What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 298 added, 250 removed, 542 unchanged (50% of the section changed)

41 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

Three Months Ended March 31,

CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

Cost of product revenue

18 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’

EQUITY (Unaudited)

For the Three Months Ended March 31, 2023

CONDENSED CONSOLIDATED

STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY (Unaudited)

For the Three and Six Months Ended June 30, 2023

Stockholders’

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( 484,805,486

For the Three Months Ended March 31, 2022

Stock-based compensation

Vesting of Restricted Stock Units, net of shares withheld for taxes

Warrants issued in connection with note payable

Cashless exercise of warrants

Exercise of stock options

Balance at June 30, 2023

( 491,176,193

For the Three and Six Months Ended June 30, 2022

Stockholders’

6 unchanged sentences

( 437,120,578

Stock-based compensation

Vesting of Restricted Stock Units, net of shares withheld for taxes and retired

Balance at June 30, 2022

( 450,885,484

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Payments on finance lease obligations

Proceeds from the exercise of stock options

Payment of deferred financing fees

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collection business with ten plasma collection facilities

located throughout the U.S., eight of which hold an approved license with the FDA.

located throughout the U.S., nine of which hold an approved license with 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”) or Inborn Errors of Immunity, and for which the Company received FDA approval on May 9, 2019 and commenced commercial sales in

(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

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 March 31, 2023, the Company had working capital of $ 227.4 million, including $ 69.2 million of cash and cash

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 will be sufficient to fund ADMA’s operations, as currently conducted, through the end of the second quarter of 2024, by which time the Company believes it

will have begun generating positive cash flow from operations.

These estimates may change based upon several factors, including the success of the Company’s commercial efforts with respect to the sale 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 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

biologics, 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.

Company continues to evaluate a variety of strategic alternatives through its ongoing engagement with Morgan Stanley.

The exploration of value-creating opportunities remains a top corporate priority for ADMA.

(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”) or Inborn Errors of Immunity, and for which the Company received FDA approval on May 9, 2019 and commenced

commercial sales in August 2019;

commercial sales in October 2019;

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.

patients with or at risk for certain infectious diseases.

As of June 30, 2023, the Company had working capital of $ 224.3 million, including $ 62.5 million of cash

and cash equivalents.

currently believes that its cash, cash equivalents, projected revenue and accounts receivable will be sufficient to fund ADMA’s operations, as currently conducted, through the end of the third quarter of 2024, by which time the Company

believes it will have been generating positive cash flow from operations.

These estimates may change based upon several factors, including the success of the Company’s commercial efforts with respect to the sale of its products, whether or

not the assumptions underlying the Company’s projected revenues and expenses are correct and the continued 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 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 biologics, 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.

continues to evaluate a variety of strategic alternatives.

While the exploration of value-creating opportunities remains a top corporate priority for the Company, ADMA has terminated its financial advisory agreement with Morgan Stanley.

ADMA BIOLOGICS, INC.

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In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and

assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of March 31, 2023 and its results of operations, changes in stockholders’ equity and cash flows for the three months

ended March 31, 2023 and 2022.

During the three months ended March 31, 2023 and 2022, comprehensive loss was equal to the net loss amounts

presented for the respective periods in the accompanying condensed consolidated statements of operations.

Operating results for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year.

assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of June 30, 2023, its results of operations and changes in stockholders’ equity for the three and six months ended

June 30, 2023 and its cash flows for the six months ended June 30, 2023 and 2022.

During the three and six months ended June 30, 2023 and 2022, comprehensive loss was equal to the net loss

amounts presented for the respective periods in the accompanying condensed consolidated statements of operations.

Operating results for interim periods are not necessarily indicative of the results that may be expected for the full fiscal

Use of Estimates

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Accounts receivable is reported at realizable value, net of allowances for contractual credits and doubtful accounts in

the amount of $ 0.1 million at March 31 , 2023 and December 31, 2022, respectively, which are recognized in the period the related revenue is recorded.

Company extends credit to its customers based upon an evaluation of each customer’s financial condition and credit history.

Evaluations of the financial condition, payment history and associated credit risk of customers are performed on an

ongoing basis.

the amount of $ 0.2 million and $ 0.1

million at June 30 , 2023 and December 31, 2022, 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, payment history 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.

