ADMA BIOLOGICS, INC. 10-K

Item 9A. Controls and Procedures Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Annual Report on Internal Control Over Financial Reporting The Management of ADMA Biologics, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act, as amended, as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) 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 of our company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 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. 74 Table of Contents Management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of its internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria set forth in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2021 based on those criteria. As a Smaller Reporting Company, the Company is not required to include in this Annual Report on Form 10-K a report on the effectiveness of its internal control over financial reporting by the Company’s independent registered public accounting firm. Changes in Internal Control Over Financial Reporting There has been no change in our internal control over financial reporting during the quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 75 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance Information required to be disclosed by this Item with respect to our executive officers is incorporated into this Annual Report on Form 10-K by reference from the section entitled “Executive Officers and Director and Officer Compensation: Executive Officers” contained in our definitive proxy statement for our 2022 annual meeting of stockholders, which we intend to file within 120 days of the end of our fiscal year ended December 31, 2021. Information required to be disclosed by this Item about our Board of Directors (the “Board”) is incorporated into this Annual Report on Form 10-K by reference from the section entitled “Proposal No. 1: Election of Directors” contained in our definitive proxy statement for our 2022 annual meeting of stockholders, which we intend to file within 120 days of the end of our fiscal year ended December 31, 2021. To the extent necessary, information required to be disclosed by this Item about the Section 16(a) compliance of our directors and executive officers is incorporated into this Annual Report on Form 10-K, as applicable, by reference from the section entitled “Delinquent Section 16(a) Reports” contained in our definitive proxy statement for our 2022 annual meeting of stockholders, which we intend to file within 120 days of the end of our fiscal year ended December 31, 2021. Information required to be disclosed by this Item about our Board, the Audit Committee of our Board, our audit committee financial expert, our Code of Ethics and Business Conduct Standards, and other corporate governance matters is incorporated into this Annual Report on Form 10-K by reference from the section entitled “Corporate Governance” contained in our definitive proxy statement for our 2022 annual meeting of stockholders, which we intend to file within 120 days of the end of our fiscal year ended December 31, 2021. The text of our Code of Ethics and Business Conduct Standards, which applies to our directors and employees (including our principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions), is posted in the “Corporate Governance” section of the Investors section of our website, www.admabiologics.com. A copy of the Code of Ethics and Business Conduct Standards can be obtained free of charge on our website. We intend to disclose on our website any amendments to, or waivers from, our Code of Ethics and Business Conduct Standards that are required to be disclosed pursuant to the rules of the SEC and The Nasdaq Stock Market. The information presented on our website is not a part of this Annual Report on Form 10-K and the reference to our website is intended to be an inactive textual reference only. Item 11. Executive Compensation Information required to be disclosed by this Item is incorporated into this Annual Report on Form 10-K by reference from the section entitled “Executive Officers and Director and Officer Compensation” contained in our definitive proxy statement for our 2022 annual meeting of stockholders, which we intend to file within 120 days of the end of our fiscal year ended December 31, 2021. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information required to be disclosed by this Item is incorporated into this Annual Report on Form 10-K by reference from the sections entitled “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” contained in our definitive proxy statement for our 2022 annual meeting of stockholders, which we intend to file within 120 days of the end of our fiscal year ended December 31, 2021. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the section entitled “Certain Relationships and Related Transactions, and Director Independence” contained in our definitive proxy statement for our 2022 annual meeting of stockholders, which we intend to file within 120 days of the end of our fiscal year ended December 31, 2021. 76 Table of Contents Item 14. Principal Accounting Fees and Services The information required to be disclosed by this Item is incorporated into this Annual Report on Form 10-K by reference from the section entitled “Audit and Other Fees” contained in our definitive proxy statement for our 2022 annual meeting of stockholders, which we intend to file within 120 days of the end of our fiscal year ended December 31, 2021. PART IV Item 15. Exhibits, Financial Statement Schedules Financial Statement Schedules (a) The following documents are filed as part of this Annual Report on Form 10-K: (1) Consolidated Financial Statements. Page Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F-4 Consolidated Statements of Operations for the years ended December 31, 2021 and 2020 F-5 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2020 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020 F-7 Notes to Consolidated Financial Statements F-8 (2) Financial Statement Schedules. Required information is included in the footnotes to the financial (3) Index to Exhibits. 77 Table of Contents INDEX TO EXHIBITS Exhibit No. Description 2.1 Master Purchase and Sale Agreement, dated as of January 21, 2017, by and among Biotest Pharmaceuticals Corporation, ADMA BioManufacturing, LLC, ADMA Biologics, Inc., Biotest AG and Biotest US Corporation (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the SEC on January 23, 2017). 3.1 Second Amended and Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 23, 2019). 3.1.1 Certificate of Amendment of the Second Amended and Restated Certificate of Incorporation of ADMA Biologics, Inc., dated as of May 27, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 28, 2021). 3.2 Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on October 7, 2016). 3.3 Certificate of Designation of Series A Junior Participating Preferred Stock of ADMA Biologics, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 21, 2021). 4.1 Specimen Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 to Amendment No. 1 to the Company’s Current Report on Form 8-K/A, filed with the SEC on March 29, 2012). 4.2 Warrant Agreement, dated December 21, 2012, issued by the Company to Hercules Technology Growth Capital, Inc. (incorporated herein by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1, filed with the SEC on February 11, 2013). 4.3 Form of Warrant Agreement, dated May 13, 2016, issued by the Company to Oxford Finance LLC (incorporated herein by reference to Exhibit 4.6 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 13, 2016). 4.4 Warrant to Purchase Stock, dated October 10, 2017, issued by the Company to Marathon Healthcare Finance Fund, L.P. (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on October 11, 2017). 4.5 Warrant to Purchase Stock, dated February 11, 2019, issued by the Company to Perceptive Credit Holdings II, LP (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on February 12, 2019). 4.6 Warrant to Purchase Stock, dated May 3, 2019, issued by the Company to Perceptive Credit Holdings II, LP (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on May 3, 2019). 4.7 Warrant to Purchase Stock, dated December 8, 2020, issued by the Company to Perceptive Credit Holdings II, LP (incorporated by reference to Exhibit 4.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 24, 2021). 4.8 Note, dated February 11, 2019, issued by the Company to Perceptive Credit Holdings II, LP (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 12, 2019). 4.9 Note, dated May 3, 2019, issued by the Company to Perceptive Credit Holdings II, LP (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 3, 2019 ). 4.10 Note, dated December 8, 2020, issued by the Company to Perceptive Credit Holdings II, L.P. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 9, 2020). 4.11* Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934. 78 Table of Contents 4.12 Rights Agreement, dated as of December 20, 2021, by and between ADMA Biologics, Inc. and Continental Stock Transfer and Trust Company, as rights agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 21, 2021). 4.13* Form of Warrant to Purchase Stock, in the form issued by the Company to various entities affiliated with Hayfin Services LLP, dated as of March 23, 2022 10.1† 2007 Employee Stock Option Plan, as amended by Amendment No. 3 (incorporated herein by reference to Exhibit A to the Information Statement on Schedule 14C, filed with the SEC on October 29, 2012). 10.2† Amended and Restated ADMA Biologics, Inc. 2014 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-8, filed with the SEC on August 18, 2017). 10.3† Amended and Restated Employment Agreement, dated January 29, 2019, by and between ADMA Biologics, Inc. and Adam Grossman (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on January 29, 2019). 10.3.1† Amendment to Employment Agreement, dated as of September 29, 2021, by and between ADMA Biologics, Inc. and Adam Grossman (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on October 1, 2021). 10.4† Amended and Restated Employment Agreement, dated January 29, 2019, by and between ADMA Biologics, Inc. and Brian Lenz (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on January 29, 2019). 10.4.1† Amendment to Employment Agreement, dated as of September 29, 2021, by and between ADMA Biologics, Inc. and Brian Lenz (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on October 1, 2021). 10.5+ Plasma Purchase Agreement, dated as of November 17, 2011, by and between Biotest Pharmaceuticals Corporation and ADMA Biologics, Inc., as amended by First Amendment to Plasma Purchase Agreement, dated as of December 1, 2011, by and between Biotest Pharmaceuticals Corporation and ADMA Biologics, Inc. (incorporated herein by reference to Exhibit 10.9 to Amendment No. 3 to the Company’s Current Report on Form 8-K/A, filed with the SEC on June 22, 2012). 10.5.1+ Second Amendment to Plasma Purchase Agreement, dated as of December 18, 2015, by and between Biotest Pharmaceuticals Corporation and ADMA Biologics, Inc. (incorporated herein by reference to Exhibit 10.3.1 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 23, 2016). 10.5.2 Third Amendment to Plasma Purchase Agreement, dated as of April 8, 2016, by and between Biotest Pharmaceuticals Corporation and ADMA Biologics, Inc. (incorporated herein by reference to Exhibit 10.3.2 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 13, 2016). 10.5.3 Fourth Amendment to Plasma Purchase Agreement, dated as of June 6, 2017, by and between Biotest Pharmaceuticals Corporation and ADMA Biologics, Inc. (incorporated herein by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 11, 2017). 10.5.4+ Fifth Amendment to Plasma Purchase Agreement, dated as of January 1, 2019, by and between Grifols Worldwide Operations Limited (as successor-in-interest to Biotest Pharmaceuticals Corporation) and ADMA Biologics, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on January 2, 2019). 10.6+ Plasma Supply Agreement, dated as of June 6, 2017, by and between ADMA BioManufacturing, LLC and Biotest Pharmaceuticals Corporation (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 11, 2017). 10.6.1+ Amendment #1 to the Plasma Supply Agreement, dated as of July 19, 2018, by and between Biotest Pharmaceuticals Corporation and ADMA BioManufacturing, LLC (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 10, 2018). 79 Table of Contents 10.7+ Plasma Purchase Agreement, dated as of June 6, 2017, by and between ADMA BioManufacturing, LLC and Biotest Pharmaceuticals Corporation (incorporated herein by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 11, 2017). 10.7.1+ Amendment to Plasma Purchase Agreement, dated as of July 19, 2018, by and between Biotest Pharmaceuticals Corporation and ADMA BioManufacturing, LLC (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 10, 2018). 10.8 Amended and Restated Agreement for Services, effective as of January 1, 2016, as amended, by and between ADMA Biologics, LLC and Areth LLC (incorporated herein by reference to Exhibit 10.18 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 12, 2016). 10.9 Lease, effective as of February 17, 2017, by and between Home Center Properties, LLC and ADMA BioCenters Georgia Inc. (incorporated herein by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K, filed with the SEC on February 24, 2017). 10.10 Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K, filed with the SEC on February 13, 2012). 10.11 Credit Agreement and Guaranty, dated as of February 11, 2019, by and among the Company, ADMA Plasma Biologics, Inc., ADMA BioCenters Georgia Inc., ADMA BioManufacturing, LLC, and Perceptive Credit Holdings II, LP. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 12, 2019). 10.12 Amendment No. 1 to Credit Agreement and Guaranty, dated as of May 3, 2019, by and among the Company, ADMA Plasma Biologics, Inc., ADMA BioCenters Georgia Inc., ADMA BioManufacturing, LLC and Perceptive Credit Holdings II, LP (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 3, 2019). 10.13 Amendment No. 2 to the Credit Agreement and Guaranty, dated December 8, 2020, by and among the Company, ADMA Plasma Biologics, Inc., ADMA BioCenters Georgia Inc., ADMA BioManufacturing, LLC and Perceptive Credit Holdings II, LP. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 9, 2020). 10.14 Security Agreement, dated as of February 11, 2019, by and among the Company, ADMA Plasma Biologics, Inc., ADMA Bio Centers Georgia Inc., ADMA BioManufacturing, LLC, and Perceptive Credit Holdings II, LP. (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on February 12, 2019). 