2018 Notes[139](index=139&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2018, the company's liquidity was critical with only **$0.3 million** in cash and a **$2.6 million** working capital deficit, with operations dependent on the **$25.0 million** Series AA financing that provided **$17.6 million** net proceeds, though additional capital will be needed in late 2019, maintaining substantial doubt about its going concern ability - As of December 31, 2018, the company had approximately **$0.3 million** of cash, a working capital deficit of **$2.6 million**, and cumulative net losses of **$101.7 million**[142](index=142&type=chunk) - A pro forma balance sheet shows that after the January 2019 financing and related transactions, cash would increase to **$17.8 million**, but total liabilities would also increase significantly to **$42.1 million**, including new long-term payables to Xoma[152](index=152&type=chunk) - Management believes the current capital is adequate for the next 12 months but intends to request additional investment from its new investors in late 2019, with no assurance this funding will be provided, which raises substantial doubt about the company's ability to continue as a going concern[151](index=151&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This disclosure is not required for the company because it qualifies as a smaller reporting company - The company is not required to provide this information as it is a smaller reporting company[163](index=163&type=chunk) [Controls and Procedures](index=32&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management's evaluation concluded that the company's disclosure controls and procedures were not effective as of December 31, 2018, due to material weaknesses in internal control over financial reporting - Management concluded that as of December 31, 2018, the company's internal control over financial reporting was not effective due to material weaknesses[164](index=164&type=chunk) - Identified material weaknesses include: (1) lack of segregation of duties, (2) potential for control overrides, (3) one employee handling complex accounting without internal review, and (4) ineffective review controls over financial statements and disclosures[165](index=165&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=33&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company reported that there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on its results of operations as of December 31, 2018 - The company reports no material legal proceedings[169](index=169&type=chunk) [Risk Factors](index=33&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section adds new risk factors related to potential stockholder dilution from the conversion of Series AA Preferred Stock and any future equity or equity-linked capital raises - The conversion of Series AA Preferred Stock, issued from the recent financing and debt conversion, will result in the dilution of existing common stockholders[170](index=170&type=chunk) - Future capital raises may involve issuing equity or equity-linked securities that could have rights senior to common stock and cause further dilution[171](index=171&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company reported no unregistered sales of equity securities or use of proceeds during the reporting period - The company reports 'None' for this item[172](index=172&type=chunk) [Defaults Upon Senior Securities](index=33&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities - The company reports 'None' for this item[173](index=173&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's business - This item is 'Not applicable'[174](index=174&type=chunk) [Other Information](index=33&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The company reported no other information for this item - The company reports 'None' for this item[175](index=175&type=chunk) [Exhibits](index=33&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including amendments to the Xoma license and stock purchase agreements, the purchase agreement for the Series AA Preferred Stock, and officer certifications - Filed exhibits include amendments to agreements with Xoma, the purchase agreement for Series AA Preferred Stock, and required CEO/CFO certifications[176](index=176&type=chunk)