At March 31 , 2023, five customers accounted for an aggregate of 98 % of the Company’s total accounts receivable, and at December 31, 2022, two customers accounted for approximately 92 % of the Company’s total

accounts receivable.

At June 30 , 2023, three customers accounted for an aggregate of 94 % of the Company’s total

accounts receivable, and at December 31, 2022, two customers accounted for approximately 92 % of the Company’s total accounts receivable.

ADMA BIOLOGICS, INC.

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Goodwill represents the excess of purchase price over the fair value of net assets acquired by the Company.

at March 31 , 2023 and December 31, 2022 was $ 3.5 million.

June 30 , 2023 and December 31, 2022 was $ 3.5 million.

All of the Company’s goodwill is attributable to its ADMA BioManufacturing business segment and is related to the Biotest

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The Company’s annual

goodwill impairment test as of October 1, 2022 did not result in a goodwill impairment charge, and the Company did no t record any impairment charges related to goodwill for the three months

ended March 31 , 2023 and 2022.

goodwill impairment test as of October 1, 2022 did not result in a goodwill impairment charge, and the Company did no t record any impairment charges related to goodwill for the three and six

months ended June 30 , 2023 and 2022.

Impairment of Long-Lived Assets

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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.

three months ended March 31 , 2023 and 2022, the Company

three and six months ended June 30 , 2023 and 2022, the Company

determined that there was no impairment of its long-lived assets.

3 unchanged sentences

Revenue Recognition

Revenues for the three months ended March 31 , 2023

Revenues for the three and six months ended June 30 , 2023

and 2022 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 through the

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Product revenues are recognized at the time of delivery if the Company retains control of the product during shipment.

For the three months ended March 31 , 2023 , three customers represented an aggregate of 76 % of the Company’s consolidated revenues.

For the three months ended March 31 , 2022, three customers represented an aggregate

of 83 % of the Company’s consolidated revenues.

For the six months ended June 30 , 2023 , two customers represented an aggregate of 68 % of the Company’s consolidated revenues.

For the six months ended June 30 , 2022, two customers represented an aggregate of

73 % of the Company’s consolidated revenues.

Cost of Product Revenue

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a net loss for all periods presented.

For the three months ended March 31 , 2023 and 2022, the

For the six months ended June 30 , 2023 and 2022, the

following securities were excluded from the calculation of diluted loss per common share because of their anti-dilutive effects:

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Stock options

24 unchanged sentences

Based on its analysis, the Company

has determined that it has no t incurred any liability for unrecognized tax benefits as of March 31, 2023 and December 31,

2022, and during the three months ended March 31, 2023 and 2022, the Company recognized no

has determined that it has no t incurred any liability for unrecognized tax benefits as of June 30, 2023 and December 31,

2022, and during the six months ended June 30, 2023 and 2022 the Company recognized no

adjustments for uncertain tax positions.

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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

6 unchanged sentences

INTANGIBLE ASSETS

Intangible assets at March 31, 2023 and December 31, 2022 consist of the following:

March 31, 2023

Intangible assets at June 30, 2023 and December 31, 2022 consist of the following:

June 30, 2023

December 31, 2022

1 unchanged sentence

Rights to intermediates

All of the Company’s intangible assets were acquired in the Biotest Transaction.

Amortization expense

related to these intangible assets was $ 0.2 million for the three months ended March 31, 2023 and 2022.

Estimated future

aggregate amortization expense is expected to be as follows:

All of the Company’s intangible assets were acquired in the

Biotest Transaction.

Amortization expense related to these intangible assets was $ 0.2 million for the three months ended June 30,

2023 and 2022, and $ 0.4 million for the six months ended June 30, 2023 and 2022.

Estimated future aggregate amortization expense is expected to be as follows:

Remainder of 2023

1 unchanged sentence

Property and equipment and related accumulated depreciation are summarized as

March 31, 2023

June 30, 2023

December 31, 2022

15 unchanged sentences

The Company recorded depreciation expense on property and equipment for the three

months ended March 31, 2023 and 2022 of $ 1.9 million and $ 1.4 million, respectively.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities at March 31, 2023 and December 31, 2022 are as follows:

months ended June 30, 2023 and 2022 of $ 1.9 million and $ 1.5

million , respectively , and for the six months ended June 30, 2023 and 2022 of $ 3.8 million and $ 3.0 million, respectively .

