NOTE 2 — LIQUIDITY AND GOING CONCERN

The Company is in the clinical stage and has not yet generated any revenues. For the fiscal year ended June 30, 2019, the Company incurred a net loss of $30.4 million and net cash used in operating activities amounted to $15.3 million. For the nine months ended March 31, 2020, the Company incurred a net loss of $16.8 million and net cash used in operating activities amounted to $20.1 million. As of March 31, 2020, the Company had an accumulated deficit of $143.7 million, cash and cash equivalents of $14.0 million and total liabilities of $4.4 million.

As discussed in Note 5, in July and August 2019 the Company received aggregate net proceeds of approximately $22.6 million from the issuance of approximately 82.9 million shares of Common Stock to investors in a private placement. Management believes the Company’s existing cash and cash equivalents balance of $14.0 million will be adequate to carry out currently planned activities through the end of calendar year 2020. While the Company has flexibility to delay clinical programs, if necessary, to conserve its capital resources, management believes an equity financing will need to be completed by the end of calendar 2020 to ensure that adequate resources are available to advance clinical programs in 2021.

As discussed in Note 7, COVID-19 has resulted in an economic environment that is unfavorable for many businesses to pursue new debt and equity financings. The U.S. economy has been largely shut down by mass quarantines and government mandated stay-in-place orders to halt the spread of the virus. While these orders are being lifted gradually, there is considerable uncertainty surrounding the recovery period for the U.S. economy. The long-term effects on the Company are expected to result in higher costs in order to comply with safeguards to protect patients and staff engaged in clinical activities, and extended periods of time may be required to complete clinical trials. The current economic environment and financial market volatility is expected to make it more challenging for the Company to obtain additional funding for its clinical programs on terms that are acceptable to the Board of Directors and stockholders. Even if an economic recovery occurs faster and more robustly than currently expected, there are no assurances that the Company will be able to obtain equity and debt financings in the future. In addition, even if these financing sources are available, they may be on terms that are not acceptable to the Company’s Board of Directors and stockholders. These conditions raise substantial doubt about the ability of the Company to continue as a going concern.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.