80 Table of Contents 10.15+ License Agreement, effective as of December 31, 2012, by and between ADMA Biologics, Inc. and Biotest AG (incorporated herein by reference to Exhibit 10.21 to the Company’s Registration Statement on Form S-1, filed with the SEC on February 11, 2013). 10.15.1+ First Amendment to License Agreement, dated as of June 6, 2017, by and between the Company and Biotest AG (incorporated herein by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 11, 2017). 10.16+ Manufacturing Agreement, dated as of September 30, 2011, by and between ADMA BioManufacturing, LLC (as successor-in-interest to Biotest Pharmaceuticals Corporation) and Sanofi Pasteur S.A. (incorporated herein by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 29, 2018). 10.16.1+ Amendment #2 to the Manufacturing Agreement, effective as of August 1, 2016, by and between ADMA BioManufacturing, LLC (as successor-in-interest to Biotest Pharmaceuticals Corporation) and Sanofi Pasteur S.A. (incorporated herein by reference to Exhibit 10.24.1 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 29, 2018). 10.16.2+ Amendment #3 to the Manufacturing Agreement, effective as of December 21, 2017, by and between ADMA BioManufacturing, LLC and Sanofi Pasteur S.A. (incorporated herein by reference to Exhibit 10.24.2 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 29, 2018). 10.17 Stockholders Agreement, dated as of June 6, 2017, by and between the Company and Biotest Pharmaceuticals Corporation (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 12, 2017). 10.18+ Transition Services Agreement, dated as of January 1, 2019, by and between the Company and Biotest Pharmaceuticals Corporation. (incorporated herein by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 13, 2019) 10.19++ Amendment #1 to Transition Services Agreement, dated as of August 29, 2019, by and between ADMA BioManufacturing, LLC and Biotest Pharmaceuticals Corporation (incorporated by reference from Exhibit 10.1 to Current Report on Form 8-K, filed on September 5, 2019). 10.20 Amendment 3 to the Amended and Restated Agreement for Services, effective as of November 7, 2019, by and between ADMA Biologics, LLC and Areth LLC (incorporated herein by reference to the Exhibit 10.27 to the Company’s Annual Report on Form 10-K filed March 12, 2020). 10.21 Distribution Agreement, dated September 3, 2021, by and between ADMA Biologics, Inc. and Raymond James & Associates, Inc. (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on September 3, 2021). 10.22 Form of Retention Bonus Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 1, 2021). 10.23 Separation Agreement and Release, dated August 6, 2021, by and between ADMA Biologics, Inc. and James Mond (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 11, 2021). 10.24* Credit Agreement and Guaranty, dated as of March 23, 2022, by and among the Company, Hayfin Services LLP and the lenders party thereto 10.25* Security Agreement, dated as of March 23, 2022, by and among the Company, certain subsidiaries of the Company and Hayfin Services LLP. 21.1* Subsidiaries of the Company. 23.1* Consent of CohnReznick LLP. 31.1* Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 81 Table of Contents 31.2* Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101* The following materials from ADMA Biologics, Inc. Form 10-K for the year ended December 31, 2021, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets at December 31, 2021 and December 31, 2020, (ii) Consolidated Statements of Operations for the years ended December 31, 2021 and 2020, (iii) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2020, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020; and (v) Notes to Consolidated Financial Statements. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). + Confidential treatment has been granted with respect as to certain portions of this exhibit. Such portions have been redacted and submitted separately to the SEC. ++ Portions of this exhibit and the schedules thereto have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. * Filed herewith. ** Furnished herewith. † Management compensatory plan, contract or arrangement. Item 16. Form 10-K Summary None. 82 Table of Contents 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. ADMA Biologics, Inc. Date: March 24, 2022 By: /s/ Adam S. Grossman Name: Adam S. Grossman Title: President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Signature Title Date /s/ Adam S. Grossman Adam S. Grossman President and Chief Executive Officer (Principal Executive Officer) and Director March 24, 2022 /s/ Brian Lenz Brian Lenz Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) March 24, 2022 /s/ Steven A. Elms Steven A. Elms Chairman of the Board of Directors March 24, 2022 /s/ Dr. Jerrold B. Grossman Dr. Jerrold B. Grossman Vice Chairman of the Board of Directors March 24, 2022 /s/ Martha J. Demski Martha J. Demski Director March 24, 2022 /s/ Bryant E. Fong Bryant E. Fong Director March 24, 2022 /s/ Lawrence P. Guiheen Lawrence P. Guiheen Director March 24, 2022 /s/ Young T. Kwon Young T. Kwon Director March 24, 2022 83 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS TABLE OF CONTENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 596 ) F-2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F-4 Consolidated Statements of Operations for the years ended December 31, 2021 and 2020 F-5 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2020 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020 F-7 Notes to Consolidated Financial Statements F-8 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of ADMA Biologics, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of ADMA Biologics, Inc. and subsidiaries (the “Company”) as of December 31, 2021 and 2020; the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended; and, the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. Inventory Description of the matter As of December 31, 2021, the Company’s inventory totaled $124,724,091. As described in the notes to the consolidated financial statements, the valuation of inventory involves significant estimates relating to the capitalization of labor and overhead costs to the work in process and finished goods inventories as well as lower of cost or net realizable value considerations. Given the significance of the inventory value, the importance of inventory to the Company’s operations, the various components and the multiple locations and the complexity of the computations, auditing the inventory was challenging and involved a relatively high degree of auditor judgement and subjectivity, extensive testing, and the involvement of more senior members of the engagement team to design the appropriate responsive audit procedures and to supervise, execute and review the test results. F-2 Table of Contents How we addressed the matter in our audit We obtained an understanding of and tested the Company’s process to estimate labor and overhead in the inventory to devise our responsive audit approach. We performed substantive test procedures relating to the inventory valuation, which included verifying significant components of the valuation to supporting records, assessing the application of direct labor costs included in the valuation and assessing the appropriateness of the components of the indirect overhead pools as well as the application of such pool to the valuation. We verified the completeness and accuracy of the data used in management’s valuation and the mathematical accuracy of the direct labor and overhead applications. To assess management’s assertion that inventory is carried at the lower of cost or net realizable value, we tested subsequent sales transactions and net sales proceeds. Sales Rebate Liabilities Description of the matter As disclosed in Note 2 to the consolidated financial statements, revenue from the sale of the Company’s products is recorded net of estimated rebates, price protection arrangements and customer incentives, including prompt pay discounts, wholesaler chargebacks and other wholesaler fees. Estimated rebates are also attributable to government programs that mandate various reductions from list price, which are reflected as liabilities and settled through cash payments. Auditing the sales rebate liabilities related to U.S. Medicaid, Medicare Part D, and managed care is complex because of the subjectivity of certain assumptions and judgements required to develop estimates. These significant assumptions and judgments include consideration of legal interpretations of applicable laws and regulations, historical claims experience, payer channel mix, current contract prices, unbilled claims and claims submission time lags. Additionally, auditing this matter is challenging given the Company’s limited history in selling certain of its products. How we addressed the matter in our audit We obtained an understanding the Company’s process to estimate rebate liabilities to devise our responsive audit approach. We performed substantive test procedures related to the rebate accruals, which included testing the significant assumptions and mathematical accuracy. We tested the completeness and accuracy of the data used in the estimates and developed expectations of the key inputs using independent sources. To address the completeness of the reserves, we also assessed the historical accuracy of management’s estimates by comparing actual activity to previous estimates and performing analytical procedures. Finally, we considered subsequent events and any new information after the financial statement date that would require an adjustment to the accruals. Liquidity Analysis Description of the matter The Company asserts that the cash on hand and certain other sources of funding as described in Note 1 to the consolidated financial statements provide sufficient liquidity to satisfy obligations for at least one year from the date of issuance of these consolidated financial statements. We concluded that liquidity considerations involved in the Company’s ability to continue as a going concern are complex and therefore a critical audit matter as such are complex. Finally, there is a high degree of subjectivity in the estimates prepared by management and in our selection of appropriate audit procedures, resulting in this to be a challenging audit area. How we addressed the matter in our audit We obtained an understanding the Company’s process to prepare cash flow projections to devise our responsive audit approach. We obtained and audited management’s projections, considering their completeness with respect to cash obligations. Through cumulative audit knowledge, we applied judgement in obtaining evidence to support the projections and scrutinized the sources and probability of realization of the projected funds. We compared the data provided to sensitivity adjusted projections, made inquiries of management and applied our industry knowledge. Finally, we considered management’s overall ability to put forth reasonable projections based on the performance of retrospective audit procedures on historic cash flow projections and based on the results of audit procedures applied to other estimates . /s/ CohnReznick LLP We have served as the Company’s auditor since 2008. Holmdel, New Jersey March 24, 2022 F-3 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2021 and 2020 December 31, 2021 December 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 51,089,118 $ 55,921,152 Accounts receivable, net 28,576,857 13,237,290 Inventories 124,724,091 81,535,599 Prepaid expenses and other current assets 4,339,245 3,046,466 Total current assets 208,729,311 153,740,507 Property and equipment, net 50,935,074 41,593,090 Intangible assets, net 1,728,768 2,444,121 Goodwill 3,529,509 3,529,509 Right to use assets 7,262,658 4,259,191 Deposits and other assets 4,067,404 2,106,976 TOTAL ASSETS $ 276,252,724 $ 207,673,394 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 12,429,409 $ 11,073,708 Accrued expenses and other current liabilities 17,214,988 8,365,143 Current portion of deferred revenue 142,834 142,834 Current portion of lease obligations 591,084 365,682 Total current liabilities 30,378,315 19,947,367 Senior notes payable, net of discount 94,866,239 92,968,866 Deferred revenue, net of current portion 1,975,865 2,118,698 Lease obligations, net of current portion 7,462,388 4,334,151 Other non-current liabilities 397,351 54,886 TOTAL LIABILITIES 135,080,158 119,423,968 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY Preferred Stock, $ 0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding - - Common Stock - voting, $ 0.0001 par value, 300,000,000 and 150,000,000 shares authorized, 195,813,817 and 104,902,888 shares issued and outstanding 19,581 10,490 Additional paid-in capital 553,265,706 428,704,039 Accumulated deficit ( 412,112,721 ) ( 340,465,103 ) TOTAL STOCKHOLDERS’ EQUITY 141,172,566 88,249,426 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 276,252,724 $ 207,673,394 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2021 and 2020 Years Ended December 31, 2021 2020 REVENUES: Product revenue $ 80,799,791 $ 42,076,949 License revenue 142,834 142,834 Total revenues 80,942,625 42,219,783 Cost of product revenue 79,769,341 61,291,426 Gross profit (loss) 1,173,284 ( 19,071,643 ) OPERATING EXPENSES: Research and development 3,646,060 5,907,013 Plasma center operating expenses 12,288,723 4,170,051 Amortization of intangible assets 715,353 715,353 Selling, general and administrative 42,896,889 35,050,817 Total operating expenses 59,547,025 45,843,234 LOSS FROM OPERATIONS ( 58,373,741 ) ( 64,914,877 ) OTHER INCOME (EXPENSE): Interest income 34,532 288,126 Interest expense ( 13,056,834 ) ( 11,985,066 ) Gain on extinguishment of debt - 991,797 Other expense ( 251,575 ) ( 128,528 ) Other expense, net ( 13,273,877 ) ( 10,833,671 ) NET LOSS $ ( 71,647,618 ) $ ( 75,748,548 ) BASIC AND DILUTED LOSS PER COMMON SHARE $ ( 0.51 ) $ ( 0.88 ) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic and Diluted 139,578,538 86,145,052 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY Years Ended December 31, 2021 and 2020 Additional Total Common Stock Paid-in Accumulated Stockholders’ Shares Amount Capital Deficit Equity Balance at December 31, 2019 59,318,355 $ 5,932 $ 290,903,772 $ ( 264,716,555 ) $ 26,193,149 Stock-based compensation - - 2,855,122 - 2,855,122 Warrants issued in connection with note payable - - 3,740,980 - 3,740,980 Vesting of Restricted Stock Units 15,000 2 ( 2 ) - - Issuance of common stock, net of offering expenses 45,562,907 4,555 131,190,736 - 131,195,291 Stock options exercised 6,626 1 13,431 - 13,432 Net loss - - - ( 75,748,548 ) ( 75,748,548 ) Balance at December 31, 2020 104,902,888 10,490 428,704,039 ( 340,465,103 ) 88,249,426 Stock-based compensation - - 3,488,253 - 3,488,253 Vesting of Restricted Stock Units, net of shares withheld for taxes and retired 64,900 6 ( 61,604 ) - ( 61,598 ) Issuance of common stock, net of offering expenses 90,846,029 9,085 121,135,018 - 121,144,103 Net loss - - - ( 71,647,618 ) ( 71,647,618 ) Balance at December 31, 2021 195,813,817 $ 19,581 $ 553,265,706 $ ( 412,112,721 ) $ 141,172,566 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2021 and 2020 Years Ended December 31, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 71,647,618 ) $ ( 75,748,548 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 5,495,502 3,942,292 Loss on disposal of fixed assets 220,761 81,697 Stock-based compensation 3,488,253 2,855,122 Amortization of debt discount 1,897,373 1,782,428 Gain on extinguishment of debt - ( 991,797 ) Amortization of license revenue ( 142,834 ) ( 142,834 ) Changes in operating assets and liabilities: Accounts receivable ( 15,339,567 ) ( 9,767,371 ) Inventories ( 43,188,489 ) ( 28,470,864 ) Prepaid expenses and other current assets ( 1,292,779 ) ( 512,873 ) Deposits and other assets ( 1,775,205 ) ( 196,749 ) Accounts payable 1,355,700 1,899,115 Accrued expenses 8,341,341 3,401,815 Other current and non-current liabilities 218,580 ( 134,391 ) Net cash used in operating activities ( 112,368,982 ) ( 102,002,958 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 13,511,258 ) ( 12,726,680 ) Proceeds from the sale of property and equipment - 2,000 Net cash used in investing activities ( 13,511,258 ) ( 12,724,680 ) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on notes payable - ( 13,950,000 ) Proceeds from issuance of common stock, net of offering expenses 121,144,103 131,195,291 Proceeds from the exercise of stock options - 13,432 Payment of debt refinancing fees - ( 830,000 ) Proceeds from issuance of note payable - 27,500,000 Taxes paid on vested Restricted Stock Units ( 61,598 ) - Payments on finance lease obligations ( 34,299 ) ( 32,068 ) Net cash provided by financing activities 121,048,206 143,896,655 Net (decrease) increase in cash and cash equivalents ( 4,832,034 ) 29,169,017 Cash and cash equivalents - beginning of year 55,921,152 26,752,135 Cash and cash equivalents - end of year $ 51,089,118 $ 55,921,152 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 1. ORGANIZATION AND BUSINESS ADMA Biologics, Inc. (“ADMA” or the “Company”) is an end-to-end commercial biopharmaceutical company dedicated to manufacturing, marketing and developing specialty plasma-derived biologics for the treatment of immunodeficient patients at risk for infection and others at risk for certain infectious diseases. The Company’s targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disorder or who may be immune-suppressed for medical reasons. ADMA operates through its wholly-owned subsidiaries ADMA BioManufacturing, LLC (“ADMA BioManufacturing”) and ADMA BioCenters Georgia Inc. (“ADMA BioCenters”). ADMA BioManufacturing was formed in January 2017 to facilitate the acquisition of the Biotest Therapy Business Unit (“BTBU”) from BPC Plasma, Inc. (formerly Biotest Pharmaceuticals Corporation) (“BPC” and, together with Biotest AG, “Biotest”) on June 6, 2017. The acquisition included certain assets (the “Biotest Assets”) of BTBU, which included the FDA-licensed BIVIGAM and Nabi-HB immunoglobulin products, and an FDA-licensed plasma fractionation manufacturing facility located in Boca Raton, FL (the “Boca Facility”) (the “Biotest Transaction”). BTBU had previously been the Company’s third-party contract manufacturer. ADMA BioCenters is the Company’s source plasma collection business with ten plasma collection facilities in various stages of approval and development located throughout the U.S., five of which hold an approved license with the U.S. Food and Drug Administration (the “FDA”). The Company has three FDA-approved products, all of which are currently marketed and commercially available: (i) BIVIGAM (Immune Globulin Intravenous, Human), an Intravenous Immune Globulin (“IVIG”) product indicated for the treatment of Primary Humoral Immunodeficiency (“PI”), also known as Primary Immunodeficiency Disease (“PIDD”), and for which the Company received FDA approval on May 9, 2019 and commenced commercial sales in August 2019; (ii) ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), an IVIG product indicated for the treatment of PI, for which the Company received FDA approval on April 1, 2019 and commenced first commercial sales in October 2019; and (iii) Nabi-HB (Hepatitis B Immune Globulin, Human), which is indicated for the treatment of acute exposure to blood containing Hepatitis B surface antigen (“HBsAg”) and other listed exposures to Hepatitis B. In addition to its commercially available immunoglobulin products, the Company provides contract manufacturing and laboratory services for certain clients and generates revenues from the sale of intermediate by-products that result from the immunoglobulin production process. The Company seeks to develop a pipeline of plasma-derived therapeutics, and its products and product candidates are intended to be used by physician specialists focused on caring for immune-compromised patients with or at risk for certain infectious diseases. As of December 31, 2021, the Company had working capital of $ 178.4 million, including $ 51.1 million of cash and cash equivalents. Based upon the Company’s current projected revenue and expenditures, including capital expenditures and continued implementation of the Company’s commercialization and expansion activities, the Company’s management currently believes that its cash, cash equivalents, projected revenue and accounts receivable, together with the remaining available funds under the distribution agreement discussed in Note 8 and the net proceeds received and expected to be received from the refinancing of the Company’s senior debt on March 23, 2022 (see Note 17), will be sufficient to fund ADMA’s operations, as currently conducted, into the first quarter of 2024, at which time the Company believes it will begin to generate positive cash flow from operations. These estimates may change based upon several factors, including the success of the Company’s commercial sales of its products, whether or not the assumptions underlying the Company’s projected revenues and expenses are correct and the acceptability of ADMA’s immune globulin products by physicians, patients or payers. There can be no assurance that the Company’s approved products will be commercially viable, or that plant capacity expansion, plasma center buildouts or other capital improvements will be successfully completed or that any product developed in the future will be approved. The Company is subject to risks common to companies in the biotechnology and pharmaceutical manufacturing industries including, but not limited to, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, inflationary pressures, supply chain constraints, protection of proprietary technology, and compliance with FDA and other governmental regulations and approval requirements. The Company is also continuing to evaluate a variety of strategic and financing alternatives through its ongoing engagement with Morgan Stanley as a financial advisor. F-8 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 During the year ended December 31, 2021, the Company issued 90,846,029 shares of its common stock through an underwritten public offering and various open market sale agreements for its common stock and received net proceeds of $ 121.1 million. 2. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of presentation The accompanying consolidated financial statements include the accounts of ADMA and its wholly-owned subsidiaries, and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). All intercompany balances have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (the “FASB”). During the years ended December 31, 2021 and 2020, comprehensive loss was equal to the net loss amounts presented for the respective periods in the accompanying consolidated statements of operations. Use of estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the realizable value of accounts receivable, valuation of inventory, assumptions used in projecting future liquidity and capital requirements, assumptions used in the fair value of awards granted under the Company’s equity incentive plans and warrants issued in connection with the issuance of notes payable and the valuation allowance for the Company’s deferred tax assets. Cash and cash equivalents The Company considers all highly-liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company regularly maintains cash and cash equivalents at third-party financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit. Although the Company monitors the daily cash balances in its operating accounts and adjusts the balances as appropriate, these balances could be impacted, and there could be a material adverse effect on the Company’s business, if one or more of the financial institutions with which the Company has deposits fails or is subject to other adverse conditions in the financial or credit markets. To date, the Company has not experienced a loss or lack of access to its deposited cash or cash equivalents; however, the Company cannot provide assurance that access to its cash and cash equivalents will not be impacted by adverse conditions in the financial and credit markets in the future. Accounts receivable Accounts receivable is reported at realizable value, net of allowances for contractual credits and doubtful accounts in the amount of $ 0.2 million and $ 0.1 million at December 31, 2021 and December 31, 2020, respectively, which are recognized in the period the related revenue is recorded. The Company extends credit to its customers based upon an evaluation of each customer’s financial condition and credit history. Evaluations of the financial condition and associated credit risk of customers are performed on an ongoing basis. Based on these evaluations, the Company has concluded that its credit risk is minimal. (see Note 16). Inventories Raw materials inventory consists of various materials purchased from suppliers, including normal source plasma, used in the production of the Company’s products. Work-in-process and finished goods inventories (see Note 3) reflect the cost of raw materials as well as costs for direct and indirect labor, primarily salaries, wages and benefits for applicable employees, as well as an allocation of overhead costs related to the Boca Facility including utilities, property taxes, general repairs and maintenance, consumable supplies and depreciation. The allocation of Boca Facility overhead to inventory is generally based upon the estimated square footage of the Boca Facility that is used in the production of the Company’s products relative to the total square footage of the facility. F-9 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Inventories, including plasma intended for resale and plasma intended for internal use in the Company’s manufacturing, commercialization or research and development activities, are carried at the lower of cost or net realizable value determined by the first-in, first-out method. Net realizable value is generally determined based upon the consideration the Company expects to receive when the inventory is sold, less costs to deliver the inventory to the recipient. The estimates for net realizable value of inventory are based on contractual terms or upon historical experience and certain other assumptions, and the Company believes that such assumptions are reasonable. Inventory is periodically reviewed to ensure that its carrying value does not exceed its net realizable value, and adjustments are recorded to write down such inventory, with a corresponding charge to cost of product revenue, when the carrying value or historical cost exceeds its estimated net realizable value. In addition, costs associated with the production of conformance or engineering lots that would not qualify as immediately available for commercial sale are charged to cost of product revenue and not capitalized into inventory. Property and equipment Assets comprising property and equipment (see Note 4) are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the asset’s estimated useful life. Land is not depreciated. The buildings have been assigned a useful life of 30 years . Property and equipment other than land and buildings have useful lives ranging from 3 to 15 years . Leasehold improvements are amortized over the lesser of the lease term or their estimated useful lives. Goodwill Goodwill represents the excess of purchase price over the fair value of net assets acquired by the Company. Goodwill at December 31, 2021 and 2020 was $ 3.5 million, all of which is attributable to the Company’s ADMA BioManufacturing business segment. There were no changes to the carrying amount of goodwill during the years ended December 31, 2021 and 2020. Goodwill is not amortized but is assessed for impairment on an annual basis or more frequently if impairment indicators exist. The Company has the option to perform a qualitative assessment of goodwill to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill and other intangible assets. If the Company concludes that this is the case, then it must perform a goodwill impairment test by comparing the fair value of the reporting unit to its carrying value. An impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The Company performs its annual goodwill impairment test as of October 1 of each year. The Company’s annual goodwill impairment tests as of October 1, 2021 and 2020 did not result in any impairment charges related to goodwill for the years ended December 31, 2021 and 2020. Impairment of long-lived assets The Company assesses the recoverability of its long-lived assets, which include property and equipment and finite-lived intangible assets, whenever significant events or changes in circumstances indicate impairment may have occurred. If indicators of impairment exist, projected future undiscounted cash flows associated with the asset are compared to its carrying amount to determine whether the asset’s carrying value is recoverable. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. For the years ended December 31, 2021 and 2020, the Company determined that there was no impairment of its long-lived assets. Revenue recognition Revenues for the years ended December 31, 2021 and 2020 are comprised of (i) revenues from the sale of the Company’s immunoglobulin products, BIVIGAM, ASCENIV and Nabi-HB, (ii) product revenues from the sale of human plasma collected by the Company’s Plasma Collection Centers business segment, (iii) contract manufacturing and laboratory services revenue, (iv) revenues from the sale of intermediate by-products; and (v) license and other revenues primarily attributable to the out-licensing of ASCENIV to Biotest in 2012 to market and sell this product in Europe and selected countries in North Africa and the Middle East. Biotest has provided the Company with certain services and financial payments in accordance with the related Biotest license agreement and is obligated to pay the Company certain amounts in the future if certain milestones are achieved. Deferred revenue is amortized into income over the term of the Biotest license, representing a period of approximately 22 years . F-10 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Product revenue is recognized when the customer is deemed to have control over the product. Control is determined based on when the product is shipped or delivered and title passes to the customer. Revenue is recorded in an amount that reflects the consideration the Company expects to receive in exchange. Revenue from the sale of the Company’s immunoglobulin products is recognized when the product reaches the customer’s destination, and is recorded net of estimated rebates, price protection arrangements and customer incentives, including prompt pay discounts, wholesaler chargebacks and other wholesaler fees. These estimates are based on historical experience and certain other assumptions, and the Company believes that such estimates are reasonable. For revenues associated with contract manufacturing and the sale of intermediates, control transfers to the customer and the performance obligation is satisfied when the customer takes possession of the product from the Boca Facility or from a third-party warehouse that is utilized by the Company. Product revenues from the sale of human plasma collected at the Company’s plasma collection centers are recognized at the time control of the product has been transferred to the customer, which generally occurs at the time of shipment. Product revenues are recognized at the time of delivery if the Company retains control of the product during shipment. Cost of product revenue Cost of product revenue includes costs associated with the manufacture of the Company’s FDA approved products, intermediates and the sale of human source plasma, as well as expenses related to conformance batch production, process development and scientific and technical operations when these operations are attributable to marketed products. When the activities of these operations are attributable to new products in development, the expenses are classified as research and development expenses. Research and development expenses Research and development expenses consist of clinical research organization costs, costs related to clinical trials, post-marketing commitment studies for BIVIGAM and ASCENIV, wages, benefits and stock-based compensation for employees directly related to research and development activities. All research and development costs are expensed as incurred. Advertising and marketing expenses Advertising and marketing expense includes cost for promotional materials and trade show expenses for the marketing of the Company’s products and services and expenses incurred for attracting donors to the Company’s plasma collection centers. All advertising and marketing expenses are expensed as incurred. Advertising and marketing expenses were $ 1.4 million and $ 1.1 million for the years ended December 31, 2021 and 2020, respectively. Stock-based compensation The Company follows recognized accounting guidance which requires all equity-based payments, including grants of stock options, to be recognized in the statement of operations as compensation expense based on their fair values at the date of grant. Compensation expense related to awards to employees and directors with service-based vesting conditions is recognized on a straight-line basis over the associated vesting period of the award based on the grant date fair value of the award. Stock options granted under the Company’s equity incentive plans generally have a four-year vesting period and a term of 10 years . For milestone-based equity awards (see Note 8) the Company periodically assesses the probability of vesting for each milestone-based award and adjusts compensation expense based on its probability assessment. Pursuant to ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718) , the Company has elected not to establish a forfeiture rate, as stock-based compensation expense related to forfeitures of unvested equity awards is fully reversed at the time of forfeiture. F-11 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Income taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or its tax returns. Under this method, deferred tax assets and liabilities are recognized for the temporary differences between the tax bases of assets and liabilities and their respective financial reporting amounts at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company records a valuation allowance on its deferred tax assets if it is more likely than not that the Company will not generate sufficient taxable income to utilize its deferred tax assets (see Note 11). The Company is subject to income tax examinations by major taxing authorities for all tax years since 2017 and for previous periods as it relates to the Company’s net operating loss carryforwards. Loss Per Share Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is calculated by dividing net loss attributable to common stockholders as adjusted for the effect of dilutive securities, if any, by the weighted average number of shares of common stock and dilutive common stock outstanding during the period. Potentially dilutive common stock includes the shares of common stock issuable upon the exercise of outstanding stock options and warrants (using the treasury stock method). Potentially dilutive common stock in the diluted net loss per share computation is excluded to the extent that it would be anti-dilutive. No potentially dilutive securities are included in the computation of any diluted per share amounts as the Company reported a net loss for all periods presented. For the years ended December 31, 2021 and 2020, the following securities were excluded from the calculation of diluted loss per common share because of their anti-dilutive effects: For the Years Ended December 31, 2021 2020 Stock options 7,862,722 6,922,931 Restricted stock units 4,485,133 326,000 Warrants 4,528,160 4,528,160 16,876,015 11,777,091 Fair value of financial instruments The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable are shown at cost, which approximates fair value due to the short-term nature of these instruments. The debt outstanding under the Company’s senior notes payable (see Note 7) approximates fair value due to the variable interest rate on this debt. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which requires financial assets to be presented at the net amount expected to be collected, with an allowance for credit losses to be deducted from the amortized cost basis of the financial asset such that the net carrying value of the asset is presented as the amount expected to be collected. Under ASU 2016-13, the entity’s statement of operations is required to reflect the measurement of credit losses for newly recognized financial assets, as well as expected increases or decreases in expected credit losses that have taken place during the period. For public business entities, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. The Company adopted ASU No. 2016-13 on January 1, 2020, and the adoption of this update did not have a significant impact on the Company’s consolidated financial statements. F-12 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 3. INVENTORIES The following table provides the components of inventories: December 31, 2021 December 31, 2020 Raw materials $ 36,755,720 $ 32,044,393 Work-in-process 58,968,535 30,293,288 Finished goods 28,999,836 19,197,918 Total inventories $ 124,724,091 $ 81,535,599 Raw materials includes plasma and other materials expected to be used in the production of BIVIGAM, ASCENIV and Nabi-HB. These materials will be consumed in the production of goods expected to be available for sale or otherwise have alternative uses that provide a probable future benefit. All other activities and materials associated with the production of inventories used in research and development activities are expensed as incurred. Work-in-process inventory primarily consists of bulk drug substance and unlabeled filled vials of the Company’s immunoglobulin products. Finished goods inventory is comprised of immunoglobulin product inventory and related intermediates that are available for commercial sale, as well as plasma collected at the Company’s plasma collection center which is expected to be sold to third-party customers. 4. PROPERTY AND EQUIPMENT Property and equipment at December 31, 2021 and 2020 is summarized as follows: December 31, 2021 December 31, 2020 Manufacturing and laboratory equipment $ 16,702,991 $ 14,468,874 Office equipment and computer software 4,082,462 3,253,528 Furniture and fixtures 3,389,140 2,389,585 Construction in process 5,496,222 3,336,557 Leasehold improvements 11,129,639 5,272,490 Land 4,339,441 4,339,441 Buildings and building improvements 19,067,032 17,396,557 64,206,927 50,457,032 Less: Accumulated depreciation ( 13,271,853 ) ( 8,863,942 ) Total property, plant and equipment, net $ 50,935,074 $ 41,593,090 The Company recorded depreciation expense on property and equipment of $ 4.8 million and $ 3.2 million for the years ended December 31, 2021 and 2020, respectively. 5. INTANGIBLE ASSETS Intangible assets at December 31, 2021 and 2020 consist of the following: December 31, 2021 December 31, 2020 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Trademark and other intangible rights related to Nabi-HB $ 4,100,046 $ 2,684,554 $ 1,415,492 $ 4,100,046 $ 2,098,833 $ 2,001,213 Rights to intermediates 907,421 594,145 313,276 907,421 464,513 442,908 $ 5,007,467 $ 3,278,699 $ 1,728,768 $ 5,007,467 $ 2,563,346 $ 2,444,121 F-13 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Under the previous contract manufacturing agreement between ADMA and BPC, intermediate by-products derived from the manufacture of ASCENIV were property of Biotest. As a result of the Biotest Transaction, ADMA obtained the right to these intermediate products, which are being amortized over a period of seven years . The intangible rights to Nabi-HB are also being amortized over a period of seven years . Amortization expense related to the Company’s intangible assets for the years ended December 31, 2021 and 2020 was $ 0.7 million. Estimated aggregate future aggregate amortization expense is expected to be as follows: 2022 $ 715,352 2023 715,352 2024 298,064 6. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other current liabilities at December 31, 2021 and 2020 are as follows: December 31, 2021 December 31, 2020 Accrued rebates $ 5,040,200 $ 2,604,245 Accrued distribution fees 4,739,651 828,120 Accrued incentives 4,066,109 3,210,884 Accrued testing 1,189,970 779,660 Accrued payroll 1,167,072 734,972 Other 1,011,986 207,262 Total accrued expenses and other current liabilities $ 17,214,988 $ 8,365,143 7. NOTES PAYABLE Senior Notes Payable A summary of outstanding senior notes payable is as follows: December 31, 2021 December 31, 2020 Notes payable $ 100,000,000 $ 100,000,000 Less: Debt discount ( 5,133,761 ) ( 7,031,134 ) Senior notes payable $ 94,866,239 $ 92,968,866 On February 11, 2019 (the “Perceptive Closing Date”), the Company and all of its subsidiaries entered into a Credit Agreement and Guaranty (the “Perceptive Credit Agreement”) with Perceptive Credit Holdings II, LP, as the lender and administrative agent (“Perceptive”). The Perceptive Credit Agreement, as amended, provides for a senior secured term loan facility in a principal amount of $ 100.0 million (the “Perceptive Credit Facility”), comprised of (i) a term loan made on the Perceptive Closing Date in the principal amount of $ 45.0 million, as evidenced by the Company’s issuance of a promissory note (the “Perceptive Tranche I Note”) in favor of Perceptive on the Perceptive Closing Date (the “Perceptive Tranche I Loan”), (ii) a term loan in the principal amount of $ 27.5 million (the “Perceptive Tranche II Loan”) evidenced by the Company’s issuance of a promissory note (the “Perceptive Tranche II Note”) in favor of Perceptive on May 3, 2019, (iii) a term loan in the principal amount of $ 12.5 million evidenced by the Company’s issuance of a promissory note (the “Perceptive Tranche III Note”) in favor of Perceptive on March 20, 2020 (the “Perceptive Tranche III Loan”); and (iv) a term loan in the principal amount of $ 15 million evidenced by our issuance of a promissory note in favor of Perceptive on December 8, 2020 (the “Perceptive Tranche IV Loan”, and together with the Perceptive Tranche I Loan, the Perceptive Tranche II Loan and the Perceptive Tranche III Loan, the “Perceptive Loans”). The Perceptive Tranche III Loan is the result of an amendment to the Perceptive Credit Agreement that the Company and Perceptive entered into on May 3, 2019 (the “First Perceptive Amendment”), and the Perceptive Tranche III Loan became available to the Company upon the approval of BIVIGAM on May 9, 2019. The Perceptive Tranche IV Loan is the result of an amendment to the Perceptive Credit Facility entered into on December 8, 2020 (the “Second Perceptive Amendment”), which also extended the maturity date of the Perceptive Credit Facility to March 1, 2024 (the “Maturity Date”), subject to acceleration pursuant to the Perceptive Credit Agreement, including upon an Event of Default (as defined in the Perceptive Credit Agreement). Also on December 8, 2020, the Company retired a subordinated note payable to Biotest in the principal amount of $ 15.0 million with the proceeds from the Perceptive Tranche IV Loan. As part of this