ADMA BIOLOGICS, INC.

1 unchanged sentence

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities at June 30, 2023 and December 31, 2022 are as follows:

June 30, 2023

December 31, 2022

6 unchanged sentences

A summary of outstanding senior notes payable is as follows:

March 31, 2023

June 30, 2023

December 31, 2022

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redemption premium paid to Perceptive.

Borrowings under the Hayfin Credit Agreement 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 increases 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 March 31,2023 and December 31, 2022 was 14.4 % and 13.9 %, respectively.

The Company is also

permitted to 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 %

From the time of the Hayfin Closing Date through May 1, 2023, borrowings under the Hayfin Credit Agreement bore 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 increases 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 pays accrued interest to Hayfin.

The rate of interest in effect as of June 30,2023

and December 31, 2022 was 13.7 % and 13.9 %, respectively.

The Company is also permitted to 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 is added to the principal amount of the outstanding debt under the Hayfin Credit Facility.

For the three months ending March 31,2023, approximately $ 1.0 million of interest was paid in kind and added to the balance of the outstanding Hayfin Loans.

For the six months ending June

30,2023, approximately $ 2.0 million of interest was paid in kind and added to the balance of the outstanding Hayfin Loans.

ADMA BIOLOGICS, INC.

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This exit fee is recorded separately as a

non-current liability on the accompanying consolidated balance sheets as of March 31,2023 and December 31,2022.

non-current liability on the accompanying consolidated balance sheets as of June 30,2023 and December 31,2022.

Prior to the Hayfin Maturity Date, there are 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 also required to pay the exit fee.

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

17 unchanged sentences

30, 2022 to $ 250.0 million for the fiscal quarter ended December 31, 2026.

As of March 31, 2023, the Company was in compliance

As of June 30, 2023, the Company was in compliance

with all of the covenants contained in the Hayfin Credit Agreement.

4 unchanged sentences

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 .

1, 2023, the Company entered into a second amendment to the Hayfin Credit Agreement (the “Hayfin Second Amendment”) whereby the Applicable Margin for adjusted Term SOFR Loans was reduced from 9.5 % to 8.5 %.

The Hayfin Second Amendment also

extended the obligation of the lenders to make the Hayfin Delayed Draw Loan from June 30, 2023 to December 31, 2023.

the terms of the Hayfin Second Amendment, in the event the Company elects to prepay all or any portion of the outstanding principal on the Hayfin Loans, the Company will be subject to 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 Second Amendment, (ii) 3.0 % of the prepaid principal amount, if prepaid after the first anniversary of the Hayfin Second Amendment and on or prior to the second

anniversary of the Hayfin Second Amendment, or (iii) 1.0 % of the prepaid principal amount, if prepaid after the second

anniversary of the Hayfin Second Amendment and on or prior to the third anniversary of the Hayfin Second Amendment.

For any prepayments of principal or payment of principal on the Hayfin Maturity Date, the Company is also required to

pay the exit fee.

In addition, the Hayfin Second Amendment provides for a 50 % reduction to the foregoing early prepayment

fees if the Hayfin Loans are prepaid in connection with a change in control of the Company or other strategic transactions as further described in the Hayfin Second Amendment.

In connection with the Hayfin Second Amendment, the Company issued additional warrants to the lenders to purchase 2,391,244

shares of the Company’s common stock at an exercise price of $ 3.2619 per share (the “ Hayfin Second Amendment Warrants”).

Second Amendment Warrants were valued at approximately $ 5.6 million and have an expiration date of May 1, 2030.

As a result of the upfront fee and exit fee paid or payable to Hayfin, the expenses incurred by the Company in connection with this transaction and the value of the Hayfin

Warrants, the Company recognized an aggregate discount on the Hayfin Loans in the amount of $ 13.9 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 31,2023 and December 31, 2022 was approximately 16.6 % and 16.1 %, respectively.

See Note 14 for discussion of an additional amendment to the Hayfin Credit Facility.

Warrants and Hayfin Second Amendment Warrants, the Company recognized an aggregate discount on the Hayfin Loans in the amount of $ 19.5

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 June 30,2023 and December 31, 2022 was approximately 17.4 % and 16.1 %, respectively.

ADMA BIOLOGICS, INC.

