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Going Concern | 9 Months Ended
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Mar. 31, 2019
Going Concern [Abstract] |
Going Concern | Note 3. Going Concern As reflected in the accompanying unaudited condensed consolidated financial statements, for the nine months ended March 31, 2019 the Company incurred a net loss of $27.3 million and net cash used in operating activities amounted to $11.5 million. As of March 31, 2019, the Company had an accumulated deficit of $123.8 million. In addition, the Company is in the clinical stage and has not yet generated any revenues. These factors raise substantial doubt about the Company’s ability to continue as a going concern. As discussed in Note 7, in January 2019 the Company closed an offering with two new investors (the “New Investors”) for an aggregate of 2.5 million shares of Series AA Preferred Stock that resulted in gross proceeds of $25.0 million (including application of a $1.5 million Exclusivity Payment received in December 2018). Closing occurred on January 30, 2019 and resulted in receipt of the remaining proceeds of $23.5 million. Due to the closing of the Series AA Financing, the Fiscal 2018 Notes discussed in Note 6 converted for an aggregate principal balance of $5,340,000 plus accrued interest of $800,117 to 767,519 shares of Series AA Preferred Stock. All of the shares of Series AA Preferred Stock automatically converted into an aggregate of 148,523,540 shares of Common Stock upon receipt of stockholder approval on April 24, 2019 for an increase in the number of authorized shares of Common Stock to 500.0 million shares. The holders of Series AA Preferred Stock were entitled to vote on an as converted basis with Common Stockholders whereby the New Investors had a majority of the votes required to increase the Company’s authorized shares of Common Stock. As a result of the $25.0 million capital infusion from the Series AA Financing, less a $5.9 million license payment to Xoma in February 2019, net proceeds of approximately $17.6 million were available primarily to advance the Company’s clinical programs. The Company also granted participation rights to the New Investors to purchase up to an aggregate of $20.0 million of shares of the Company’s Common Stock at a per share price equal to the greater of $0.29 or 75% of the volume weighted average closing price of the Company’s Common Stock over 30 consecutive trading days prior to the exercise of the option (the “Formula Price”). These future participation rights are triggered at such time when the Company requests additional funding on or before December 31, 2020, whereby the New Investors must provide such funding within five business days or the right to participate will expire. A contingent beneficial conversion feature will be recognized if the Formula Price is less than the fair value of the Company’s Common Stock on date the New Investors may elect to participate in the future financing . As a result of the completion of the Series AA Financing, the Company has adequate capital resources to (i) meet its contractual licensing obligations to Xoma of $4.5 million over the next 12 months, (ii) increase spending on RZ 358 and other clinical programs, and (iii) make cash payments for working capital requirements. The Company currently expects to request additional funding from the New Investors during the second half of calendar year 2019. However, there are no assurances that the New Investors will elect to exercise their rights to invest up to an additional $20.0 million, or that the Company would be able to obtain additional financing through other sources, such as equity offerings and bank financings. Even if these other financing sources are available, they may not be on terms that are acceptable to management. These conditions raise substantial doubt about the Company’s ability 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.

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- Definition The entire disclosure when substantial doubt is raised about the ability to continue as a going concern. Includes, but is not limited to, principal conditions or events that raised substantial doubt about the ability to continue as a going concern, management's evaluation of the significance of those conditions or events in relation to the ability to meet its obligations, and management's plans that alleviated or are intended to mitigate the conditions or events that raise substantial doubt about the ability to continue as a going concern. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 40 -URI http://asc.fasb.org/subtopic&trid=51888271 + Details
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