transaction, Biotest agreed to a 7 % discount from the principal, and the obligation under the note was satisfied by a payment by the Company of approximately $ 14.0 million. As a result, the Company recorded a gain on the extinguishment of the note of approximately $ 1.0 million. F-14 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Borrowings under the Perceptive Credit Agreement bear interest at a rate per annum equal to 7.5 % plus the greater of (i) one-month LIBOR and (ii) 3.5 %; provided, however, that upon, and during the continuance of, an Event of Default, the interest rate will automatically increase by an additional 400 basis points. Accrued interest was payable to Perceptive on the last day of each month during the term of the Perceptive Credit Facility. The rate of interest in effect as of the Perceptive Closing Date and at December 31, 2021 was 11.0 %. On the Maturity Date, the Company was to have paid Perceptive the entire outstanding principal amount underlying the Perceptive Loans and any accrued and unpaid interest thereon. There were no scheduled principal payments on the Perceptive Loans prior to the Maturity Date. On March 23, 2022, the Company retired in full all of its outstanding obligations under the Perceptive Credit Agreement, including a redemption premium of $ 2.0 million per the amended terms of the Perceptive Credit Agreement, using the proceeds received from a new senior credit facility the Company entered into on that date (see Note 17). All of the Company’s obligations under the Perceptive Credit Agreement were secured by a first-priority lien and security interest in substantially all of the Company’s tangible and intangible assets, including intellectual property and all of the equity interests in the Company’s subsidiaries. The Perceptive Credit Agreement contained certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings. The negative covenants restricted or limited the ability of the Company and its subsidiaries to, among other things and subject to certain exceptions contained in the Perceptive Credit Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes, such as mergers or acquisitions, or changes to the Company’s or its subsidiaries’ business activities; make certain Investments or Restricted Payments (each as defined in the Perceptive Credit Agreement); change its fiscal year; pay dividends; repay other certain indebtedness; engage in certain affiliate transactions; or enter into, amend or terminate any other agreements that had the impact of restricting the Company’s ability to make loan repayments under the Perceptive Credit Agreement. In addition, the Company was required (i) at all times prior to the Maturity Date to maintain a minimum cash balance of $ 3.0 million; and (ii) as of the last day of each fiscal quarter commencing with the fiscal quarter ended June 30, 2019, report revenues for the trailing 12-month period that exceed the amounts set forth in the Perceptive Credit Agreement, which ranged from $ 7.0 million for the fiscal quarter ended June 30, 2019 to $ 55.0 million for the fiscal quarter ending December 31, 2021. At December 31, 2021, the Company was in compliance with all of the covenants contained in the Perceptive Credit Agreement. As consideration for the Perceptive Credit Agreement, the Company issued to Perceptive a warrant to purchase 1,360,000 shares of the Company’s common stock (the “Perceptive Warrant”) on the Perceptive Closing Date. The Perceptive Warrant has an exercise price equal to $ 3.28 per share, which is equal to the trailing 10-day volume weighted average price (“VWAP”) of the Company’s common stock on the business day immediately prior to the Perceptive Closing Date multiplied by 1.15 . The Company valued the Perceptive Warrant at $ 2.7 million as of the Perceptive Closing Date and it has an expiration date of February 11, 2029 . In connection with the First Perceptive Amendment, the Company issued an additional warrant (the “Perceptive Tranche III Warrant”) to purchase 250,000 shares of the Company’s common stock to Perceptive with an exercise price equal to $ 4.64 per share, which represents the trailing 10-day VWAP of the Company’s common stock as of May 2, 2019. The Perceptive Tranche III Warrant was valued by the Company at $ 0.9 million and has an expiration date of May 3, 2029 . As consideration for the Second Perceptive Amendment, the Company issued an additional warrant (the “Perceptive Tranche IV Warrant” and, together with the Perceptive Warrant and the Perceptive Tranche III Warrant, the “Perceptive Warrants”) to purchase 2,390,000 shares of the Company’s common stock to Perceptive with an exercise price of $ 1.94 per share, which is equal to the trailing 10-day VWAP of the Company’s common stock on the business day immediately prior to the date of the Perceptive Second Amendment. The Perceptive Tranche IV Warrant was valued by the Company at $ 3.7 million and has an expiration date of December 8, 2030 . Perceptive had represented to the Company, among other things, that it was an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act) and the Company issued the Perceptive Warrants in reliance upon an exemption from registration contained in Section 4(2) under the Securities Act. The Perceptive Warrants and the shares of common stock issuable thereunder may not be offered, sold, pledged or otherwise transferred in the U.S. absent registration or an applicable exemption from the registration requirements under the Securities Act. F-15 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 As a result of the fees paid to Perceptive and the value of the Perceptive Warrants, the Company recognized an aggregate discount on the Perceptive Loans in the amount of $ 7.1 million. The Company records debt discount as a reduction to the face amount of the debt, and the debt discount is amortized as interest expense over the life of the debt using the interest method. Based on the fair value of the Perceptive Warrants and the aggregate amount of fees and expenses associated with obtaining the Perceptive Credit Facility, the effective interest rate on the Perceptive Loans since December 8, 2020 was approximately 13.7 %. 8. STOCKHOLDERS ’ EQUITY Preferred Stock The Company is currently authorized to issue up to 10 million shares of preferred stock, $ 0.0001 par value per share. There were no shares of preferred stock outstanding at December 31, 2021 and 2020. Common Stock As of December 31, 2021 and 2020, the Company was authorized to issue 300,000,000 and 150,000,000 shares, respectively, of its common stock, $ 0.0001 par value per share, and 195,813,817 and 104,902,888 shares of common stock were outstanding as of December 31, 2021 and 2020, respectively. On May 27, 2021, the Company amended its Second Amended and Restated Certificate of Incorporation to increase the number of shares of common stock that the Company is authorized to issue from 150,000,000 to 300,000,000 . After giving effect to shares reserved for the issuance of warrants and for awards issued under the Company’s equity incentive plans, 87,241,078 shares of common stock were available for issuance as of December 31, 2021. On October 25, 2021, the Company completed an underwritten public offering whereby the Company issued 57.5 million shares of common stock and received gross proceeds of $ 57.5 million. Net proceeds after underwriting discounts and expenses associated with the offering, were approximately $ 53.8 million, and are being used (i) to advance the commercial sales of the Company’s FDA approved products through the procurement of raw materials for the manufacturing of BIVIGAM and ASCENIV; (ii) to expand the Company’s plasma collection facility network; (iii) to scale up the manufacturing capacity of the Boca Facility and make continuous improvements in order to adhere to cGMP compliance; (iv) to explore business development opportunities; and (v) for general corporate purposes and other capital expenditures. On September 3, 2021, the Company entered into a distribution agreement with Raymond James & Associates, Inc., as agent (“Agent”), pursuant to which the Company may offer and sell, from time to time, at its option, through or to the Agent, up to an aggregate of $ 50 million of shares of the Company’s common stock (the “Distribution Agreement”). The Company currently intends to use any net proceeds from the sale of its common stock under the Distribution Agreement for general corporate purposes, including procurement of source plasma and other raw materials, supply chain initiatives and production expenditures, funding expansion of plasma centers, working capital, capital expenditures, expansion and resources for commercialization activities, and other potential research and development and business opportunities. During the year ended December 31, 2021, the Company issued 5,540,831 shares of its common stock under the Distribution Agreement and received net proceeds of $ 6.9 million. F-16 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 On August 5, 2020, the Company entered into an open market sale agreement (as amended from time to time, the “Sale Agreement”) with Jefferies LLC (“Jefferies”), pursuant to which the Company could offer and sell, from time to time, at its option, through or to Jefferies, up to an aggregate of $ 50 million of shares of the Company’s common stock. On November 5, 2020 and February 3, 2021, the Company and Jefferies amended the Sale Agreement to provide for increases in the aggregate offering amount under the Sale Agreement such that the Company could sell shares having an aggregate offering price of up to $ 105.4 million under the Sale Agreement, as amended. For the year ended December 31, 2021, the Company issued and sold 27,805,198 shares of common stock under the 2020 Sale Agreement and received net proceeds of $ 60.4 million. For the year ended December 31, 2020, the Company sold 18,537,907 shares of common under the Sale Agreement and received net proceeds of $ 42.5 million. On February 11, 2020, the Company completed an underwritten public offering of 23,500,000 shares of its common stock for gross proceeds of $ 82.3 million. On February 21, 2020, the Company sold an additional 3,525,000 shares pursuant to the underwriters’ exercise of their option to purchase additional shares of the Company’s common stock for additional gross proceeds of $ 12.3 million. The Company received net proceeds, after underwriting discounts and other expenses associated with the offering, of approximately $ 88.7 million. During the year ended December 31, 2020, the Company issued 6,626 shares of common stock in connection with the exercise of stock options that had been granted to employees. Warrants On December 8, 2020, the Company issued the Perceptive Tranche IV Warrant, whereby Perceptive may purchase an aggregate of 2,390,000 shares of common stock at an exercise price $ 1.94 per share (see Note 7). The warrant was valued at $ 3.7 million, using the Black-Scholes option-pricing model assuming an expected term of 10 years , a volatility of 69.3 %, a dividend yield of 0 % and a risk-free interest rate of 0.92 %. At December 31, 2021 and 2020, the Company had outstanding warrants to purchase an aggregate of 4,528,160 shares of common stock, with a weighted average exercise price of $ 2.82 per share and expiration dates ranging between June 2022 and December 2030. Equity Incentive Plans From time to time the Company grants stock options or other equity-based awards under the Company’s Amended and Restated 2014 Omnibus Incentive Compensation Plan (the “2014 Plan”). The 2014 Plan, as amended, was approved by the Board on March 15, 2017 and by the Company’s stockholders on May 25, 2017. Currently, the maximum number of shares reserved for grant under the 2014 Plan is: (a) 2,334,940 shares; plus (b) an annual increase as of the first day of the Company’s fiscal year, beginning in 2018 and occurring each year thereafter through 2022, equal to 4 % of the outstanding shares of common stock as of the end of the Company’s immediately preceding fiscal year, or any lesser number of shares determined by the Board; provided, however, that no more than an aggregate of 10 million shares of common stock may be issued pursuant to incentive stock options intended to qualify under Section 422 of the Internal Revenue Code. As of December 31, 2021, an aggregate of 69,090 shares were available for issuance under the 2014 Plan. In accordance with the foregoing, on January 1, 2022 the aggregate number of shares available for issuance increased to 7,901,643 . F-17 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 During the years ended December 31, 2021 and 2020, the Company granted options to purchase an aggregate of 1,895,550 and 1,468,412 shares of common stock, respectively, to its directors, employees and certain third-party service providers. The fair value of stock options granted was determined on the date of grant using the Black-Scholes model. The Black-Scholes option valuation model was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different from those of traded options, and changes in the underlying Black-Scholes assumptions can materially affect the fair value estimate. To determine the risk-free interest rate, the Company utilized the U.S. Treasury yield curve in effect at the time of the grant with a term consistent with the term of the awards granted by the Company. The expected term of the options granted is in accordance with Staff Accounting Bulletins 107 and 110, which is based on the average between vesting terms and contractual terms. The expected dividend yield reflects the Company’s current and expected future policy for dividends on the Company’s common stock. For the years ended December 31, 2021 and 2020, the expected stock price volatility for the Company’s stock options was calculated by examining the historical volatility of the Company’s common stock since the stock became publicly traded in the fourth quarter of 2013. The grant date fair values of stock options awarded during the years ended December 31, 2021 and 2020 were determined using the Black-Scholes option-pricing model with the following assumptions: Years Ended December 31, 2021 December 31, 2020 Expected term 5.5 - 6.3 years 5.5 - 6.3 years Volatility 68 - 70 % 62 - 70 % Dividend yield 0.0 0.0 Risk-free interest rate 0.80 - 1.27 % 0.33 - 1.68 % The 2014 Plan provides for the Board or a Committee of the Board (the “Committee”) to grant awards to optionees and to determine the exercise price, vesting term, expiration date and all other terms and conditions of the awards, including acceleration of the vesting of an award at any time. All options granted under the 2014 Plan are intended to be incentive stock options (“ISOs”), unless specified by the Committee to be non-qualified options (“NQOs”) as defined by the Internal Revenue Code. ISOs and NQOs may be granted to employees, consultants or Board members at an option price not less than the fair market value of the common stock subject to the stock option agreement. The following table summarizes information about stock options outstanding as of December 31, 2021 and 2020: Shares Weighted Average Exercise Price Options outstanding, vested and expected to vest at December 31, 2019 5,630,351 $ 4.76 Forfeited ( 141,724 ) $ 3.81 Expired ( 27,482 ) $ 4.26 Granted 1,468,412 $ 2.93 Exercised ( 6,626 ) $ 2.03 Options outstanding, vested and expected to vest at December 31, 2020 6,922,931 $ 4.40 Forfeited ( 529,202 ) $ 2.89 Expired ( 426,557 ) $ 4.91 Granted 1,895,550 $ 2.14 Exercised - - Options outstanding, vested and expected to vest at December 31, 2021 7,862,722 $ 3.93 Options exercisable 5,521,312 $ 4.54 F-18 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 As of December 31, 2021, the Company had $ 3.1 million of unrecognized compensation expense related to stock options granted under the Company’s equity incentive plan, which is expected to be recognized over a weighted-average period of 2.4 years. The weighted average remaining contractual term of stock options outstanding and expected to vest at December 31, 2021 is 6.1 years. The weighted average remaining contractual term of stock options exercisable at December 31, 2021 is 4.9 years. The following table summarizes additional information regarding outstanding and exercisable options under the stock option plans at December 31, 2021: Stock Options Outstanding Stock Options Exercisable Range of Exercise Prices Options Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Aggregate Intrinsic Value Options Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Aggregate Intrinsic Value $ 1.10 - $ 1.67 352,500 9.6 $ 1.10 $ 35,935 15,583 9.8 $ 1.10 $ 4,831 $ 1.73 - $ 2.60 1,673,518 8.9 $ 2.42 - 374,318 8.5 $ 2.42 - $ 2.62 - $ 3.93 4,209,177 5.9 $ 3.51 - 3,554,848 5.6 $ 3.51 - $ 3.98 - $ 5.97 487,040 5.6 $ 5.07 - 442,202 5.4 $ 5.07 $ 6.02 - $ 9.03 892,987 1.1 $ 7.74 - 886,861 1.0 $ 7.74 $ 9.37 - $ 10.80 247,500 2.9 $ 10.28 - 247,500 2.9 $ 10.28 - 7,862,722 6.1 $ 3.93 $ 35,935 5,521,312 4.9 $ 4.54 $ 4,831 During the years ended December 31, 2021 and 2020, the Company granted Restricted Stock Units (“RSUs”) representing an aggregate of 4,384,744 and 361,000 shares, respectively, to certain management employees of the Company and, during 2020, to members of its Board of Directors (the “Board”). Except for the RSUs granted under the Company’s retention incentive program discussed below, the RSUs generally vest annually over a period of four years for employees and semi-annually over a period of one year for directors. The RSUs granted during the year ended December 31, 2021 include 3,832,500 shares granted under a retention incentive program implemented by the Company for its executive management and certain employees (see Note 10), whereby the Company issued an aggregate of 2,685,000 time-based RSUs and 1,147,500 milestone-based RSUs. Fifty percent of the time-based RSUs granted under the retention incentive program vest on December 31, 2022, with the remainder vesting in quarterly installments through December 31, 2024. The milestone-based RSUs will vest upon achievement of the applicable milestone, with each milestone required to be achieved on or prior to December 31, 2022. The milestones required to be achieved in order for the milestone-based RSUs to vest were determined by the Board and are consistent with the 2022 operating plan approved by the Board. The Company will periodically assess the probability of vesting for each milestone-based RSU and will adjust compensation expense based on its probability assessment. In connection with the completion of the refinancing of the Company’s senior credit facility on March 23, 2022 (see Note 17), 254,745 milestone-based RSUs vested. During the year ended December 31, 2021, 92,750 shares vested in connection with grants of RSUs. With respect to these vested RSUs, 27,850 shares valued at approximately $ 62,000 were withheld by the Company to cover employees’ tax liabilities. These shares have been retired by the Company and were no longer outstanding as of December 31, 2021. A summary of the Company’s unvested RSU activity and related information is as follows: Shares Weighted Average Grant Date Fair Value Balance at December 31, 2019 - $ - Granted 361,000 $ 2.82 Vested ( 15,000 ) $ 2.92 Forfeited ( 20,000 ) $ 2.83 Balance at December 31, 2020 326,000 $ 2.81 Granted 4,384,744 $ 1.30 Vested ( 92,750 ) $ 2.82 Forfeited ( 132,861 ) $ 2.51 Balance at December 31, 2021 4,485,133 $ 1.34 F-19 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 As of December 31, 2021, the Company had $ 5.1 million of unrecognized compensation expense related to unvested RSUs granted under the Company’s equity incentive plan, which is expected to be recognized over a weighted-average period of 2.6 years. Total stock-based compensation expense for all awards granted under the Company’s equity incentive plan for the years ended December 31, 2021 and 2020 was as follows: 2021 2020 Research and development $ 153,924 $ 471,146 Plasma center operating expenses 60,257 33,464 Selling, general and administrative 2,958,008 2,107,577 Cost of product revenue 316,064 242,935 Total stock-based compensation expense $ 3,488,253 $ 2,855,122 9. RELATED PARTY TRANSACTIONS The Company leases an office building and equipment from Areth, LLC (“Areth”) pursuant to an agreement for services effective as of January 1, 2016, as amended from time to time. Effective October 1, 2017, monthly rent on this facility was reduced to $ 10,000 . On September 27, 2018, the agreement was amended to extend the term of the agreement through September 30, 2019. On November 7, 2019, an additional amendment was entered into between Areth and the Company to extend the term of this agreement through September 30, 2020, and to provide for automatic one-year renewals unless ADMA gives written notice of termination to Areth 60 days prior to the end of the term. The Company did not provide such written notice to Areth as of July 31, 2021. Rent expense for the years ended December 31, 2021 and 2020 amounted to $ 0.1 million. Areth is a company controlled by Dr. Jerrold B. Grossman, the Vice Chairman of the Company’s Board of Directors, and Adam S. Grossman, the Company’s President and Chief Executive Officer. The Company also reimburses Areth for office, warehousing and building related (common area) expenses, equipment and certain other operational expenses, which were not material to the consolidated financial statements for the years ended December 31, 2021 and 2020. During the years ended December 31, 2021 and 2020, the Company purchased certain specialized medical equipment and services related to the Company’s plasma collection centers, as well as personal protective equipment, from GenesisBPS and its affiliates (“Genesis”) in the amount of $ 0.2 million and $ 0.1 million, respectively. Genesis is owned by Dr. Grossman and Adam Grossman. See Notes 7 and 17 for a discussion of the Company’s credit facility and related transactions with Perceptive, a holder of more than 5 % of the Company’s common stock. During the year ended December 31, 2021, in connection with the resignation of Dr. James Mond, the Company’s former Chief Scientific and Medical Officer, the Company recognized an expense and corresponding liability in the amount of $ 0.8 million for payments to be made under a separation and transition agreement with Dr. Mond. Such payments are to be made in scheduled installments over a period of 10 months. In connection with the 2021 public offering of the Company’s common stock (see Note 8) on October 25, 2021: (i) Mr. Grossman purchased 100,000 shares of common stock directly and 250,000 shares of common stock indirectly through an entity he controls, (ii) Dr. Grossman purchased 100,000 shares of common stock, (iii) Dr. Young Kwon, a member of the Company’s Board of Directors, purchased 100,000 shares of common stock, and (iv) Brian Lenz, the Company’s Executive Vice President and Chief Financial Officer, purchased 30,000 shares of common stock, all at the public offering price of $ 1.00 per share. In connection with the 2020 public offering of the Company’s common stock (see Note 8) on February 11, 2020: (i) Perceptive Advisors, a principal stockholder of ADMA, purchased 4,563,700 shares of common stock through one of its affiliates, (ii) Dr. Grossman purchased 22,857 shares of common stock directly and 22,857 shares indirectly through an entity he controls, (iii) Lawrence P. Guiheen, a director of the Company, purchased 20,000 shares of common stock, (iv) Mr. Grossman purchased 28,571 shares of common stock directly and 57,143 shares indirectly through an entity he controls, (v) Mr. Lenz purchased 7,142 shares of common stock, and (vi) Dr. Mond purchased 4,285 shares of common stock, all at the public offering price of $ 3.50 per share. F-20 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 10. COMMITMENTS AND CONTINGENCIES General Legal Matters From time to time the Company is or may become subject to certain legal proceedings and claims arising in connection with the normal course of its business. Management does not expect that the outcome of any such claims or actions will have a material effect on the Company’s liquidity, results of operations or financial condition. COVID-19 Pandemic The Company continues to monitor the ongoing developments related to the COVID-19 pandemic, including the emergence of the Delta and Omicron variants and other resistant strains of the coronavirus, and its impacts to the Company’s commercial and manufacturing operations and plasma collection facilities, including collections of source plasma, procurement of raw materials and packaging materials, a portion of which are sourced internationally, and the testing of finished drug product that is required prior to its availability for commercial sale. A substantial portion of such testing has historically been performed by contract laboratories outside the United States. Due to a combination of previous state and local “shelter-in-place” orders, as well as government stimulus packages, persisting social distancing measures and varying roll-outs of vaccinations by state, the Company has experienced lower than normal donor collections at its FDA approved plasma collection centers. The Company was also subject to delays in shipments of source plasma from its contracted third-party suppliers, as well as delays in deliveries for personal protective equipment, reagents and other non-plasma raw materials and supplies used in the manufacture and distribution of its products. In addition, the Company is subject to supply chain delays as a result of certain of its suppliers diverting significant resources towards the rapid development and distribution of COVID-19 vaccines and, as a result, the Company has elected to carry more raw materials inventory than it has in the past. The COVID-19 pandemic has also impacted, to a certain degree, the Company’s customer engagement initiatives, whereby ADMA’s sales and medical affairs field personnel have faced difficulties communicating directly with physicians and other healthcare professionals, as well as the cancellation or postponement of a number of key scientific and medical meetings, further limiting the Company’s ability to communicate with potential customers. The Company has implemented a comprehensive suite of virtual engagement initiatives; however, clinician engagement has been reduced due to rapidly evolving COVID-19 priorities at U.S. medical centers. The pandemic could also impact the Company’s ability to interact with the FDA or other regulatory authorities and may result in delays in the conduct of inspections or review of pending applications or submissions. Although the Company received several FDA approvals and two FDA inspections of the Boca Facility were completed during the year ended December 31, 2021, no assurances can be provided as to the timing for completion of any other regulatory submissions or applications that may be impacted by restrictions related to COVID-19. During the years ended December 31, 2021 and 2020, revenue attributable to international customers was approximately 13 % of the Company’s total revenues. As the Company seeks to grow this aspect of its business, it may also be subject to the impacts of the COVID-19 pandemic in locations outside the United States. Notwithstanding the foregoing, the COVID-19 pandemic to date has not had a material impact on the Company’s financial condition or results of operations, and the Company does not believe that its production operations at the Boca Facility, the Company’s contract fill/finishers or its plasma collection facilities have been significantly impacted by the COVID-19 pandemic. As a result, the Company does not anticipate and has not experienced any material impairments with respect to any of its long-lived assets, including the Company’s property and equipment, goodwill or intangible assets. Although the COVID-19 pandemic has not, to date, materially adversely impacted the Company’s capital and financial resources, because the Company is unable to determine the ultimate severity or duration of the pandemic or its long-term effects on, among other things, the global, national or local economies, the capital and credit markets or the Company’s workforce, customers or our suppliers, at this time the Company is unable to predict whether COVID-19 will have a material adverse impact on the Company’s business, financial condition, liquidity and results of operations. F-21 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Vendor and Licensor Commitments Pursuant to the terms of a plasma purchase agreement with BPC dated as of November 17, 2011 (the “2011 Plasma Purchase Agreement”), the Company agreed to purchase from BPC an annual minimum volume of source plasma containing antibodies to RSV to be used in the manufacture of ASCENIV. The Company must purchase a to-be-determined and agreed upon annual minimum volume from BPC, but may also collect high-titer RSV plasma from up to five wholly-owned ADMA plasma collection facilities. During 2015, the Company and BPC amended the 2011 Plasma Purchase Agreement to allow the Company the ability to collect its raw material RSV high-titer plasma from other third-party collection organizations, thus allowing the Company to expand its reach for raw material supply as it executes its commercialization plans for ASCENIV. As part of the closing of the Biotest Transaction, the parties amended the 2011 Plasma Purchase Agreement to extend the initial term through the ten-year anniversary of the closing date of the Biotest Transaction. Unless terminated earlier, the 2011 Plasma Purchase Agreement expires in June 2027, after which it may be renewed for two additional five-year periods if agreed to by the parties. On December 10, 2018, BPC assigned its rights and obligations under the 2011 Plasma Purchase Agreement to Grifols Worldwide Operations Limited (“Grifols”) as its successor-in-interest, effective January 1, 2019. On January 1, 2019, Grifols and the Company entered into an additional amendment to the 2011 Plasma Purchase Agreement for the purchase of source plasma containing antibodies to RSV from Grifols (see Note 16). Pursuant to this amendment, until January 1, 2022, the Company may purchase RSV plasma from Grifols from the two plasma collection centers that were transferred to BPC on January 1, 2019 at a price equal to cost plus five percent ( 5 %) (without any additional increase due to inflation). Effective January 1, 2022, RSV plasma purchased from these two plasma collection centers will be subject to the pricing terms in effect for RSV plasma purchased from other plasma collection centers owned by Grifols. On June 6, 2017, the Company and BPC entered into a Plasma Supply Agreement pursuant to which BPC supplies, on an exclusive basis subject to certain exceptions, to ADMA BioManufacturing an annual minimum volume of hyperimmune plasma that contain antibodies to the Hepatitis B virus for the manufacture of Nabi-HB. The Plasma Supply Agreement has a 10-year term. On July 19, 2018, the Company and BPC entered into an amendment to the Plasma Supply Agreement to provide, among other things, that in the event BPC elects not to supply in excess of ADMA BioManufacturing’s specified amount of Hepatitis B plasma and ADMA BioManufacturing is unable to secure Hepatitis B plasma from a third party at a price that is within a low double- digit percentage of the price that ADMA BioManufacturing pays to BPC, then BPC shall reimburse ADMA BioManufacturing for the difference in price ADMA BioManufacturing incurs. On December 10, 2018, BPC assigned its rights and obligations under the Plasma Supply Agreement to Grifols, effective January 1, 2019. On June 6, 2017, the Company and BPC entered into a Plasma Purchase Agreement (the “2017 Plasma Purchase Agreement”), pursuant to which ADMA BioManufacturing purchases normal source plasma (“NSP”) from BPC at agreed upon annual quantities and prices. The 2017 Plasma Purchase Agreement has an initial term of five years after which the 2017 Plasma Purchase Agreement may be renewed for additional two terms of two years each upon the mutual written consent of the parties. On July 19, 2018, the Company and BPC entered into an amendment to the 2017 Plasma Purchase Agreement to, among other things, provide agreed upon amounts of normal source plasma to be supplied by BPC to ADMA BioManufacturing in calendar year 2019 at a specified price per liter, provided that ADMA BioManufacturing delivers a valid purchase order to BPC. Additionally, pursuant to the amendment to the 2017 Plasma Purchase Agreement, BPC agreed that, for calendar years 2020 and 2021, it shall supply no less than a high double-digit percentage of ADMA BioManufacturing’s requested NSP amounts, provided that such requested NSP amounts are within an agreed range, at a price per liter to be mutually determined. Furthermore, pursuant to the amendment to the 2017 Plasma Purchase Agreement, in the event BPC fails to supply ADMA BioManufacturing with at least a high double-digit percentage of ADMA BioManufacturing’s requested NSP amounts, BPC shall promptly reimburse ADMA BioManufacturing the difference in price ADMA BioManufacturing incurs due to BPC’s election not to supply NSP to ADMA BioManufacturing in such amounts as requested. On December 10, 2018, BPC assigned its rights and obligations under the Plasma Purchase Agreement to Grifols, effective January 1, 2019. F-22 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Effective as of May 12, 2021, the Company and Grifols amended the foregoing 2017 Plasma Purchase Agreement whereby, among other things, the term of the agreement was extended through December 31, 2022, while certain historical provisions were deleted. In order to maintain a reliable supply of raw material plasma thereafter, the Company has executed additional agreements with multiple third-party suppliers of NSP to supplement the 2017 Plasma Purchase Agreement. The Company has also increased its number of planned plasma collection center buildouts such that the Company expects to have 10 FDA-approved plasma collection centers in operation by the end of 2023, while also continuing to increase its plasma collection capabilities at its ADMA BioCenters plasma collection centers business segment. Post-marketing commitments In connection with the approval of the BLA for BIVIGAM, on December 19, 2012 Biotest committed to perform two additional post-marketing studies, a pediatric study to evaluate the efficacy and safety of BIVIGAM in children and adolescents, and a post-authorization safety study to further assess the potential risk of hypotension and hepatic and renal impairment in BIVIGAM-treated patients with primary humoral immunodeficiency. These studies are still pending completion. ADMA has assumed the remaining obligations, and the costs of the studies will be expensed as incurred as research and development expenses. The Company currently expects to incur expenses of approximately $ 3.0 million to $ 4.0 million to complete these studies, with both studies to be completed by June of 2023. In connection with the FDA’s approval of ASCENIV on April 1, 2019, the Company is required to perform a pediatric study to evaluate the safety and efficacy of ASCENIV in children and adolescents. The Company expects to incur expenses of approximately $ 2 million to complete this study, which is required to be completed by June of 2023. Employment contracts The Company has entered into employment agreements with Mr. Grossman and Mr. Lenz. Other commitments On September 28, 2021, following the approval of the Company’s Board of Directors upon recommendation of the Compensation Committee of the Board of Directors, and in consultation with an independent compensation consultant, the Company implemented a retention incentive program, consisting of cash payments and awards of RSUs (see Note 8), to the Company’s management, including Mr. Grossman and Mr. Lenz, and to certain other employees. The purpose of the retention program is to promote and ensure business continuity and provide an incentive to the Company’s executive management and certain other employees considering the operational challenges presented by the ongoing COVID -19 pandemic and the competitive work environment in which the Company operates as an FDA regulated manufacturer of specialized biologic therapies. The retention awards were granted considering the nationwide labor shortages and the increased employee turnover rates that the Company, its pharmaceutical peers and other companies outside of the Company’s industry have reported experiencing. The cash portion of the retention program consists of two tranches. The first tranche was paid to employees on September 30, 2021 in the amount of $ 1.3 million, and the second tranche aggregating to approximately $ 1.3 million will be paid on June 15, 2022. Based on the terms of the retention agreements the Company entered into with each applicable executive and employee, $ 0.8 million of the first tranche is being recognized over the retention service period, which ends on December 31, 2022, with the remainder having been recognized as expense on September 30, 2021. The second tranche will be recognized as compensation expense over a 15 -month period from October 1, 2021 through December 31, 2022. In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. Further, the Company indemnifies its directors and officers who are, or were, serving at the Company’s request in such capacities. The Company’s maximum exposure under these arrangements is unknown as of December 31, 2021. The Company does not anticipate recognizing any significant losses relating to these arrangements. F-23 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 11. INCOME TAXES A reconciliation of income taxes at the U.S. federal statutory rate to the benefit for income taxes is as follows: Year Ended December 31, 2021 2020 Benefit at U.S. federal statutory rate $ ( 15,045,999 ) $ ( 15,907,195 ) State taxes - deferred ( 251,839 ) ( 3,797,393 ) Increase in valuation allowance 14,618,762 19,535,265 Research and development credits ( 239,585 ) ( 246,989 ) Decrease in federal net operating loss 623,679 - Other 294,982 416,312 Benefit for income taxes $ - $ - A summary of the Company’s deferred tax assets is as follows: Year Ended December 31, 2021 2020 Federal and state net operating loss carryforwards $ 73,036,983 $ 59,114,928 Federal and state research credits 31,333 921,577 Interest expense limitation carryforwards 6,013,040 2,911,508 Transaction costs 977,046 1,080,041 Deferred revenue 519,819 563,956 Accrued expenses and other 1,030,064 2,397,513 Total gross deferred tax assets 81,608,285 66,989,523 Less: valuation allowance for deferred tax assets ( 81,608,285 ) ( 66,989,523 ) Net deferred tax assets $ - $ - As of December 31, 2021, the Company had federal and state (post-apportioned basis) net operating losses (“NOLs”) of $ 299.9 million and $ 185.0 million, respectively. Approximately $ 55.2 million and $ 77.8 million of the foregoing federal and state NOLs, respectively, will expire at various dates from 2027 through 2041 , if not limited by triggering events prior to such time. Under the provisions of the Internal Revenue Code, changes in ownership of the Company, in certain circumstances, would limit the amount of federal NOLs that can be utilized annually in the future to offset taxable income. In particular, Section 382 of the Internal Revenue Code imposes limitations on an entity’s ability to use NOLs upon certain changes in ownership. If the Company is limited in its ability to use its NOLs in future years in which it has taxable income, then the Company will pay more taxes than if it were otherwise able to fully utilize its NOLs. The Company may experience ownership changes in the future as a result of subsequent shifts in ownership of the Company’s capital stock that the Company cannot predict or control that could result in further limitations being placed on the Company’s ability to utilize its federal NOLs. As of December 31, 2021, the Company performed an analysis of limitations imposed by Section 382 of the Internal Revenue Code and as a result has written off the deferred tax assets related to $ 3.0 million of federal NOLs, $ 1.0 million of federal research and development tax credits and $ 28.1 million of state NOLs which are limited by historical ownership changes. As a result, there was a $ 3.9 million reduction to the Company’s net deferred tax assets, which is offset by a corresponding $ 3.9 million reduction in the Company’s valuation allowance, resulting in no net impact to the Company’s provision for income taxes for the year ended December 31, 2021. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, the Company assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income, exclusive of reversing taxable temporary differences, to outweigh objective negative evidence of recent financial reporting losses. Based on these criteria and the relative weighting of both the positive and negative evidence available, management continues to maintain a full valuation allowance against its net deferred tax assets. F-24 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 In accordance with U.S. GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Derecognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce net assets. The amount of the liability for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. Components of the liability are classified as either a current or a long-term liability in the accompanying consolidated balance sheets based on when the Company expects each of the items to be settled. The Company does no t have any unrecognized tax benefits as of December 31, 2021 and 2020, and does not anticipate a significant change in unrecognized tax benefits during the next 12 months. 12. LEASE OBLIGATIONS The Company leases certain properties and equipment for its ADMA BioCenters subsidiary and certain equipment for its ADMA BioManufacturing subsidiary, which leases provide the right to use the underlying assets and require lease payments through the respective lease terms which expire at various dates through 2033. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company determines if an arrangement is an operating lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. All other leases are recorded on the balance sheet with assets representing the right to use the underlying asset for the lease term and lease liabilities representing the obligation to make lease payments arising from the lease. Right-to-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of the lease payments is determined using the Company’s incremental borrowing rate as of the lease commencement date. For the lease liabilities recognized during the years ended December 31, 2021 and 2020, the Company used a discount rate of 13 % to determine the present value of its lease obligations. The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is reflected in Plasma center operating expenses and Selling, general and administrative expenses. Aggregate lease expense for the Company’s operating leases for the years ended December 31, 2021 and 2020 was $ 1.4 million and $ 0.7 million, respectively. Aggregate cash paid on these leases for the years ended December 31, 2021 and 2020 was $ 1.1 million and $ 0.5 million, respectively. F-25 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 During the year ended December 31, 2021, the Company recognized additional right-to-use assets and corresponding lease liabilities of $ 3.6 million in connection with four new property leases where the Company has opened or intends to open additional plasma collection facilities. Including a finance lease the Company entered into in June 2018, the Company has aggregate lease liabilities of $ 8.1 million and $ 4.7 million as of December 31, 2021 and 2020, respectively, which are comprised primarily of the leases for the Company’s plasma collection centers. The Company’s operating leases have a weighted average remaining term of 9.1 years. Scheduled payments under the Company’s lease obligations are as follows: Year ended December 31, 2022 $ 1,596,006 2023 1,641,603 2024 1,517,229 2025 1,525,793 2026 1,260,391 Thereafter 6,345,559 Total payments 13,886,581 Less: imputed interest ( 5,833,109 ) Current portion ( 591,084 ) Balance at December 31, 2021 $ 7,462,388 On June 11, 2021, t he Company entered into an additional property lease that the Company intends to use to store certain inventory for its ADMA BioManufacturing business segment. The Company has not taken possession of this leased property and its lease commencement date has not been determined. With the exception of a security deposit and six months’ rent totaling $ 0.3 million, no payments have been made under this lease. The initial term of the lease is for 90 months with monthly rental payments varying between approximately $ 14,000 and $ 24,000 , including common area maintenance charges. On January 22, 2022, the Company entered into an additional property lease for its ninth plasma collection facility. The Company has not taken possession of this leased property and its lease commencement date has not been determined. With the exception of a security deposit and an initial month’s rent totaling approximately $ 44,000 , no payments have been made under this lease. The initial term of the lease is for 126 months with monthly rental payments varying between approximately $ 18,000 and $ 25,000 , including common area maintenance charges. 13. SEGMENTS The Company is engaged in the manufacture, marketing and development of specialty plasma-derived biologics. The Company’s ADMA BioManufacturing segment reflects the Company’s immune globulin manufacturing and development operations in Florida, acquired on June 6, 2017. The Plasma Collection Centers segment consists of ten plasma collection facilities in various stages of development as of December 31, 2021, six of which are operational and collecting plasma, and five of which hold an approved license with the FDA (and of which one facility has received approvals from the Korean Ministry of Food and Drug Safety as well as FDA approval to implement a Hepatitis B immunization program). The Corporate segment includes general and administrative overhead expenses. The Company defines its segments as those business units whose operating results are regularly reviewed by the chief operating decision maker (“CODM”) to analyze performance and allocate resources. The Company’s CODM is its President and Chief Executive Officer. Summarized financial information concerning reportable segments is shown in the following tables: F-26 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Year Ended December 31, 2021 ADMA BioManufacturing Plasma Collection Centers Corporate Consolidated Revenues $ 74,935,528 $ 5,864,263 $ 142,834 $ 80,942,625 Cost of product revenue 74,124,999 5,644,342 - 79,769,341 Loss from operations ( 29,293,309 ) ( 12,056,364 ) ( 17,024,068 ) ( 58,373,741 ) Interest and other expense, net ( 218,053 ) ( 5,660 ) ( 13,050,164 ) ( 13,273,877 ) Net loss ( 29,511,362 ) ( 12,062,024 ) ( 30,074,232 ) ( 71,647,618 ) Capital expenditures 4,876,983 8,634,275 - 13,511,258 Depreciation and amortization expense 4,217,771 1,272,397 5,334 5,495,502 Total assets 208,391,019 24,681,691 43,180,014 276,252,724 Year Ended December 31, 2020 ADMA BioManufacturing Plasma Collection Centers Corporate Consolidated Revenues $ 36,673,287 $ 5,403,662 $ 142,834 $ 42,219,783 Cost of product revenue 55,908,696 5,382,730 - 61,291,426 Loss from operations ( 46,904,634 ) ( 4,410,890 ) ( 13,599,353 ) ( 64,914,877 ) Interest and other expense, net ( 984,017 ) ( 7,388 ) ( 10,834,063 ) ( 11,825,468 ) Gain on extinguishment of debt - - 991,797 991,797 Net loss ( 47,888,651 ) ( 4,418,278 ) ( 23,441,619 ) ( 75,748,548 ) Capital expenditures 7,579,437 5,147,243 - 12,726,680 Depreciation and amortization expense 3,341,506 591,593 9,193 3,942,292 Total assets 140,908,957 13,102,008 53,662,429 207,673,394 14. OTHER EMPLOYEE BENEFITS The Company sponsors a 401(k) savings plan. Under the plan, employees may make contributions which are eligible for a Company discretionary percentage contribution as defined in the plan and determined by the Board of Directors. The Company recognized $ 1.1 million and $ 0.9 million of related compensation expense for the years ended December 31, 2021 and 2020, respectively. F-27 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 15. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Supplemental cash flow information for the years ended December 31, 2021 and 2020 is as follows: 2021 2020 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 11,159,461 $ 10,267,632 Noncash Financing and Investing Activities: Equipment acquired reflected in accounts payable and accrued liabilities $ 1,352,627 $ 973,958 Right-to-use assets in exchange for lease obligations $ 3,554,473 $ 3,329,374 Warrants issued in connection with notes payable $ - $ 3,740,980 16. CONCENTRATIONS Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. At December 31, 2021, three customers accounted for approximately 94 % of the Company’s consolidated accounts receivable. At December 31, 2020, three customers accounted for approximately 92 % of the Company’s consolidated accounts receivable. For the year ended December 31, 2021, four customers accounted for approximately 81 % of the Company’s consolidated revenues. For the year ended December 31, 2020, three customers represented an aggregate of 82 % of the Company’s consolidated revenues. The Company purchases substantially all of its raw material plasma from Grifols. For the year ended December 31, 2021, plasma purchases from Grifols were approximately $ 42.0 million, or 69 % of the Company’s total inventory purchases. For the year ended December 31, 2020, plasma purchases from Grifols were approximately $ 25.0 million, or 68 % of the Company’s total inventory purchases. Net revenues according to geographic area, based on the location of where the product is shipped, is as follows: Year Ended December 31, 2021 2020 United States $ 70,625,848 $ 36,552,244 International 10,316,777 5,667,539 Total revenues $ 80,942,625 $ 42,219,783 17. SUBSEQUENT EVENTS Refinancing of Senior Credit Facility On March 23, 2022, (the “Hayfin Closing Date”) the Company and all of its subsidiaries entered into a Credit and Guaranty Agreement (the “Hayfin Credit Agreement”) with Hayfin Services LLP (“Hayfin”). T he Hayfin Credit Agreement provides for a senior secured term loan facility in a principal amount of up to $ 175.0 million (the “Hayfin Credit Facility”), composed of (i) a term loan made on the Hayfin Closing Date in the principal amount of $ 150.0 million(the “Hayfin Closing Date Loan”), and (ii) a delayed draw term loan in the principal amount of $ 25.0 million (the “Hayfin Delayed Draw Loan” and, together with the Hayfin Closing Date Loan, the “Hayfin Loans”). The obligation of the lenders to make the Hayfin Delayed Draw Loan expires on March 22, 2023 and is subject to the satisfaction of certain conditions, including, but not limited to, the Company’s meeting certain 12-month revenue targets as set forth in the Hayfin Credit Agreement. The Hayfin Credit Facility has a maturity date of March 23, 2027 (the “Hayfin Maturity Date”), subject to acceleration pursuant to the Hayfin Credit Agreement, including upon an Event of Default (as defined in the Hayfin Credit Agreement) . On the Hayfin Closing Date, the Company used $ 100.0 million of the Hayfin Closing Date Loan to terminate and pay in full all of the outstanding obligations under the Perceptive Credit Facility (see Note 7). The Company also used $ 2.0 million of the Hayfin Closing Date Loan proceeds to pay a redemption premium to Perceptive and used approximately $ 0.3 million of the Hayfin Closing Date Loan proceeds to pay certain fees and expenses incurred in connection with this transaction. In addition, a $ 1.8 million upfront fee payable to Hayfin was paid “in kind” and was added to the outstanding principal balance in accordance with the terms of the Hayfin Credit Agreement. In connection with the repayment of the Perceptive Loans, the Company will record a loss on extinguishment of debt in the approximate amount of $ 6.7 million, consisting of the write-off of unamortized discount related to the Perceptive Loans and the redemption premium paid to Perceptive. F-28 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Borrowings under the Hayfin Credit Agreement will bear interest, at the Company’s election, at either (a) a base rate (equal to the highest of (i) the rate of interest per annum last quoted by the Wall Street Journal as the “Prime Rate” in the United States, (ii) the federal funds rate in effect on such day plus 0.50 % and (iii) adjusted Term Secured Overnight Financing Rate (“SOFR”) for a one-month tenor in effect on such day plus 1.00 %) plus an applicable margin of 8.5 %, or (b) adjusted Term SOFR for either a one-month or three-month tenor, as elected by the Company, and subject to a floor of 1.25 %, plus an applicable margin of 9.5 % (the “Applicable Margin”); provided, however, that upon, and during the continuance of, an Event of Default, the Applicable Margin shall increase by an additional 3 % per annum. On the last day of each calendar month or quarter during the term of the Hayfin Credit Facility, the Company will pay accrued interest to Hayfin. The rate of interest in effect as of the Hayfin Closing Date was 10.75 %. The Company will also pay “in kind” a portion of the interest on the Hayfin Loans for each monthly or quarterly interest period in an amount equal to 2.5 % per annum, which will be added to the principal amount of the outstanding debt under the Hayfin Credit Facility. On the Hayfin Maturity Date, the Company will pay Hayfin the entire outstanding principal amount underlying the Hayfin Loans and any accrued and unpaid interest thereon, as well as an exit fee of 1.0 % of the outstanding principal amount being paid. Prior to the Hayfin Maturity Date, there will be no scheduled principal payments on the Hayfin Loans. The Company may prepay outstanding principal on the Hayfin Loans at any time and from time to time upon five business days’ prior written notice, subject to the payment to Hayfin of, (A) any accrued but unpaid interest on the prepaid principal amount plus (B) an early prepayment fee in the amount equal to (i) 7.0 % of the prepaid principal amount, if prepaid on or prior to the first anniversary of the Hayfin Closing Date, (ii) 3.0 % of the prepaid principal amount, if prepaid after the first anniversary of the Hayfin Closing Date and on or prior to the second anniversary of the Hayfin Closing Date, or (iii) 1.0 % of the prepaid principal amount, if prepaid after the second anniversary of the Hayfin Closing Date and on or prior to the third anniversary of the Hayfin Closing Date. In addition, for any prepayments of principal or payment of principal on the Hayfin Maturity Date, the Company is required to pay an exit fee of 1.0 % of the amount of principal being paid. All of the Company’s obligations under the Hayfin Credit Agreement are secured by a first-priority lien and security interest in substantially all of the Company’s tangible and intangible assets, including intellectual property and all of the equity interests in the Company’s subsidiaries. The Hayfin Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings. The negative covenants restrict or limit the ability of the Company and its subsidiaries to, among other things and subject to certain exceptions contained in the Hayfin Credit Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes, such as mergers or acquisitions, or changes to the Company’s or its subsidiaries’ business activities; make certain Investments or Restricted Payments (each as defined in the Hayfin Credit Agreement); change its fiscal year; pay dividends; repay other certain indebtedness; engage in certain affiliate transactions; or enter into, amend or terminate any other agreements that have the impact of restricting the Company’s ability to make loan repayments under the Hayfin Credit Agreement. In addition, the Company is required (i) at all times prior to the Maturity Date to maintain a minimum cash balance of $ 6.0 million; and (ii) as of the last day of each fiscal quarter commencing with the fiscal quarter ending June 30, 2022, report IVIG product and related revenues for the trailing 12-month period that exceed the amounts set forth in the Hayfin Credit Agreement, which range from $ 75.0 million for the fiscal quarter ending June 30, 2022 to $ 250.0 million for the fiscal quarter ending December 31, 2026. F-29 Table of Contents ADMA BIOLOGICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 As consideration for the Hayfin Credit Agreement, the Company issued to various entities affiliated with Hayfin, on the Hayfin Closing Date, warrants to purchase 9,103,047 shares of the Company’s common stock (the “Hayfin Warrants”). The Hayfin Warrants have an exercise price equal to $ 1.6478 per share, which is equal to the trailing 30 -day Volume Weighted-average Price of the Company’s common stock on the business day immediately prior to the Hayfin Closing Date (the “Closing Date Exercise Price”). The Hayfin Warrants were valued by the Company at approximately $ 9.6 million as of the Hayfin Closing Date and have an expiration date of March 23, 2029 . As a result of the fees paid to Hayfin and the value of the Hayfin Warrants, the Company recognized an aggregate discount on the Hayfin Loans in the amount of $ 13.2 million. The Company records debt discount as a reduction to the face amount of the debt, and the debt discount is amortized as interest expense over the life of the debt using the interest method. Based on the fair value of the Hayfin Warrants and the aggregate amount of fees and expenses associated with obtaining the Hayfin Credit Facility, the effective interest rate on the Hayfin Loans as of March 23, 2022 was approximately 12.9 % . F-30