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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 March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022, the Company was authorized to issue 300,000,000 shares of its common stock, $ 0.0001

par value per share, and 222,262,588 and 221,816,930 shares of common stock were outstanding as of March 31, 2023 and December 31, 2022, respectively.

After giving effect to the 48,356,592 shares reserved for outstanding warrants and awards issued or reserved for future issuance under the Company’s equity incentive plans, as of March 31, 2023

there were 29,380,820 shares of common stock available for issuance.

In connection with the Hayfin Credit Agreement that the Company entered into on March 23, 2022 (see Note 7), the

Company issued the Hayfin Warrants to purchase 9,103,047 shares of the Company’s common stock.

The Hayfin Warrants were valued at

$ 9.6 million using the Black-Scholes option-pricing model assuming an expected term of seven years , a volatility of 68.1 %, a dividend yield of 0 % and a risk-free rate of interest of 2.36 %.

At March 31, 2023 and December 31,2022, the Company had outstanding warrants to purchase an aggregate of 13,525,148 shares of

common stock, with a weighted-average exercise price of $ 1.99 per share with expiration dates ranging between May 2023 and

December 2030 (see Note 14).

There were no shares of preferred stock outstanding at June 30, 2023 and December 31, 2022.

As of June 30, 2023 and December 31, 2022, the Company was authorized to issue 300,000,000 shares of its common stock, $ 0.0001 par

value per share, and 224,526,748 and 221,816,930

shares of common stock were outstanding as of June 30, 2023 and December 31, 2022, respectively.

After giving effect to the 46,940,501

shares reserved for outstanding warrants and awards issued or reserved for future issuance under the Company’s equity incentive plans, as of June 30, 2023 there were 28,532,751 shares of common stock available for issuance.

In connection with the Hayfin Credit Agreement that the Company entered into on March 23, 2022 (see Note 7), the Company

issued the Hayfin Warrants to purchase 9,103,047 shares of the Company’s common stock.

The Hayfin Warrants were valued at $ 9.6 million using the Black-Scholes option-pricing model assuming an expected term of seven years , a volatility of 68.1 %, a dividend yield of 0 % and a risk-free rate of interest of 2.36 %.

On May 1, 2023 the Company issued the Hayfin Second Amendment Warrants, which were valued at $ 5.6

million using the Black-Scholes option-pricing model assuming an expected term of seven years , a volatility of 67.8 %, a dividend yield of 0 %

and a risk-free rate of interest of 3.62 %.

On May 13, 2023, warrants to purchase 24,800 shares of

the Company’s common stock held by a former noteholder of the Company expired in accordance with their terms.

On June 16, 2023, various entities affiliated with Hayfin exercised 3,388,686 Hayfin Warrants in a cashless exercise transaction resulting in the Company issuing 1,967,847 shares of its common stock to such entities.

At June 30, 2023 and December 31, 2022, the Company had outstanding warrants to purchase an aggregate of 12,502,906 and 13,525,148 shares,

respectively, of common stock, with weighted-average exercise prices of $ 2.32 and $ 1.99 per share, respectively, with expiration dates ranging between December 2024 and December 2030.

Equity Incentive Plans

The fair value of stock options granted under the Company’s equity incentive plans was determined on the

date of grant using the Black-Scholes option valuation model.

The Black-Scholes model was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable.

option valuation models require the input of certain subjective assumptions including the expected stock price volatility.

The stock options granted to employees and directors have characteristics significantly different from those of

traded options, and changes in the subjective input assumptions can materially affect the fair value estimate.

The following assumptions were used to determine the fair value of options granted during the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

The fair value of stock options granted under t he Company’s equity incentive plans w as determined on the date of grant using the Black-Scholes option valuation model.

The Black-Scholes model was

developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable.

In addition, option valuation models require the input of certain subjective assumptions including the

expected stock price volatility.

The stock options granted to employees and directors have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair

value estimate.

The following assumptions were used to determine the fair value of options granted during the six months ended June 30, 2023 and 2022:

ADMA BIOLOGICS, INC.

AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30,

Expected term

3 unchanged sentences

Risk-free interest rate

On June 21, 2022, the

Company’s stockholders approved the ADMA Biologics, Inc.

2022 Compensation Plan (the “2022 Equity Plan”), which replaced the ADMA Biologics, Inc.

On June 21, 2022, the Company’s stockholders approved the ADMA Biologics, Inc.

