Rezolute, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

12 Months Ended

Jun. 30, 2020

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 14 — SUBSEQUENT EVENTS

Related Party Licensing Agreement

On September 15, 2020, the Company entered into an exclusive license agreement with Handok (the “Handok License”) for the territory of the Republic of Korea. The Handok License relates to pharmaceutical products in final dosage form containing the pharmaceutical compounds developed or to be developed by the Company, including those related to RZ358 and RZ402. The Handok License is in effect for a period of 20 years after the first commercial sale of each product, and requires (i) milestone payments of $0.5 million upon approval of a New Drug Application (“NDA”) for each product in the territory, and (ii) the Company will sell products ordered by Handok at a transfer price equal to 70% of the net selling price of the products. To date, no milestone payments have been earned by the Company.

Fiscal 2021 Financing

On September 15, 2020, the Company entered into financial advisory agreements to undertake a private placement of equity or equity equivalent securities (the “Fiscal 2021 Financing”). Pursuant to the financial advisory agreements, the Company agreed to pay transaction fees to the financial advisors for an aggregate of 6.0% of the gross proceeds plus out-of-pocket expenses. In addition, for any financing completed within 60 days of the closing of the Fiscal 2021 Financing, the financial advisors are entitled to additional transaction fees equal to 6.0% of the gross proceeds.

On October 9, 2020, the Company completed the Fiscal 2021 Financing through the sale of units (the “Units”) consisting of (i) approximately 2.5 million shares of Common stock, and (ii) warrants entitling the holders to purchase approximately 0.8 million shares of Common Stock (the “Warrants”). The Warrants are exercisable at $19.50 per share for a period of seven years and may be exercised on a cash or cashless basis at the election of the holders. The Units were issued for a purchase price of $16.50 per Unit, resulting in gross proceeds of $41.0 million. Pursuant to the financial advisory agreements, the Company paid transaction fees of $2.5 million, and costs for professional fees and other offering costs are estimated at approximately $0.9 million. After deducting the financial advisory fees and other offering costs, the estimated net proceeds amounted to approximately $37.6 million. Pursuant to the terms of the Fiscal 2021 Financing, the Company executed the Reverse Stock Split discussed in Note 1 and agreed to use commercially reasonable efforts to enable trading of its Common Stock on the Nasdaq Capital Market. The Company effected a one share for 50 shares reverse stock split on October 9, 2020. In addition, the Company entered into a registration rights agreement (“RRA”), pursuant to which the Company agreed to use commercially reasonable efforts to register (i) the shares of Common Stock included in the Units, and (ii) the shares of Common Stock issuable upon exercise of the warrants. If the Company fails to register the shares pursuant to the terms of the RRA, liquidated damages up to a maximum of 6.0% of the gross proceeds of the Fiscal 2021 Financing may be assessed.

Early Payments to Xoma

Upon completion of a qualified financing of $20.0 million or more, the Company is obligated to repay the remaining outstanding balance due to Xoma within 15 days as discussed in Note 4. The completion of the Fiscal 2021 Financing resulted in acceleration of the remaining balance due to Xoma of $1.8 million as of June 30, 2020. The Company expects to make this payment to Xoma by October 2020.

Unaudited Pro Forma Disclosure

Presented below is an unaudited pro forma balance sheet that gives effect to the Fiscal 2021 Financing and the Early Payments to Xoma, as if these events had occurred on June 30, 2020 (in thousands, except per share amount):


			Equity Financing				Xoma
			Gross			Offering	Early
	Historical		Proceeds (1)		Costs (2)		Payments (3)		Pro Forma
									(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	9,955	$	41,000	$	(3,420)	$	(1,809)	$	45,726
Other current assets		563		—		—		—		563
Total current assets		10,518		41,000		(3,420)		(1,809)		46,289

Non-current assets:
Right-of-use assets, net		383		—		—		—		383
Other		64		—		—		—		64
Total assets	$	10,965	$	41,000	$	(3,420)	$	(1,809)	$	46,736
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	893	$	—	$	—	$	—	$	893
Accrued liabilities		488		—		—		—		488
Current portion of license fees payable to Xoma		1,600		—		—		(1,600)		—
Current portion of operating lease liabilities		245		—		—		—		245
Total current liabilities		3,226		—		—		(1,600)		1,626

Non-current liabilities:
License fees payable to Xoma, net of current portion		209		—		—		(209)		—
Operating lease liabilities, net of current portion		165		—		—		—		165
Total liabilities		3,600		—		—		(1,809)		1,791
Stockholders' equity:
Common stock, $0.001 par value, 500,000 shares authorized; see below for outstanding shares		6		2		—		—		8
Additional paid-in capital		154,595		40,998		(3,420)		—		192,173
Accumulated deficit		(147,236)		—		—		—		(147,236)

Total stockholders' equity		7,365		41,000		(3,420)		—		44,945

Total liabilities and stockholders' equity	$	10,965	$	41,000	$	(3,420)	$	(1,809)	$	46,736

Number of shares of Common Stock outstanding		5,867		2,485		—		—		8,352

⁽¹⁾

Gives effect to the receipt of gross proceeds of $41.0 million on October 9, 2020, as a result of the private placement of units at an issuance price of $16.50 per unit. The units consisted of an aggregate of approximately 2.5 million shares of Common Stock and warrants for the purchase of an additional 0.8 million shares of Common Stock.

⁽²⁾

Gives effect to the financial advisory fees of 6.0% of the gross proceeds and other estimated offering costs of approximately $0.9 million related to the Fiscal 2021 Financing.

⁽³⁾

Gives effect to the requirement discussed in Note 4 to repay the remaining obligations due to Xoma, since the Fiscal 2021 Financing met the definition of a qualified financing.

Bonuses for Certain Officers and Employees

On October 7, 2020, the Company's Board of Directors approved bonus payments for an aggregate of $0.5 million to certain officers and employees. The bonuses are expected to be paid in October 2020.