2022 Compensation Plan (the “2022 Equity

Plan”), which replaced the ADMA Biologics, Inc.

2014 Omnibus Incentive Compensation Plan.

Approval of the 2022 Equity Plan resulted in

approximately 18 million additional shares of the Company’s common stock being reserved for future awards.

three months ended March 31, 2023 and 2022, the Company granted options to purchase an aggregate of 1,727,510 and 1,194,032 shares of common stock, respectively, to its directors and employees.

The weighted average remaining contractual life of stock options

outstanding and expected to vest at March 31, 2023 is 6.6 years.

The weighted average remaining contractual life of stock

options exercisable at March 31, 2023 is 5.3 years.

the three months ended March 31, 2023, options to purchase 5,416 shares of common stock were exercised in a cashless transaction

resulting in the issuance of 2,443 shares of common stock.

Approval of the 2022 Equity Plan resulted in approximately 18 million additional shares of the Company’s common stock being reserved for future awards.

During the six months ended June 30, 2023 and 2022, the

Company granted options to purchase an aggregate of 1,727,510 and 1,194,032 shares of common stock, respectively, to its directors and employees.

The weighted average remaining contractual life of stock options outstanding and expected to vest at June

30, 2023 is 6.2 years.

The weighted average remaining contractual life of stock options exercisable at June 30, 2023 is 5.0 years.

During the six months ended June 30, 2023, options to purchase 178,829 shares of common stock were exercised and the Company received aggregate exercise proceeds of $ 0.5 million.

Also during the six months ended June 30, 2023, options to purchase 5,416

shares of common stock were exercised in a cashless transaction resulting in the issuance of 2,443 shares of common stock.

A summary of the Company’s option activity under the Company’s equity incentive plans and related information is as

ADMA BIOLOGICS, INC.

AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Exercise Price

Options outstanding, vested and expected to vest at December 31, 2022

Options outstanding, vested and expected to vest at March 31, 2023

Options outstanding, vested and expected to vest at June 30, 2023

Options exercisable

As of March 31, 2023, the Company had $ 5.6 million of unrecognized compensation expense related to options granted under the Company’s equity incentive plans, which is expected to be recognized over a weighted-average

period of 3.0 years.

During the three months ended March 31, 2023 and 2022, the Company granted RSUs representing an aggregate

of 2,666,260 and 1,059,266

shares, respectively, to certain employees of the Company and to members of its Board of Directors .

As of June 30, 2023, the Company had $ 4.9 million of unrecognized compensation expense related to options granted under the Company’s equity incentive plans, which is expected to be recognized over a weighted-average period

of 2.9 years.

During the six months ended June 30, 2023 and 2022, the Company granted RSUs representing an aggregate of 2,976,260 and 1,109,266 shares,

respectively, to certain employees of the Company and to members of its Board of Directors.

These RSUs generally vest annually over a period of four years for employees and semi-annually over a period of one year for directors.

During the three months ended March 31, 2023 , an aggregate of 628,283

shares of common stock vested in connection with grants of RSUs.

With respect to these vested RSUs, 185,068 shares valued at

approximately $ 0.6 million were withheld by the Company to cover employees’ tax liabilities.

These shares were no longer

outstanding as of March

summary of the Company’s unvested RSU activity and related information is as follows:

During the six months ended

June 30, 2023, an aggregate of 806,781 shares of common stock vested in connection with grants of RSUs.

With respect to these

vested RSUs, 246,082 shares valued at approximately $ 0.9 million were withheld by the Company to cover employees’ tax liabilities.

These shares were no longer outstanding as of June 30, 2023.

A summary of the

Company’s unvested RSU activity and related information is as follows:

ADMA BIOLOGICS, INC.

AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Average Grant

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Balance at December 31, 2022

Balance at March 31, 2023

As of March 31, 2023 , the Company had $ 12.0 million of unrecognized compensation expense related to unvested RSUs granted under the Company’s equity incentive plans, which is expected to be recognized over a

weighted-average period of 3.4 years.

Balance at June 30, 2023

As of June 30, 2023, the Company had $ 11.6 million of unrecognized compensation expense related to unvested RSUs granted under the Company’s equity incentive plans, which is expected to be recognized over a weighted-average

period of 3.2 years.

Total stock-based compensation expense for all awards granted under the Company’s equity incentive plans for the three

months ended March 31, 2023 and 2022 is as follows:

Three Months Ended March 31,

and six months ended June 30, 2023 and 2022 is as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

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effective as of January 1, 2016, as amended from time to time , and pays monthly rent on this facility in the amount of $ 10,000 through December 31, 2026 .

Rent expense for the three months ended March 31, 2023 and 2022 amounted to $ 30,000 (see Note 12).

Areth is a company controlled by Dr.

Rent expense for the three and six months ended June 30, 2023 and 2022 amounted to $ 30,000 and $ 60,000 , respectively .

company controlled by Dr.

Grossman, the Vice Chairman of the Company’s Board of Directors, and Adam S.

Grossman, the Company’s President and Chief Executive

The Company also reimburses Areth for office and building-related (common area) expenses, equipment and certain other operational expenses, which were not material to the condensed consolidated financial statements for the three months

ended March 31, 2023 and 2022.

ADMA BIOLOGICS, INC.

AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended March 31, 2023 and 2022, the Company purchased certain specialized medical equipment and

services primarily related to the Company’s plasma collection centers, as well as personal protective equipment, from GenesisBPS and its affiliates (“Genesis”), aggregating to $ 0.1 million and $ 43,000 , respectively.

Grossman, the Company’s President and Chief Executive Officer.

The Company also reimburses Areth for office and building-related

(common area) expenses, equipment and certain other operational expenses, which were not material to the condensed consolidated financial statements for the six months ended June 30, 2023 and 2022.

During the six months ended June 30, 2023 and 2022, the Company purchased certain specialized medical equipment and

Genesis is owned by Dr.

Grossman and Adam Grossman.

and Adam Grossman.

See Note 7 for a discussion of the Company’s former credit facility and related

transactions with Perceptive, a holder of more than 5 % of the Company’s common stock during the three months ended March 31, 2022.

transactions with Perceptive, a holder of more than 5 % of the Company’s common stock during the six months ended June 30, 2022.

There were no transactions with Perceptive

during the three months ended March 31, 2023.

during the six months ended June 30, 2023.

COMMITMENTS AND CONTINGENCIES

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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.

ADMA BIOLOGICS, INC.

AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

IT Systems Disruption

On June 19, 2023, the Company experienced an IT systems disruption, which rendered certain of the Company’s IT

technology systems inaccessible for less than one week.

The Company’s investigation of the disruption remains ongoing with the

assistance of third-party consultants.

As no definitive root cause has been identified, the Company believes, theoretically, this IT systems disruption may have been caused by a third-party who may have gained access to the system.

no original financial systems or other data loss or any evidence of files exfiltrated due to this disruption.

Normal course operations have resumed across the Company’s business units.

At the time of the disruption, the Company was in

production of two batches of BIVIGAM, and after a prolonged hold time, it was deemed to be a prudent GMP quality decision to

discard these two in-process production batches as these batches were no longer viable for further production or had any

alternative use.

As a result, the Company recorded a one-time, non-recurring charge of $ 2.1 million for this inventory, which is

reflected in Cost of product revenue in the accompanying consolidated statements of operations.

In addition, the Company believes that its Plasma center operating expenses were adversely impacted by approximately $ 0.7 million due to the temporary closing of the Company’s plasma collection centers while their IT systems were restored.

The Company carries appropriate insurance for these types of instances, and while there can be no assurances

ADMA will be reimbursed for the insurance claims made pertaining to these charges, the Company is actively working with its insurance broker and carriers.

COVID-19 Pandemic

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or review of pending applications or submissions.

Although the Company has received FDA approvals for five of its plasma collection centers since January 1, 2022 and received several other FDA approvals while 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

future regulatory submissions or applications that may be impacted by restrictions related to COVID-19.

During the three months ended March 31, 2023 and 2022, revenue attributable to international customers was

approximately 7 % and 6 %,

respectively, 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.

Although the Company has received FDA approvals for six of its plasma collection centers since January 1, 2022 and received several other FDA approvals while 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 future regulatory

submissions or applications that may be impacted by restrictions related to COVID-19.

During the six months ended June 30, 2023 and 2022, revenue attributable to international customers was

approximately 7 % 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.

ADMA BIOLOGICS, INC.

1 unchanged sentence

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Notwithstanding the foregoing, the COVID-19 pandemic to date has not had a material impact on the Company’s financial

Although the COVID-19 pandemic has not, to date, materially adversely impacted the Company’s capital and financial

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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.

Pursuant to this amendment, until January 1, 2022, the Company could 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 are subject to the pricing terms in effect for RSV plasma purchased from other plasma collection centers owned by

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.

Pursuant to this amendment, until January 1, 2022, the Company could 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 are 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

8 unchanged sentences

pursuant to which ADMA BioManufacturing purchases normal source plasma (“NSP”) from BPC at agreed upon annual quantities and prices.

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.

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

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.

ADMA BIOLOGICS, INC.

10 unchanged sentences

Company purchased substantially all of its raw material plasma from Grifols.

For the three months ended March 31, 2023, plasma purchases from Grifols totaled $ 11.6 million, or approximately 40 % of the Company’s total inventory

For the three months ended March 31, 2022, plasma purchases from Grifols totaled approximately $ 15.5 million, representing

approximately 75 % of the Company’s total inventory purchases.

For the six months ended June 30, 2023, plasma purchases from Grifols totaled $ 5.2 million, or approximately 26 % of the Company’s total inventory purchases.

For the six months

ended June 30, 2022, plasma purchases from Grifols totaled $ 22.8 million, representing approximately 66 % of the Company’s total inventory purchases.

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.

The pediatric study for BIVIGAM has been completed, and the safety study has been completed pending a clinical study report to

ADMA has assumed the remaining obligations, and the costs of the studies will be expensed as incurred as research and development expenses.

For the three months ended March 31, 2023 and 2022, the Company incurred expenses

related to these studies of $ 0.4 million.

The Company currently expects to incur expenses of approximately $ 1.5 million to $ 2.0 million to

complete the safety study, which is required 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.

For the three months ended March 31, 2023 and 2022, the Company

incurred expenses related to these studies in the amount of $ 0.2 million and $ 0.1 million, respectively.

The Company expects to incur expenses of approximately $ 1.5 million to complete this study, which is currently required to be completed by June of 2023.

The Company has submitted an extension request to the FDA.

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 were required to be completed by June of 2023 and both studies have been completed and the study reports have been submitted to the FDA.

assumed the remaining obligations, and the costs of the studies have been expensed as incurred as research and development expenses.

For the six months ended June 30, 2023 and 2022, the Company incurred expenses related to these studies of $ 1.4 million and $ 0.9 million,

respectively.

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.

For the six months ended June 30, 2023 and 2022, the Company incurred expenses related to this study in the amount of $ 0.4 million and $ 0.2 million,

respectively.

The Company expects to incur expenses of approximately $ 1.5 million to complete this study, which is required to be

completed by June of 2026.

Employment Contracts

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Chief Financial Officer and General Manager, ADMA BioCenters.

ADMA BIOLOGICS, INC.

AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other Commitments

3 unchanged sentences

The Company’s maximum exposure under these arrangements is

unknown as of March 31, 2023.

unknown as of June 30, 2023.

The Company does not anticipate recognizing any significant losses relating to these arrangements.

The Company is engaged in the manufacture, marketing and development of specialty plasma-derived biologics.

Company’s ADMA BioManufacturing segment reflects the Company’s immunoglobulin manufacturing, commercial and development operations in Boca Raton, FL.

The Plasma Collection Centers segment consists of ten operational plasma collection facilities located throughout the U.S., eight of which currently hold FDA licenses .

ADMA BIOLOGICS, INC.

AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company is engaged in the manufacture, marketing and development of specialty plasma-derived

The Company’s ADMA BioManufacturing segment reflects the Company’s immunoglobulin manufacturing, commercial and development operations in Boca Raton, FL.

The Plasma Collection Centers segment consists of ten operational plasma collection facilities located throughout the U.S., nine of which currently hold FDA licenses .

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 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:

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

BioManufacturing

Plasma Collection

Cost of product revenue

Income (loss) from operations

Interest and other (expense) income, net

Net income (loss)

Depreciation and amortization expense

Three Months Ended June 30, 2022

Plasma Collection

BioManufacturing

Cost of product revenue

Loss from operations

Interest and other expense, net

Depreciation and amortization expense

ADMA BIOLOGICS, INC.

AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30, 2023

Plasma Collection

BioManufacturing

Cost of product revenue

Income (loss) from operations

3 unchanged sentences

Depreciation and amortization expense

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Plasma Collection

6 unchanged sentences

Depreciation and amortization expense

ADMA BIOLOGICS, INC.

AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Net revenues according to geographic area, based on the location of where the product is shipped, is as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

United States

6 unchanged sentences

or material restrictive covenants.

ADMA BIOLOGICS, INC.

AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company determines if an arrangement is an operating lease at inception.

10 unchanged sentences

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 leases for the three months ended March 31, 2023 and 2022

was approximately $ 0.6 million and $ 0.4

million, respectively.

Cash paid for the Company’s leases for the three months ended March 31, 2023 and 2022 was approximately $ 0.6

million and $ 0.4 million, respectively.

Including a finance lease the Company entered into in June 2018, the Company has aggregate lease

liabilities of $ 11.4 million and $ 11.6

million as of March 31, 2023 and December 31, 2022, respectively, which are comprised primarily of the leases for the Company’s plasma collection centers and a warehouse lease for raw material storage related to the Company’s immunoglobulin

manufacturing operations.

The Company’s operating leases have a weighted average remaining term of 8.3 years.

Scheduled payments under the

Company’s lease obligations are as follows:

Aggregate lease expense for the Company’s leases for the three months ended June 30, 2023 and 2022 was approximately $ 0.6 million and $ 0.5 million, respectively, and aggregate

lease expense for the six months ended June 30, 2023 and 2022 was $ 1.2 million and $ 0.9 million, respectively.

Cash paid for the Company’s leases for the three months ended June 30, 2023 and 2022 was approximately $ 0.6 million and $ 0.4 million,

respectively, and cash paid for the six months ended June 30, 2023 and 2022 was approximately $ 1.1 million and $ 0.8 million, respectively.

The Company has aggregate lease liabilities of $ 11.2 million and $ 11.6 million as of June 30, 2023 and December 31, 2022,

respectively, which are comprised primarily of the leases for the Company’s plasma collection centers and a warehouse lease for raw material storage related to the Company’s immunoglobulin manufacturing operations.

The Company’s operating

leases have a weighted average remaining term of 8.1 years.

Scheduled payments under the Company’s lease obligations are as follows:

Remainder of 2023

3 unchanged sentences

Current portion

Balance at March 31, 2023

Balance at June 30, 2023

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Supplemental cash flow information for the three months ended March 31, 2023 and 2022 is as follows:

ADMA BIOLOGICS, INC.

AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental cash flow information for the six months ended June 30, 2023 and 2022 is as follows:

SUPPLEMENTAL CASH FLOW INFORMATION:

2 unchanged sentences

Equipment acquired reflected in accounts payable and accrued liabilities

Right-to-use assets in exchange for lease obligations

Warrants issued in connection with notes payable

SUBSEQUENT EVENT

On May 1, 2023, the Company entered into a second amendment (the “Hayfin Second Amendment”) to the

Hayfin Credit Agreement (see Note 7) whereby the Applicable Margin for adjusted Term SOFR Loans was reduced from 9.5 % to 8.5 %.

The Hayfin Second Amendment also extended the obligation of the lenders to make the Hayfin Delayed Draw Loan from June 30, 2023 to December 31,

Under the terms of the Hayfin Second Amendment, in the event the Company elects to prepay all or any

portion of the outstanding principal on the Hayfin Loans, the Company will be subject to 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 Second Amendment, (ii) 3.0 % of the prepaid

principal amount, if prepaid after the first anniversary of the Hayfin Second Amendment and on or prior to the second anniversary of the Hayfin Second Amendment, or (iii) 1.0 % of the prepaid principal amount, if prepaid after the second anniversary of the Hayfin Second Amendment and on or prior to the third anniversary of the Hayfin Second Amendment.

addition, the Hayfin Second Amendment provides for a 50 % reduction to the foregoing early prepayment fees if the Hayfin Loans are prepaid

in connection with a change in control of the Company or other strategic transactions as further described in the Hayfin Second Amendment.

In connection with the Hayfin Second Amendment, the Company issued additional warrants to the lenders

to purchase 2,391,244 shares of the Company’s common stock at an exercise price of $ 3.2619 per share (“the Hayfin Second Amendment Warrants”).

The Hayfin Second Amendment Warrants were valued at approximately $ 5.6 million and have an expiration date of May 1, 2030.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements