What changed in this filing

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Item 9A. Controls and Procedures

2022-06-28 compared with 2021-06-24 · 559 added, 745 removed, 820 unchanged (61% of the section changed)

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Disclosure Controls and Procedures

We maintain “disclosure

controls and procedures,”

(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or

the Exchange Act) that are designed to ensure that information required to be disclosed, in our Exchange Act reports is recorded, processed,

summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated

and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to

allow timely decisions regarding required disclosures.

We maintain “disclosure

controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information

required to be disclosed, in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified

in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal

executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

In designing and evaluating

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We have carried out an evaluation as of the end of the period covered

by this report under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial

Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

by this Annual Report under the supervision and with the participation of our management, including our Chief Executive Officer and Chief

Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

Based on such evaluation,

our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure

controls and procedures were effective.

our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Annual Report,

our disclosure controls and procedures were effective.

Internal Control over Financial Reporting

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible

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According to the guidelines established by

Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, one or more

material weaknesses renders a company’s internal control over financial reporting ineffective.

Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, one or more

material weaknesses renders a company’s internal control over financial reporting ineffective.

Based on this evaluation, we have

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We have no disclosure applicable to this item.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT

We have no disclosure applicable to this item.

Certain information required by Part III is omitted

from this Annual Report and incorporated by reference to our definitive proxy statement for our 2022 Annual Meeting of Stockholders, or

the Proxy Statement, to be filed pursuant to Regulation 14A of the Exchange Act.

If our Proxy Statement is not filed within 120 days after

the end of the fiscal year covered by this Annual Report, the omitted information will be included in an amendment to this Annual Report

filed not later than the end of such 120-day period.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Except as set forth below,

the information required by this item will be contained in our Definitive Proxy Statement to be filed with the SEC in connection with

our 2021 Annual Meeting of Stockholders, the Proxy Statement, within 120 days after the end of the fiscal year ended March 31, 2021, and

is incorporated herein by reference.

On February 23, 2005, the

Board of Directors approved a “Code of Business Conduct and Ethics,”

or the Code, which applies to our principal executive

officer, our principal financial officer, our principal accounting officer and persons performing similar tasks.

On February 6, 2020,

the Board of Directors adopted an amended Code, which supersedes the Company’s existing Code previously adopted by the Board of

Our Code is available on our company website at www.aethlonmedical.com.

If we make any substantive amendments to, or grant

any waivers from, the Code of Business Conduct and Ethics for any officer or director, we will disclose the nature of such amendment or

waiver on our website or in a Current Report on Form 8-K.

Except as set forth below, the information required

by this item will be contained in the sections titled “Information About our Board of Directors and Executive Officers,” “Information

About our Board of Directors and Executive Officers – Code of Ethics,” “Delinquent Section 16(a) Reports,” “Information

About our Board of Directors and Executive Officers – Information Regarding Committees of the Board of Directors – Nominating

and Corporate Governance Committee,” “Information About our Board of Directors and Executive Officers – Information

Regarding Committees of the Board of Directors – Audit Committee and Audit Committee Financial Expert,” “Information

About our Board of Directors and Executive Officers – Information Regarding Committees of the Board of Directors – Compensation

Committee” and “Executive Compensation and Director Compensation” in our Proxy Statement and is incorporated herein

by reference.

EXECUTIVE COMPENSATION

The information required by this item will be contained

in our Proxy Statement and is incorporated herein by reference.

in the sections titled “Executive and Director Compensation” and “Information About our Board of Directors and Executive

Officers – Information Regarding Committees of the Board of Directors – Compensation Committee” in our Proxy Statement

and is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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The information required by this item will be contained

in our Proxy Statement and is incorporated herein by reference.

in the sections titled “Security Ownership of Certain Beneficial Owners and Management” and “Executive and Director

Compensation – Narrative Disclosure to Executive Summary – Equity-Based Incentive Awards” in our Proxy Statement and

is incorporated herein by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR

The information required by this item will be contained

in our Proxy Statement and is incorporated herein by reference.

PRINCIPAL ACCOUNTING FEES AND SERVICES

in the sections titled “Information About our Board of Directors and Executive Officers – Board of Directors” and “Certain

Relationships and Related Transactions” in our Proxy Statement and is incorporated herein by reference.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item will be contained

in our Proxy Statement and is incorporated herein by reference.

EXHIBITS ANDFINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this report on Form 10-K:

in the section titled “Ratification of Appointment of Independent Registered Public Accounting Firm” in our Proxy Statement

and is incorporated herein by reference.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this Annual Report:

Consolidated Financial Statements for the years ended March 31,

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Notes to Consolidated Financial Statements

Incorporated by Reference

Exhibit Description

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September 18, 2017

Form of Placement Agent Warrant dated _______, 2017.

September 22, 2017

Form of Warrant to Purchase Common Stock.

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January 17, 2020

Description of Aethlon Medical, Inc.’s Securities.

June 25, 2020

Amended 2010 Stock Incentive Plan.

March 30, 2016

Standard Industrial Net Lease, by and between Glenborough Aventine, LLC and Aethlon Medical, Inc., dated September 28, 2009.

November 16, 2009

Second Amendment to Standard Industrial Net Lease, by and between AGP Sorrento Business Complex and Aethlon Medical, Inc., dated October 10, 2014.

December 31, 2014

Office Lease, by and between T-C Stonecrest LLC and Aethlon Medical, Inc., dated November 13, 2014.

November 19, 2014

UCI Clinical Trial Agreement, by and between The Regents of the University of California, on behalf of its Irvine campus and Aethlon Medical, Inc., dated March 24, 2015.

April 15, 2015

Third Amendment to Standard Industrial Net Lease, by and between AGP Sorrento Business Complex, L.P.

and Aethlon Medical, Inc., dated October 21, 2015.

November 16, 2015

Common Stock Sales Agreement, by and between H.C.

Wainwright & Co., LLC and Aethlon Medical, Inc., dated June 28, 2016.

Description of Aethlon Medical, Inc.’s Securities.

June 25, 2020

Amendment No.

1 to Common Stock Sales Agreement, by and between H.C.

Wainwright & Co., LLC and Aethlon Medical, Inc., dated June 28, 2016.

August 12, 2019

Amendment No.

2 to Common Stock Sales Agreement, by and between H.C.

Wainwright & Co., LLC and Aethlon Medical, Inc., dated March 30, 2020.

August 11, 2020

Aethlon Medical, Inc.

Amended and Restated Non-Employee Directors Compensation Policy, as Modified on October 30, 2020.

Fourth Amendment to Standard Industrial Net Lease, by and between AGP Sorrento Business Complex, L.P.

and Aethlon Medical, Inc., dated October 5, 2016.

June 28, 2017

Form of Securities Purchase Agreement, by and among each purchaser identified on the signature pages therein and Aethlon Medical, Inc., dated March 22, 2017.

March 22, 2017

Form of Securities Purchase Agreement, by and among each purchaser identified on the signature pages therein and Aethlon Medical, Inc., dated September ______, 2017.

September 15, 2017

Fifth Amendment to Standard Industrial Net Lease, by and between AGP Sorrento Business Complex, L.P.

and Aethlon Medical, Inc., dated October 16, 2017.

November 2, 2017

Sixth Amendment to Standard Industrial Net Lease, by and between AGP Sorrento Business Complex, L.P.

and Aethlon Medical, Inc., dated September 18, 2018.

November 6, 2018

Amended and Restated Non-Employee Directors Compensation Policy, as Modified on February 10, 2022.++

February 14, 2022

Employment Agreement, by and between Aethlon Medical, Inc.

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February 11, 2019

Seventh Amendment to Standard Industrial Net Lease, by and between Aethlon Medical, Inc.

and San Diego Inspire 1, LLC., dated September 9, 2019.

November 1, 2019

SBIR Phase II Award Contract, by and among Aethlon Medical, Inc., the National Institutes of Health and the National Cancer Institute, dated September 12, 2019.

November 1, 2019

Amendment to SBIR Phase II Award Contract, by and among Aethlon Medical, Inc., the National Institutes of Health and the National Cancer Institute, dated October 28, 2020.

Assignment Agreement, by and between Aethlon Medical, Inc.

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November 15, 2019

Form of Securities Purchase Agreement, by and

between Aethlon Medical, Inc.

and the Purchasers thereto, dated January 17, 2020.

January 17, 2020

Aethlon Medical, Inc.

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September 15, 2020

Separation Agreement between the Company and Dr.

Rodell, dated October 30, 2020.

November 3, 2020

Employment Agreement between the Company and Dr.

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February 10, 2021

Eighth Amendment to Standard Industrial Net Lease, by and between the Company and San Diego Inspire 1, LLC., effective December 7, 2020.

February 10, 2021

Executive Employment Agreement between the Company and Guy Cipriani, dated January 1, 2021.

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February 10, 2021

At the Market Offering Agreement, March 22, 2021, by and between Aethlon Medical, Inc.

Lease between Aethlon Medical, Inc.

and San Diego Inspire 5, LLC, effective October 27, 2021.

November 9, 2021

At the Market Offering Agreement, dated March 24, 2022, by and between Aethlon Medical, Inc.

Wainwright & Co., LLC.

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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, on the 24th day of June, 2021.

of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on

its behalf by the undersigned, thereunto duly authorized, o n the 28 th d ay of

/s/ CHARLES J.

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person whose signature appears below constitutes and appoints James B.

Frakes and Timothy C.

Rodell, his or her true and lawful attorney-in-fact

and agent, with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign

any and all amendments to this Annual Report on form 10-K, and to file the same, with all exhibits thereto, and other documents in connection

therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power

and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all

intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents,

or any of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

Frakes and Charles J.

Fisher, Jr., M.D., his or her true and lawful

attorney-in-fact and agent, with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities,

to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents

in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them,

full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as

fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact

and agents, or any of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements

of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in

the capacities and on the dates indicated.

of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant

and in the capacities and on the dates indicated.

/s/ CHARLES J.

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June 28, 2022

/s/ SABRINA MARTUCCI JOHNSON

/s/ ANGELA ROSSETTI

June 28, 2022

Sabrina Martucci Johnson

Angela Rossetti

/s/ GUY CIPRIANI

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Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 23 )

Consolidated Balance Sheets as of March 31, 2022 and 2021

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These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are

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Restricted cash

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

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COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS’

STOCKHOLDERS’ EQUITY

Common stock, $ 0.001 par value, 30,000,000 shares authorized at March 31, 2022 and 2021;

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TOTAL AETHLON MEDICAL, INC.

STOCKHOLDERS’

EQUITY BEFORE NONCONTROLLING INTERESTS

STOCKHOLDERS’ EQUITY BEFORE NONCONTROLLING INTERESTS

NONCONTROLLING INTERESTS

TOTAL STOCKHOLDERS’

TOTAL LIABILITIES AND STOCKHOLDERS’

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

See accompanying notes to the consolidated financial

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OPERATING LOSS

OTHER EXPENSE

Loss on debt extinguishment

(Gain) on share for warrant exchanges

Interest and other expenses

Total other expense

( 10,420,885 )

( 7,891,499 )

NET LOSS BEFORE NONCONTROLLING INTERESTS

( 10,420,885 )

( 7,891,499 )

LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

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$ ( 112,026,381 )

Issuances of common stock for cash

under at the market program

Loss on debt extinguishment

Issuances of common stock for cash

under warrant exercises

Issuance of common shares upon

vesting of restricted stock units.

Proceeds from the issuance of common

stock in public offerings, net

Issuances of common stock upon

warrant exchanges

Par value of DTC roundup of shares

following reverse split

$ ( 132,124 )

Issuances of common stock for cash under at the market program

Issuance of common shares upon vesting of restricted stock units and net

stock option exercise

Stock-based compensation expense

BALANCE - MARCH 31, 2020

( 7,886,709 )

( 7,891,499 )

Issuances of common stock for cash

under at the market program

Issuance of common shares upon

vesting of restricted stock units and net stock option exercise

BALANCE - MARCH 31, 2021

( 119,913,090 )

Issuances of common stock for cash under at the market program

Issuances of common stock for cash in registered direct financing

Issuances of common stock for cash under warrant exercises

Issuances of common stock for cash under stock option exercises

Issuances of common stock under cashless warrant exercises

Issuance of common shares upon vesting of restricted stock units and net

stock option exercise

Stock-based compensation expense

( 10,416,091 )

( 10,420,885 )

BALANCE - MARCH 31, 2022

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$ ( 130,329,181 )

$ ( 141,708 )

See accompanying notes to the consolidated financial

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Depreciation and amortization

Gain on share for warrant exchanges

Loss on debt extinguishment

Stock based compensation

Amortization of debt discount and deferred financing costs

Non-cash rent expense

Accretion of right-of-use lease asset

Changes in operating assets and liabilities:

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Net cash used in operating activities

( 9,767,157 )

( 6,764,940 )

Cash flows from investing activities:

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Tax withholding payments or tax equivalent payments for net share settlement of restricted stock units

Principal repayments of notes payable

Net proceeds from the issuance of common stock and exercise of warrants

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Cash and restricted cash at end of year

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Supplemental information of non-cash investing and financing activities:

Issuance of shares under vested restricted stock units, net stock option exercises and unvested share issuance for services

Issuance of common stock upon warrant exchanges

Issuances of common stock under cashless warrant exercises

Initial recognition of right-of-use lease asset and lease liability

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:

Issuance of shares under vested restricted stock units, net stock option exercises and unvested share issuance for services

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets:

Cash and cash equivalents

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Cash and restricted cash

See accompanying notes to the consolidated financial

See accompanying notes to the

consolidated financial statements.

Aethlon Medical, Inc.

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Aethlon Medical, Inc.

and its subsidiary (collectively,

“Aethlon”, the “Company”, “we”

or “us”), is a medical technology company focused on developing

products to diagnose and treat life and organ threatening diseases.

The Aethlon Hemopurifier is a clinical-stage immunotherapeutic device

designed to combat cancer and life-threatening viral infections.

In cancer, the Hemopurifier is designed to deplete the presence of circulating

tumor-derived exosomes that promote immune suppression, seed the spread of metastasis and inhibit the benefit of leading cancer therapies.

Food and Drug Administration, or FDA, has designated the Hemopurifier as a “Breakthrough Device”

for two independent

the treatment of individuals with advanced or metastatic cancer who are either unresponsive to or intolerant of standard of care therapy, and with cancer types in which exosomes have been shown to participate in the development or severity of the disease;

the treatment of life-threatening viruses that are not addressed with approved therapies.

(collectively, “Aethlon”,

the “Company”, “we” or “us”) is a medical technology company focused on developing products to diagnose

and treat life and organ threatening diseases.

The Aethlon Hemopurifier is a clinical-stage immunotherapeutic device designed to combat

cancer and life-threatening viral infections.

In cancer, the Hemopurifier is designed to deplete the presence of circulating tumor-derived

exosomes that promote immune suppression, seed the spread of metastasis and inhibit the benefit of leading cancer therapies.

Food and Drug Administration, or FDA, has designated the Hemopurifier as a “Breakthrough Device” for two independent indications:

treatment of individuals with advanced or metastatic cancer who are either unresponsive to or intolerant of standard of care therapy,

and with cancer types in which exosomes have been shown to participate in the development or severity of the disease;

treatment of life-threatening viruses that are not addressed with approved therapies.

We believe the Hemopurifier can be a substantial

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spread of tumors through multiple mechanisms.

We are currently preparing for the initiation of clinical trials in patients with advanced

and metastatic cancers.

We are initially focused on the treatment of solid tumors, including head and neck cancer, gastrointestinal cancers

and other cancers.

As we advance our clinical trials, we are in close contact with our clinical sites to navigate and assess the impact

of the COVID-19 global pandemic on our clinical trials and current timelines.

We are currently conducting a clinical trial in patients with advanced and metastatic head

and neck cancer.

We are initially focused on the treatment of solid tumors, including head and neck cancer, gastrointestinal cancers and

other cancers.

As we advance our clinical trials, we are in close contact with our clinical sites to navigate and assess the impact of

the COVID-19 global pandemic on our clinical trials and current timelines.

On October 4, 2019, the FDA approved our Investigational

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cancer in combination with standard of care pembrolizumab (Keytruda).

The primary endpoint for the EFS, which will enroll 10 to12

subjects at a single center, will be safety, with secondary endpoints including measures of exosome clearance and characterization, as

The primary endpoint for the EFS, which is designed to enroll 10

to 12 subjects at a single center, is safety, with secondary endpoints including measures of exosome clearance and characterization, as

well as response and survival rates.

This study, which is being conducted at the UPMC Hillman Cancer Center in Pittsburgh, PA, is in the

process of recruiting and treating patients.

We also believe the Hemopurifier can be a part

of the broad-spectrum treatment of life-threatening highly glycosylated, or carbohydrate coated, viruses that are not addressed with an

already approved treatment.

In small-scale or early feasibility human studies, the Hemopurifier has been used to treat individuals infected

with human immunodeficiency virus, or HIV, hepatitis-C, and Ebola.

This study, which is being conducted at the UPMC Hillman Cancer Center in Pittsburgh, Pennsylvania,

has treated two patients and is in the process of recruiting additional patients.

We are considering adding one or more additional sites

to this trial to accelerate patient recruitment and we are also considering starting additional trials in other forms of cancer.

We also believe the Hemopurifier can be part of

the broad-spectrum treatment of life-threatening highly glycosylated, or carbohydrate coated, viruses that are not addressed with an already

approved treatment.

In small-scale or early feasibility human studies, the Hemopurifier has been used in the past to treat individuals

infected with human immunodeficiency virus, or HIV, hepatitis C, and Ebola.

Additionally, in vitro , the Hemopurifier

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in a New Feasibility Study.

That study’s plan is to enroll up to 40 subjects at up to 20 centers

Subjects will have established laboratory diagnosis of COVID-19, be admitted to an intensive care unit, or ICU, and will have

acute lung injury and/or severe or life threatening disease, among other criteria.

Endpoints for this study, in addition to safety, will

include reduction in circulating virus as well as clinical outcomes (NCT # 04595903).

The initial sites for this trial, Hoag Memorial

Hospital Presbyterian in Newport Beach, CA and Hoag Hospital –

Irvine in Irvine, CA and Loma Linda Hospital in Loma Linda, CA, have

completed clinical trial agreements, and have received IRB approval in the case of the Hoag hospitals, and are preparing to open for patient

Under Single Patient Emergency Use regulations, the Company has also treated two patients with COVID-19 with the Hemopurifier.

That study is designed to enroll up to 40 subjects at up to 20 centers in the U.S.

Subjects will have established

laboratory diagnosis of COVID-19, be admitted to an intensive care unit, or ICU, and will have acute lung injury and/or severe or life-threatening

disease, among other criteria.

Endpoints for this study, in addition to safety, include reduction in circulating virus as well as clinical

outcomes (NCT # 04595903).

Under Single Patient Emergency Use regulations, the Company has also treated two patients with COVID-19 with

the Hemopurifier.

In September 2021, we entered into an agreement

with PPD, Inc., or PPD, a leading global contract research organization, or CRO, to oversee our U.S.

clinical studies investigating the

Hemopurifier for critically ill COVID-19 patients.

We now have nine hospitals activated for patient enrollment and they are actively screening

patients for the trial.

These sites include LSU Shreveport, Valley Baptist Medical Center in Texas, Loma Linda Medical Center, Hoag Irvine

and Newport Beach, University of California Davis, University of Miami Medical Center, Cooper Medical and Thomas Jefferson Medical Center.

We are in the site activation process with three additional U.S.

medical centers.

We also obtained ethics review board approval

and entered into a clinical trial agreement with Medanta Medicity Hospital, a multi-specialty hospital in Delhi NCR, India, for a COVID-19

clinical trial at that location.

We have completed all site initiation activities at Medanta Medicity Hospital and this site is now open

for enrollment and is actively screening patients.

One patient recently has completed treatment protocol in this trial.

We are also the majority owner of Exosome Sciences,

Inc., or ESI, a company focused on the discovery of exosomal biomarkers to diagnose and monitor life-threatening diseases.

Included among

ESI’s activities is the advancement of a TauSome™

biomarker candidate to diagnose chronic traumatic encephalopathy, or CTE,

in the living.

ESI previously documented TauSome levels in former NFL players to be nine times higher than same age-group control subjects.

Through ESI, we are also developing exosome based biomarkers in patients with, or at risk for, a number of cancers.

We consolidate ESI’s

activities in our consolidated financial statements.

Inc., or ESI, a company formed to focus on the discovery of exosomal biomarkers to diagnose and monitor life-threatening diseases.

consolidate ESI’s activities in our consolidated financial statements.

Successful outcomes of human trials will also

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COVID-19 and their effectiveness, as well as the economic impact on national and international markets.

Our executive offices are located at 9635 Granite

Ridge Drive, Suite 100, San Diego, California 92123.

Our executive offices are located at 11555 Sorrento

Valley Road, Suite 203, San Diego, California 92121.

Our telephone number is (619) 941-0360.

Our website address is www.aethlonmedical.com.

Our common stock is listed on the Nasdaq Capital Market under the symbol

“AEMD.”

REVERSE STOCK SPLIT

Effective October 14, 2019, the Company completed

a 1-for-15 reverse stock split.

Accordingly, 15 shares of outstanding common stock then held by stockholders were combined into one share

of common stock.

Any fractional shares resulting from the reverse split were rounded up to the next whole share.

Authorized common stock

remained at 30,000,000 shares.

The accompanying consolidated financial statements and accompanying notes have been retroactively revised

to reflect such reverse stock split as if it had occurred on April 1, 2018.

All shares and per share amounts have been revised accordingly.

Our common stock is listed on the Nasdaq Capital

Market under the symbol “AEMD.”

LIQUIDITY AND GOING CONCERN

Management expects existing cash as of March 31,

2021 and additional cash raised in June 2021 to be sufficient to fund the Company’s operations for at least twelve months from the

issuance date of these consolidated financial statements.

2022 to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of these consolidated financial

PRINCIPLES OF CONSOLIDATION

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CASH AND CASH EQUIVALENTS

Accounting standards define “cash and cash

equivalents”

as any short-term, highly liquid investment that is both readily convertible to known amounts of cash and so near their

Accounting standards define “cash and cash

equivalents” as any short-term, highly liquid investment that is both readily convertible to known amounts of cash and so near their

maturity that they present insignificant risk of changes in value because of changes in interest rates.

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that the Company is exposed to any significant risk with respect to its cash.

All of our accounts receivable at March 31, 2021 and all of our revenue

in the fiscal years ended March 31, 2021 and 2020 related to our government contracts.

Restricted Cash

To comply with the terms of our new laboratory and office lease, we

caused our bank to issue a standby letter of credit, or the L/C, in the amount of $46,726 in favor of the landlord.

The L/C is in lieu

of a security deposit.

In order to support the L/C, we agreed to have our bank withdraw $46,726 from our operating accounts and to place

that amount in a restricted certificate of deposit.

We have classified that amount as restricted cash, a long-term asset, on our balance

All of our accounts receivable at March 31, 2022

and all of our revenue in the fiscal years ended March 31, 2022 and 2021 related to our government contracts.

To comply with the terms of our new laboratory,

office, and manufacturing space leases, we caused our bank to issue two standby letters of credit, or the L/C’s, in the amount of

$ 87,506 in favor of the landlord.

The L/C’s are in lieu of a security deposit.

In order to support the L/C’s, we agreed to

have our bank withdraw $87,506 from our operating accounts and to place that amount in restricted certificates of deposit.

We have classified

that amount as restricted cash, a long-term asset, on our balance sheet.

PROPERTY AND EQUIPMENT

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As of March 31, 2022 and 2021, a total of 2,243,838

and 2,072,492 potential common shares, consisting of shares underlying outstanding stock options, restricted stock units, warrants and

convertible notes payable were excluded as their inclusion would be antidilutive.

Historically, we operated in one segment that

was based on our development of therapeutic devices.

However, in the December 2013 quarter, we initiated the operations of ESI to develop

diagnostic tests.

As a result, we now operate in two segments, Aethlon for therapeutic applications and ESI for diagnostic applications

(See Note 9).

We record discrete financial information for ESI

and our chief operating decision maker reviews ESI’s operating results in order to make decisions about resources to be allocated

to the ESI segment and to assess its performance.

and 2,836,062 potential common shares, consisting of shares underlying outstanding stock options, restricted stock units, or RSUs, and

warrants were excluded as their inclusion would be antidilutive.

We operate our businesses principally through

two reportable segments:

Aethlon, which represents our therapeutic business activities, and ESI, which represents our diagnostic business.

Our reportable segments have been determined based on the nature of the potential products being developed.

We record discrete financial

information for ESI, consisting of patent maintenance costs.

Aethlon’s revenue is generated primarily

from government contracts to date and ESI does not have any revenues or activities other than patent maintenance.

We have not included

any allocation of corporate overhead to the ESI segment.

DEFERRED FINANCING COSTS

Costs related to the issuance of debt are capitalized

as a deduction to our convertible notes based on the new accounting standard on imputation of interest, and amortized to interest expense

as a deduction to our convertible notes based on the accounting standard on imputation of interest, and amortized to interest expense

over the life of the related debt using the effective interest method.

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scope of ASC Topic, 606, Revenue from Contracts with Customers, or Topic 606, as the NIH grants and contracts do not meet the definition

of a “customer”

as defined by Topic 606.

of a “customer” as defined by Topic 606.

Prior to the effective date of ASC Topic 606, which for the Company was April 1,

2018, we accounted for our grant/contract revenues under the Milestone Method as prescribed by the legacy guidance of ASC 605-28, Revenue

Recognition –

Milestone Method, or Milestone Method.

Recognition – Milestone Method, or Milestone Method.

In the absence of other applicable guidance under US GAAP, effective April

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the arrangement is entered into that the event will be achieved.

A vendor’s assessment that it expects to achieve a milestone does

not necessarily mean that there is not substantive uncertainty associated with achieving the milestone.

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or in part on either:

(a) the vendor’s performance;

or (b) a specific outcome resulting from the vendor’s performance.

(a) the vendor’s performance;

or (b) a specific outcome resulting from the vendor’s performance.

(3) If achieved, the event would result in additional

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(a) contingent solely upon the passage of time;

or (b) the result of a counterparty’s performance.

The policy for recognizing deliverable consideration

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(1) The consideration is commensurate with either:

(a) the vendor’s performance to achieve the milestone;

or (b) the enhancement of the value of the delivered item or items as a result

of a specific outcome resulting from the vendor’s performance to achieve the milestone;

(2) The consideration relates solely to past performance;

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or NCI, part of the National Institutes of Health, or NIH, awarded to us an SBIR Phase II Award Contract, for NIH/NCI Topic 359, entitled

“A Device Prototype for Isolation of Melanoma Exosomes for Diagnostics and Treatment Monitoring”, or the Award Contract.

Award Contract amount is $1,860,561 and runs for the period from September 16, 2019 through September 15, 2021.

The work to be performed pursuant to this Award

Contract focuses on melanoma exosomes.

This work follows from our completion of a Phase I contract for the Topic 359 solicitation that

ran from September 2017 through June 2018.

Following on the Phase I work, the deliverables in the Phase II program involve the design

and testing of a pre-commercial prototype of a more advanced version of the exosome isolation platform.

“A Device Prototype for Isolation of Melanoma Exosomes for Diagnostics and Treatment Monitoring”, or the Award Contract.

Award Contract amount is $ 1,860,561 and, as amended, runs for the period from September 16, 2019 through September 15, 2022.

The work performed pursuant to this Award Contract

focused on melanoma exosomes.

This work follows from our completion of a Phase I contract for the Topic 359 solicitation that ran from

September 2017 through June 2018.

Following on the Phase I work, the deliverables in the Phase II program involve the design and testing

of a pre-commercial prototype of a more advanced version of the exosome isolation platform.

During the fiscal year ended March 31, 2022, we

completed the milestones relevant to the first nine months of the fiscal year.

As a result, we recorded $436,427 of government contract

revenue on the Phase 2 Melanoma Cancer Contract in the fiscal year ended March 31, 2021.

Of the total revenue recognized during

the current period relating to this grant, a total of $117,849 was invoiced to the NCI during the three months ended December 31, 2020

and we recorded $318,578 which had previously been recognized as deferred revenue.

During the three month period ended March 31,

2021, we did not complete all of the milestones relevant to that time period, as a result, we recorded $114,849 as deferred revenue related

to the Phase 2 Melanoma Cancer Contract.

recorded $ 229,698 of government contract revenue on the Phase 2 Melanoma Cancer Contract.

That revenue related to work performed in the

three months ended March 31, 2021 and June 30, 2021 that had previously been recorded as deferred revenue as a result of falling short

on certain milestones.

We then achieved those March period milestones in the June quarter and the June period milestones in the September

quarter and therefore recorded the previously deferred revenue as government contract revenue in the quarter ended September 30, 2021.

We recorded the invoices related to the September 30, 2021, December 31, 2021 and March 31, 2022 periods as deferred revenue, since we

fell short of certain milestones related to those periods.

During the fiscal year ended March 31, 2021, we

completed the milestones relevant to the first nine months of the fiscal year and, as a result, we recorded $ 436,427 of government contract

revenue on the Phase 2 Melanoma Cancer Contract in that fiscal year.

Breast Cancer Grant

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The title of this Small Business Innovation Research,

or SBIR, Phase I grant is “The Hemopurifier Device for Targeted Removal of Breast Cancer Exosomes from the Blood Circulation,”

or the Breast Cancer Grant.

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In 2020, we entered into a cost reimbursable subaward

arrangement with the University of Pittsburgh in connection with an NIH contract entitled “Depleting Exosomes to Improve Responses

to Immune Therapy in HNNCC.”

Our share of the award is $256,750.

We recorded $34,233 of revenue related to this subaward in the

fiscal year ended March 31, 2021.

arrangement with the University of Pittsburgh in connection with an NIH contract entitled “Depleting Exosomes to Improve Responses

to Immune Therapy in HNNCC.” Our share of the award is $ 256,750 .

We recorded $ 64,467 and $ 34,233 of revenue related to this subaward

in the fiscal years ended March 31, 2022 and March 31.

2021, respectively.

STOCK-BASED COMPENSATION

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The exercise price of

options is generally equal to the market price of the Company’s common stock (defined as the closing price as quoted on the Nasdaq

Capital Market or OTCBB on the date of grant).

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expenses relating to shares and options granted and the effect on loss per common share during the years ended March 31, 2022 and 2021:

Share-based compensation expenses

Fiscal Years Ended

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Total Stock-Based Compensation Expense

Weighted average number of common shares outstanding –

basic and diluted

Weighted average number of common shares outstanding – basic and diluted

Basic and diluted loss per common share

We record share-based compensation expenses for

awards of stock options and restricted stock units, or RSUs, under ASC 718, Share-based compensation, or ASC 718.

For awards to non-employees

for periods prior to the adoption of ASU 2018-07, Compensation-Stock Compensation:

Improvements to Non-employee Share-Based Payment Accounting,

on April 1, 2019, the Company had applied ASC 505-50, Equity –

Equity-based payments to non-employees, or ASC 505-50.

ASC 718 establishes

guidance for the recognition of expenses arising from the issuance of share-based compensation awards at their fair value at the grant

awards of stock options and RSUs under ASC 718, Share-based compensation, or ASC 718.

For awards to non-employees for periods prior to

the adoption of ASU 2018-07, Compensation-Stock Compensation:

Improvements to Non-employee Share-Based Payment Accounting, on April 1,

2019, the Company had applied ASC 505-50, Equity – Equity-based payments to non-employees, or ASC 505-50.

ASC 718 establishes guidance

for the recognition of expenses arising from the issuance of share-based compensation awards at their fair value at the grant date.

We recognize share-based compensation expense

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STOCK PURCHASE WARRANTS

We grant warrants in connection with the issuance

of common stock for cash.

Warrants issued in connection with common stock for cash, if classified as equity, are considered issued in

connection with equity transactions and the warrant fair value is recorded to additional paid-in-capital.

BENEFICIAL CONVERSION FEATURE OF CONVERTIBLE NOTES

The convertible feature of certain notes payable

provides for a rate of conversion that is below market value.

Such feature is normally characterized as a Beneficial Conversion Feature,

We measure the estimated fair value of the BCF in circumstances in which the conversion feature is not required to be separated

from the host instrument and accounted for separately, and record that value in the consolidated financial statements as a discount from

the face amount of the notes.

Such discounts are amortized to interest expense over the term of the notes.

As of March 31, 2021, we did

not have any unamortized debt discount relating to BCF.

In the past we issued warrants for the purchase

of shares of our common stock in connection with the issuance of common stock for cash.

Warrants issued in connection with common stock

for cash, if classified as equity, are considered issued in connection with equity transactions and the warrant fair value is recorded

to additional paid-in-capital.

RESEARCH AND DEVELOPMENT EXPENSES

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expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees.

2018-07 is effective for interim and annual reporting periods beginning after December 15, 2018 and early adoption is permitted.

must apply the guidance retrospectively with a cumulative effect adjustment to retained earnings as of the beginning of the period of

2018-07 is effective for interim and annual reporting periods beginning after December 15, 2018.

Entities must apply the guidance retrospectively

with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption.

The adoption of ASU No.

2018-07 on April 1, 2019 did not have a material impact on the Company's consolidated financial position,

results of operations and related disclosures.

on April 1, 2019 did not have a material impact on the Company's consolidated financial position, results of operations and related disclosures.

On April 1, 2019, the Company adopted ASC Topic

842, Leases,”

utilizing the alternative transition method allowed for under this guidance.

842, Leases,” utilizing the alternative transition method allowed for under this guidance.

As a result, the Company recorded lease

liabilities and right-of-use lease assets of $228,694 on its balance sheet as of April 1, 2019.

The lease liabilities represent the present

value of the remaining lease payments of the Company’s corporate headquarters lease (see Note 13), discounted using the Company’s

incremental borrowing rate as of April 1, 2019.

The corresponding right-of-use lease assets are recorded based on the lease liabilities

and the cumulative difference between rent expense and amounts paid under its corporate headquarters lease.

The Company also elected the

short-term lease recognition exemption for its laboratory lease.

For the laboratory lease that qualified as short-term, the Company did

not recognize ROU assets or lease liabilities at adoption.

liabilities and right-of-use lease assets on its balance sheet.

Topic 842 also allows lessees and lessors to elect

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The Company elected the following practical expedients:

Transitional practical expedients, which must be elected as a package and applied consistently to all of the Company’s leases:

The Company need not reassess whether any expired or existing contracts are or contain leases.

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Hindsight practical expedient.

The Company elected the hindsight practical expedient in determining the lease term (that is, when considering lessee options to extend or terminate the lease and to purchase the underlying asset) and in assessing impairment of the Company’s right-of-use assets.

PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consist of the following:

Schedule of property and equipment

March 31, 2022

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Furniture and office equipment, at cost

Leasehold improvements

Accumulated depreciation

Furniture and office equipment, net

Depreciation expense for the fiscal years ended March 31, 2022 and

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Patents, net consist of the following:

Schedule of patents

March 31, 2022

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patents for each of the fiscal years ended March 31, 2022 and 2021 was $ 54,754 and $ 550 , respectively.

As several patents expired during

the fiscal year ended March 31, 2020 and only one capitalized patent remains to be amortized, future amortization expense on patents is

estimated to be approximately $550 per year based on the estimated life of the patent.

The weighted average remaining life of our remaining

capitalized patent is approximately 5 years.

CONVERTIBLE NOTES PAYABLE

We paid off our convertible notes in full in July

We also paid $83,332 of accrued interest during the fiscal year ended March 31, 2020.

The following table shows the activity related

to our convertible notes during the fiscal year ended March 31, 2020:

Total Convertible Notes Payable at March 31, 2019

Less Principal Payments in Cash on Convertible Notes During the Fiscal Year Ended March 31, 2020

Total Convertible Notes Payable at March 31, 2020

During the fiscal year ended March 31, 2020, we

recorded interest expense of $23,759 related to the contractual interest rates of our convertible notes and interest expense of $30,287

related to the amortization of the note discount, for a total interest expense of $54,046 related to our convertible notes in the fiscal

year ended March 31, 2020.

As only one capitalized patent

remains to be amortized, future amortization expense on patents is estimated to be approximately $550 per year based on the estimated

life of the patent.

The weighted average remaining life of our remaining capitalized patent is approximately 4 years.

EQUITY TRANSACTIONS

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Equity Transactions in the Fiscal Year Ended March 31, 2022.

2021 At The Market Offering Agreement with H.C.

On March 22, 2021, we entered into an At the Market Offering Agreement,

or the 2021 ATM Agreement, with H.C.

Wainwright & Co., LLC, or Wainwright, as sales agent, pursuant to which we could offer and sell

shares of our common stock, from time to time as set forth in the 2021 ATM Agreement.

The offering was registered under the Securities Act of 1933, as amended,

or Securities Act, pursuant to our shelf registration statement on Form S-3 (Registration Statement No.

333-237269), as previously filed

with the Securities and Exchange Commission, or SEC, and declared effective on March 30, 2020.

We filed a prospectus supplement

with the SEC, dated March 22, 2021, in connection with the offer and sale of the shares of common stock, pursuant to which we could offer

and sell shares of common stock having an aggregate offering price of up to $5,080,000 from time to time.

Subject to the terms and conditions set forth in the 2021 ATM Agreement,

Wainwright agreed to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares

under the 2021 ATM Agreement from time to time, based upon our instructions.

We provided Wainwright with customary indemnification rights

under the 2021 ATM Agreement, and Wainwright was entitled to a commission at a fixed rate equal to up to three percent of the gross proceeds

per share sold.

In addition, we agreed to reimburse Wainwright for certain specified expenses in connection with entering into the 2021

ATM Agreement.

The 2021 ATM Agreement provided that it would terminate upon the written termination by either party as permitted thereunder.

Sales of the shares, under the 2021 ATM Agreement are made in transactions

that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act, including sales made by means

of ordinary brokers’ transactions, including on the Nasdaq Capital Market, at market prices or as otherwise agreed with Wainwright.

The 2021 ATM Agreement provided that we have no obligation under the 2021 ATM Agreement to sell any of the shares, and, at any time, we

could suspend offers under the 2021 ATM Agreement or terminate the agreement.

In the fiscal year ended March 31, 2022, we raised aggregate net proceeds

under the 2021 ATM Agreement described above of $ 4,947,785 , net of $ 126,922 in commissions to Wainwright and $ 2,154 in other offering

expense, through the sale of 626,000 shares of our common stock at an average price of $ 7.90 per share of net proceeds.

No further sales

can be made under the 2021 ATM Agreement.

Registered Direct Financing

In the fiscal year ended March 31, 2022, we sold an aggregate of 1,380,555

shares of our common stock at a purchase price per share of $ 9.00 , for aggregate net proceeds to us of $ 11,659,044 , after deducting fees

payable to Maxim Group LLC, the placement agent, and other offering expenses.

These shares were sold through a securities purchase agreement

with certain institutional investors.

The shares were issued pursuant to an effective shelf registration statement on Form S-3, which

was originally filed with the SEC on March 19, 2020, and was declared effective on March 30, 2020 (File No.

333-237269) and a prospectus

supplement thereunder.

Warrant Exercises

In the fiscal year ended March 31, 2022, pursuant to the exercise of

outstanding warrants to purchase 531,167 shares of our common stock, we received proceeds in the amount of $ 820,938 from institutional

Also in the fiscal year ended March 31, 2022, pursuant to the exercise

of 874,664 outstanding warrants on a cashless basis, we issued 675,554 shares of our common stock.

The difference of 199,110 shares of

common stock issuable pursuant to the warrants were cancelled.

Stock Option Exercises

In the fiscal year ended March 31, 2022, former employees paid us an

aggregate of $ 28,325 for the exercise of outstanding options to purchase 11,562 shares of our common stock.

2022 At The Market Offering Agreement with H.C.

On March 24, 2022, we entered into an At The Market

Offering Agreement, or the 2022 ATM Agreement, with Wainwright, which established an at-the-market equity program pursuant to which we

may offer and sell shares of our common stock from time to time as set forth in the 2022 ATM Agreement.

The 2022 ATM Agreement provides

for the sale of shares of our common stock having an aggregate offering price of up to $ 15,000,000 , or the 2022 ATM Shares.

The offering was registered under the Securities Act pursuant to our

shelf registration statement on S-3 (Registration Statement No.

333-259909), as previously filed with the SEC and declared effective on

October 21, 2021.

We filed a prospectus supplement, dated March 24, 2022, with the SEC in connection with the offer and sale of 2022 ATM

Under the 2022 ATM Agreement, Wainwright may sell the 2022 ATM Shares

by any method permitted by law and deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities

Act, including sales made directly on the Nasdaq Capital Market, or on any other existing trading market for the 2022 ATM Shares.

under the 2022 ATM Agreement, Wainwright may sell the 2022 ATM Shares in privately negotiated transactions with our consent and in block

transactions.

Under certain circumstances, we may instruct Wainwright not to sell the 2022 ATM Shares if the sales cannot be effected

at or above the price designated by us from time to time.

We are not obligated to make any sales of the 2022 ATM Shares under

the 2022 ATM Agreement.

The offering of the 2022 ATM Shares pursuant to the 2022 ATM Agreement will terminate upon the termination of

the 2022 ATM Agreement by Wainwright or us, as permitted therein.

The 2022 ATM Agreement contains customary representations, warranties

and agreements by us, and customary indemnification and contribution rights and obligations of the parties.

We agreed to pay Wainwright

a placement fee of up to 3.0% of the aggregate gross proceeds from each sale of the 2022 ATM Shares.

We also agreed to reimburse Wainwright

for certain specified expenses in connection with entering into the 2022 ATM Agreement.

As of March 31, 2022, we had not sold any 2022 ATM Shares under the

2022 ATM Agreement.

RSU Grants to Non-Employee Directors

The Company maintains an Amended and Restated

Non-Employee Director Compensation Policy, which was most recently amended on February 10, 2022, or the Director Compensation Policy,

that provides cash and equity compensation for persons serving as non-employee directors of the Company.

Under this policy, each new director

receives either stock options or a grant of RSUs upon appointment/election as well as either an annual grant of stock options or RSUs

at the beginning of each fiscal year.

The (i) stock options are subject to vesting and (ii) RSUs are subject to vesting and represent

the right to be issued on a future date shares of our common stock upon vesting.

On April 1, 2021, pursuant to the Director Compensation

Policy, the Compensation Committee, or Compensation Committee, of the Company’s Board of Directors, or Board, granted RSUs under

the Company’s 2020 Equity Incentive Plan, or the 2020 Plan, to each non-employee director of the Company.

The Director Compensation

Policy provides for a grant of stock options or $50,000 worth of RSUs at the beginning of each fiscal year, with the RSUs priced at the

average for the closing prices for the five days preceding and including the date of grant, or $2.06 per share as of April 1, 2021.

eligible director was granted an RSU in the amount of 24,295 shares under the 2020 Plan.

The RSUs were subject to vesting in four equal

quarterly installments on June 30, September 30, December 31, 2021, and March 31, 2022, subject to the recipient’s continued service

with the Company on each such vesting date.

In June 2021, 18,221 vested RSUs held by our non-employee

directors were exchanged into the same number of shares of our common stock.

All three non-employee directors elected to return 40% of

their vested RSUs in exchange for cash, in order to pay their withholding taxes on the share issuances, resulting in 7,289 of the vested

RSUs being cancelled in exchange for $ 35,786 in aggregate cash proceeds to those independent directors.

In September 2021, 18,221 vested RSUs held by

our non-employee directors were exchanged into the same number of shares of our common stock.

All three non-employee directors elected

to return 40% of their vested RSUs in exchange for cash, in order to pay their withholding taxes on the share issuances, resulting in

7,289 of the vested RSUs being cancelled in exchange for $ 28,134 in aggregate cash proceeds to those independent directors.

In December 2021, 18,221 vested RSUs held by our

non-employee directors were exchanged into the same number of shares of our common stock.

All three non-employee directors elected to

return 40% of their vested RSUs in exchange for cash, in order to pay their withholding taxes on the share issuances, resulting in 7,289

of the vested RSUs being cancelled in exchange for $ 13,557 in aggregate cash proceeds to those independent directors.

In March 2022, 18,221 vested RSUs held by our

non-employee directors were exchanged into the same number of shares of our common stock.

All three non-employee directors elected to

return 40% of their vested RSUs in exchange for cash, in order to pay their withholding taxes on the share issuances, resulting in 7,289

of the vested RSUs being cancelled in exchange for $ 10,641 in aggregate cash proceeds to those independent directors.

There were no vested RSUs outstanding as of March

Equity Transactions in the Fiscal Year Ended March 31, 2021.

2016 Common Stock Sales Agreement with H.C.

Wainwright & Co.,

On June 28, 2016, we entered into a Common Stock

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the 2016 Agreement, unless terminated earlier by either party as permitted under the 2016 Agreement.

As of March 31, 2021, no further sales will be

made under the 2016 Agreement.

On March 22, 2021, we entered into an At the Market

Offering Agreement, or the Offering Agreement, with Wainwright as sales agent, pursuant to which we may offer and sell shares of our common

stock, from time to time as set forth in the Offering Agreement.

has been registered under the Securities Act of 1933, as amended, or Securities Act , pursuant

to our shelf registration statement on Form S-3 (Registration Statement No.

333-237269), as previously filed with the SEC

and declared effective on March 30, 2020.

We filed a prospectus supplement, dated March 22, 2021, with the SEC in connection with the

offer and sale of the shares of common stock, pursuant to which we may offer and sell shares

of common stock having an aggregate offering price of up to $5,080,000 from time to time.

Subject to the terms and conditions set forth

in the Offering Agreement, Wainwright agreed to use its commercially reasonable efforts consistent with its normal trading and sales practices

to sell the shares under the Offering Agreement from time to time, based upon our instructions.

We provided Wainwright with customary

indemnification rights under the Offering Agreement, and Wainwright is entitled to a commission at a fixed rate equal to three percent

of the gross proceeds per share sold.

In addition, we agreed to reimburse Wainwright for certain specified expenses in connection with

entering into the Offering Agreement.

The Offering Agreement will terminate upon the written termination by either party as permitted

Sales of the shares, if any, under the 2016 Agreement and the Offering

Agreement will be made in transactions that are deemed to be “at the market offerings”

as defined in Rule 415 under the Securities

Act, including sales made by means of ordinary brokers’

transactions, including on the Nasdaq Capital Market, at market prices or

as otherwise agreed with Wainwright.

We have no obligation to sell any of the shares, and, at any time, we may suspend offers under the

2016 Agreement and the Offering Agreement or terminate the Agreement.

In the fiscal year ended March 31, 2021, we raised aggregate net proceeds

of $7,260,869, net of $224,825 in commissions to Wainwright and $8,472 in other offering expenses, under the Agreement, through the sale

of 2,685,600 shares at an average price of $2.70 per share of net proceeds.

Restricted Stock Unit Grants to Non-Employee

In 2012, as amended through October 30, 2020,

our Board of Directors established the Non-Employee Directors Compensation Program, to provide for cash and equity compensation for persons

serving as non-employee directors of the Company.

Under this program, each new director receives either stock options or a grant of restricted

stock units, or RSUs, as well as an annual grant of RSUs at the beginning of each fiscal year.

The RSUs are subject to vesting and represent

No further sales can be made under

the 2016 Agreement.

2021 At the Market Offering Agreement with

Wainwright & Co., LLC

On March 22, 2021, we entered into the 2021 ATM

Agreement with Wainwright.

In the fiscal year ended March 31, 2021, we raised

aggregate net proceeds of $ 7,260,869 , net of $ 224,825 in commissions to Wainwright and $ 8,472 in other offering expenses under the 2021

ATM Agreement through the sale of 2,685,600 shares at an average price of $ 2.70 per share of net proceeds.

RSU Grants to Non-Employee Directors

The Company maintains the Director Compensation

Policy which provides cash and equity compensation for persons serving as non-employee directors of the Company.

Under this program, each

new director receives either stock options or a grant of RSUs upon appointment/election as well as an annual grant of stock options or

RSUs at the beginning of each fiscal year.

The (i) stock options are subject to vesting and (ii) RSUs are subject to vesting and represent

the right to be issued on a future date shares of our common stock upon vesting.

On April 3, 2020, pursuant to the terms of the

Company’s Non-Employee Directors Compensation Program, the Compensation Committee of the Board of Directors granted RSUs to each

non-employee director of the Company.

The Non-Employee Directors Compensation Program provided for a grant of RSUs with a grant date fair

value of $35,000, priced at the average of the closing prices for the five trading days ending on the date of grant, which was $1.41 per

share, so that the total number of RSUs to be granted to each non-employee director for fiscal year 2020 would be 24,822 shares of our

common stock.

On April 3, 2020, each eligible director was granted an RSU for 23,893 shares under the Company’s 2010

Stock Plan, or the 2010 Plan, as the number of shares that remained available for grant under the 2010 Plan was not sufficient for each

director’s full RSU grant.

The Compensation Committee also granted to each eligible director a contingent grant under our 2020 Equity

Incentive Plan, or the 2020 Plan, for the remaining portion of the annual RSU grants, or 929 RSU’s to each eligible director, contingent

upon stockholder approval of the 2020 Plan at the Company’s 2020 Annual Meeting of Stockholders, or the Annual Meeting.

are subject to vesting as follows:

50% of the RSUs subject to the grants will vest on December 31, 2020 and 50% of the RSUs will vest

on March 31, 2021, subject in each case to the continuous service of each director, through such vesting dates, as well as approval of

the 2020 Plan by the stockholders at the Annual Meeting, which was obtained at the Annual Meeting.

On April 3, 2020, pursuant to the Director

Compensation Policy, the Compensation Committee granted RSUs to each non-employee director of the Company.

The then current Director

Compensation Policy provided for a grant of RSUs with a grant date fair value of $35,000,

priced at the average of the closing prices for the five trading days ending on the date of grant, which was $ 1.41

per share, so that the total number of RSUs to be granted to each non-employee director for fiscal year 2020 would be 24,822

shares of our common stock.

On April 3, 2020, each eligible director was granted an RSU for 23,893

shares under the Company’s 2010 Stock Plan, or the 2010 Plan, as the number of shares that remained available for grant under

the 2010 Plan was not sufficient for each director’s full RSU grant.

The Compensation Committee also granted to each eligible

director a contingent RSU grant under our 2020 Plan for the remaining portion of the annual RSU grants, or 929 RSU’s to each

eligible director, contingent upon stockholder approval of the 2020 Plan at the Company’s 2020 Annual Meeting of Stockholders,

or the 2020 Annual Meeting, which approval was obtained in September 2020.

These grants were subject to vesting as follows:

the RSUs subject to the grants vested on December 31, 2020 and 50% of the RSUs vested on March 31, 2021.

In June 2020, 29,866 vested RSUs held by our non-employee

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11,947 of the vested RSUs being cancelled in exchange for $ 16,128 in aggregate cash proceeds to those independent directors.

Also in September 2020, our stockholders approved

the 2020 Plan at the Annual Meeting, at which point the grants of 929 RSUs to each of our eligible independent directors for a total of

4,645 RSUs were considered effective and no longer contingent as of that date (See Note 9).

As noted above, in September 2020, our stockholders

approved the 2020 Plan at the 2020 Annual Meeting, at which point the grants of 929 RSUs to each of our eligible independent directors

for a total of 4,645 RSUs were considered effective and no longer contingent as of that date.

In December 2020, 32,189 vested RSUs held by our

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Restricted Stock Grant to Consultant

In February 2021, our Board of directors approved a restricted stock

grant of 7,758 shares to an investor relations consultant.

Those shares were valued at $18,000 based on our closing price on the date

of the approval.

The shares will vest quarterly over a twelve month period and were issued under our 2020 Stock Plan.

During the twelve

months ended March 31, 2021, we recorded non-cash stock-based compensation expense of $1,500 related to this grant.

Equity Transactions in the Fiscal Year Ended March 31, 2020.

December 2019 Public Offering

On December 13, 2019, we entered into an underwriting

agreement with H.C.

Wainwright and Co., or Wainwright, as representative of the several underwriters named therein, relating to the public

offering, issuance and sale of 3,333,334 shares of common stock (which includes pre-funded warrants to purchase shares of common stock

in lieu thereof), and common warrants to purchase up to an aggregate of 3,333,334 shares of common stock, at a public offering price of

$1.50 per share and common warrant.

Each share of common stock (or pre-funded warrant in lieu thereof) was sold together with a common

warrant to purchase one share of common stock.

The common warrants have an exercise price of $1.50 per share, were immediately exercisable,

and will expire five years from the date of issuance.

The offering closed on December 17, 2019.

The gross proceeds of the December 2019 Public

Offering were approximately $5 million, prior to deducting underwriting discounts and commissions and estimated offering expenses and

excluding the exercise of any common warrants and the underwriter's option to purchase additional securities.

The net proceeds from the

December 2019 Public Offering were $4,091,437.

Subsequent to the completion of the December 2019

Public Offering and prior to March 31, 2020, all of the holders of pre-funded warrants exercised their pre-funded warrants in full.

In the event of a Fundamental Transaction (a transfer

of ownership of the Company as defined in the common warrants issued in the December 2019 Public Offering) within our control, the holders

of the unexercised common stock warrants exercisable for $1.50 per share, are entitled to receive cash consideration equal to a Black-Scholes valuation,

as defined in the warrant.

If such Fundamental Transaction is not within our control, the warrant holders would only be entitled to receive

the same form of consideration (and in the same proportion) as the holders of our common stock, hence these warrants are classified as

a component of permanent equity.

January 2020 Registered Direct Offering and

Private Placement

On January 16, 2020, we engaged Wainwright to

act as our exclusive placement agent in connection with the private placement and a concurrent registered direct offering, or together,

the Offering, of an aggregate of 1,885,378 shares of our common stock at a purchase price per share of $2.00, or the Shares, for aggregate

gross proceeds to us of approximately $3.77 million, before deducting fees payable to Wainwright and other estimated offering expenses

payable by us.

We also entered into a securities purchase agreement, or the Purchase Agreement with certain institutional investors, or

the Purchasers, pursuant to which we agreed to sell and issue to the Purchasers warrants, or the Purchase Warrants, to purchase up to

an aggregate of 942,689 shares of our common stock, or the Purchase Warrant Shares.

We agreed to pay Wainwright a cash fee of 6.0% of

the aggregate gross proceeds in the Offering, excluding the proceeds, if any, from the exercise of the Purchase Warrants.

We paid Wainwright

an additional 1.0% of the aggregate gross proceeds in the Offering as a management fee and also paid Wainwright an additional $70,000

for certain expenses in connection with the Offering.

In addition, Wainwright received placement agent warrants on substantially the same

terms as the Purchase Warrants in an amount equal to 3.0% of the aggregate number of Shares sold in the offering, or 56,561 shares of

Common Stock, at an exercise price of $2.50 per share and a term expiring on January 17, 2025, or the Placement Agent Warrants, and the

shares of common stock issuable thereunder, or the Placement Agent Warrant Shares.

On January 22, 2020, the Company closed the Offering

and issued the Purchase Warrants to the Purchasers.

The Purchase Warrants are exercisable immediately at an exercise price of $2.75 per

share and will expire five and one-half years from the issuance date.

The net proceeds from the January 2020 Registered

Direct Offering and Private Placement were $3,364,878.

Common Stock Sales Agreement with H.C.

In the fiscal year ended March 31, 2020, we raised

aggregate net proceeds of $896,031 (net of $27,896 in commissions to H.C.

Wainwright and $5,929 in other offering expenses) under this

Agreement through the sale of 161,149 shares at an average price of $5.56 per share of net proceeds.

Warrant Exercises

In fiscal year ended March 31, 2020, investors

that participated in the December 2019 public offering exercised 2,700,000 warrants for aggregate cash proceeds to us of $3,807,162.

Restricted Stock Unit Grants to Non-Employee

In 2012, as amended through October 30, 2020,

our Board of Directors established the Non-Employee Directors Compensation Program, to provide for cash and equity compensation for persons

serving as non-employee directors of the Company.

Under this program, each new director receives either stock options or a grant of restricted

stock units, or RSUs, as well as an annual grant of RSUs at the beginning of each fiscal year.

The RSUs are subject to vesting and represent

the right to be issued on a future date shares of our common stock for upon vesting.

In April 2019, pursuant to the Non-Employee Directors

Compensation Program, we issued RSUs with a value of $35,000, in accordance with the terms of the plan, to each of our non-employee directors,

as the stock-based compensation element of their overall directors’

compensation, for the fiscal year ending March 31, 2020.

grants were based on the closing price of our common stock on the grant date, or $14.25 per share, resulting in 2,456 RSUs being issued

to each of our five non-employee directors, for a total of 12,280 RSUs.

All of the RSUs were subject to vesting in equal quarterly installments

on June 30, 2019, September 30, 2019, December 31, 2019 and March 31, 2020.

During the fiscal year ended March 31, 2020, 12,280

vested RSUs held by our outside directors were exchanged into the same number of shares of our common stock.

As four of our five independent

directors elected to return 40% of their RSUs in exchange for cash in order to pay their withholding taxes on the share issuances, 3,926

of the RSUs were cancelled and we paid $11,230 in cash to those independent directors.

In addition, during the fiscal year ended March

31, 2020, 8,793 vested RSUs then held by our executive officers were exchanged into the same number of shares of our common stock.

our executives elected to net settle a portion of their RSU’s in exchange for the Company paying the related withholding taxes on

the share issuance, 4,657 of the RSUs were cancelled and we issued a net 4,136 shares to our executives.

There were no vested RSUs outstanding as of March

Common Stock for Warrant Cancellation

During the fiscal year ended March 31, 2020, we

agreed with seven accredited investors to issue an aggregate of 3,992 shares of our common stock to these investors in exchange for the

cancellation of outstanding warrants then held by the investors to purchase an aggregate of 39,900 shares of our common stock.

the fair value of the shares issued and the fair value of the warrants exchanged for those shares and recorded a gain of $51,190 on those

exchanges based on the changes in fair value between the instruments exchanged.

In February 2021, our Board approved a restricted

stock grant of 7,758

shares to an investor relations consultant.

Those shares were valued at $ 18,000

based on our closing price on the date of the approval.

The shares vested quarterly over a twelve month period and were issued

under our 2020 Plan.

During the years ended March 31, 2022 and 2021, we recorded non-cash stock-based compensation expense of $ 16,500

and $ 1,500 , respectively,

related to this grant.

We did not issue any warrants during the fiscal

year ended March 31, 2021.

During the fiscal year ended March 31, 2020, we issued 4,432,585 warrants in association with our December

2019 Public Offering and our January 2020 Registered Direct Financing and associated private placement (see Note 6).

All of those warrants

had a five year term and had exercise prices as follows:

Warrants Issued

Exercise Price

December 2019 Public Offering –

Investors’

December 2019 Public Offering –

Placement Agents’

January 2020 Registered Direct –

Investors’

January 2020 Registered Direct –

Placement Agents’

Based on the above assumptions, we valued the warrants issued during

the fiscal year ended March 31, 2020 as follows:

The 999,251 warrants issued in our January 2020 Registered Direct Financing were valued at $2,388,776 and we classified that fair value as equity.

The 3,433,334 warrants issued in our December 2019 public offering were valued at $3,021,334 and we classified that fair value as equity.

years ended March 31, 2022 and 2021.

A summary of the aggregate warrant activity for the years ended March

31, 2022 and 2021 is presented below:

Summary of warrant activity

Fiscal Year Ended March 31,

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Outstanding, beginning of year

Adjustment for reverse split

( 1,206,721 )

Cancelled/Forfeited

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Weighted average estimated fair value of warrants granted

The following outlines the significant weighted average assumptions

used to estimate the fair value of warrants granted in the fiscal year ended March 31, 2020 utilizing the Binomial Lattice option pricing

Fiscal Year Ended

March 31, 2020

Risk free interest rate

1.57% - 1.71%

Average expected life

Expected volatility

148.6% - 233.0%

Expected dividends

The expected volatility was based on the historic volatility.

life of options granted was based on the “simplified method”

as described in the SEC’s guidance due to changes in the

vesting terms and contractual life of current option grants compared to our historical grants.

The detail of the warrants outstanding and exercisable as of March

31, 2022 is as follows:

Summary of warrant activity exercisable and outstanding

Warrants Outstanding

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$16.50 - $59.25

$64.50 - $135.00

STOCK-BASED COMPENSATION:

2020 EQUITY INCENTIVE PLAN

In September 2020, our stockholders approved

the adoption of the 2020 Plan, to provide incentives to attract, retain and motivate employees, directors and consultants, whose present

and potential contributions are important to our success, by offering them an opportunity to participate in our future performance through

In September 2020, our stockholders approved the

adoption of the 2020 Plan, to provide incentives to attract, retain and motivate employees, directors and consultants, whose present and

potential contributions are important to our success, by offering them an opportunity to participate in our future performance through

awards of options, the right to purchase common stock, stock bonuses and stock appreciation rights and other awards.

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compensation.

2010 STOCK INCENTIVE PLAN

In August 2010, we adopted the 2010 Stock Incentive

Plan, to provide incentives to attract, retain and motivate employees, directors and consultants, whose present and potential contributions

are important to our success, by offering them an opportunity to participate in our future performance through awards of options, the

right to purchase common stock, stock bonuses and stock appreciation rights and other awards.

We initially authorized a total of 4,667

common shares for issuance under the 2010 Stock Incentive Plan.

On January 26, 2016, our Board of Directors approved

an amendment to the 2010 Stock Incentive Plan to increase the total number of shares of common stock authorized for issuance under the

plan to 211,333 shares, subject to amendment of our Articles of Incorporation to increase our authorized common stock.

On March 29, 2016,

at which our stockholders approved the Amended 2010 Stock Incentive Plan and an amendment of our Articles of Incorporation to increase

our authorized common stock to 30,000,000 shares.

On March 31, 2016, we filed a Certificate of Amendment to our Articles of Incorporation

to effect the increase in our authorized common stock.

As a result of such amendment, the Amended 2010 Stock Incentive Plan became effective

on March 31, 2016.

Effective October 14, 2019, we completed a 1-for-15

reverse stock split.

Accordingly, 15 shares of outstanding common stock then held by stockholders were combined into one share of common

Any fractional shares resulting from the reverse split were rounded up to the next whole share.

Authorized common stock remained

at 30,000,000 shares.

No future grants will be made under the 2010 Stock

Incentive Plan.

2012 NON-EMPLOYEE DIRECTORS COMPENSATION PROGRAM

In 2012, as amended through October 30, 2020,

our Board of Directors established the Non-Employee Directors Compensation Program, to provide for cash and equity compensation for persons

serving as non-employee directors of the Company.

Under this program, each new director receives either stock options or a grant of restricted

stock units, or RSUs, as well as an annual grant of RSUs at the beginning of each fiscal year.

The RSUs are subject to vesting and represent

NON-EMPLOYEE DIRECTORS COMPENSATION POLICY

The Company maintains the Director Compensation

Policy which provides cash and equity compensation for persons serving as non-employee directors of the Company.

Under this policy, each

new director receives either stock options or a grant of RSUs upon appointment/election, as well as either an annual grant of stock options

or RSUs at the beginning of each fiscal year.

The (i) stock options are subject to vesting and (ii) RSUs are subject to vesting and represent

the right to be issued on a future date shares of our common stock upon vesting.

On April 3, 2020, pursuant to the terms of the

Company’s Non-Employee Directors Compensation Program, the Compensation Committee of the Board of Directors granted RSUs to each

non-employee director of the Company.

The Non-Employee Directors Compensation Program provided for a grant of RSUs with a grant date fair

value of $35,000, priced at the average of the closing prices for the five trading days ending on the date of grant, which was $1.41 per

share, so that the total number of RSUs to be granted to each non-employee director for fiscal year 2020 would be 24,822 shares of our

common stock.

On April 3, 2020, each eligible director was granted an RSU for 23,893 shares under the Company’s 2010

Stock Plan, or the 2010 Plan, as the number of shares that remained available for grant under the 2010 Plan was not sufficient for each

director’s full RSU grant.

The Compensation Committee also granted to each eligible director a contingent grant under our 2020 Equity

Incentive Plan, or the 2020 Plan, for the remaining portion of the annual RSU grants, or 929 RSU’s to each eligible director, contingent

upon stockholder approval of the 2020 Plan at the Company’s 2020 Annual Meeting of Stockholders, or the Annual Meeting.

were subject to vesting as follows:

50% of the RSUs subject to the grants vested on December 31, 2020 and 50% of the RSUs vested on March

31, 2021, subject in each case to the continuous service of each director, through such vesting dates, as well as approval of the 2020

Plan by the stockholders at the Annual Meeting, which was obtained at the Annual Meeting.

In June 2020, 29,866 vested RSUs held by our non-employee

directors were exchanged into the same number of shares of our common stock.

All five non-employee directors elected to return 40% of

their vested RSUs in exchange for cash, in order to pay their withholding taxes on the share issuances, resulting in 11,947 of the vested

RSUs being cancelled in exchange for $24,251 in aggregate cash proceeds to those independent directors.

In September 2020, 29,866 vested RSUs held by

our non-employee directors were exchanged into the same number of shares of our common stock.

All five non-employee directors elected

to return 40% of their vested RSUs in exchange for cash, in order to pay their withholding taxes on the share issuances, resulting in

11,947 of the vested RSUs being cancelled in exchange for $16,128 in aggregate cash proceeds to those independent directors.

Also in September 2020, our stockholders approved

the 2020 Plan at the Annual Meeting, at which point the grants of 929 RSUs to each of our eligible independent directors for a total of

4,645 RSUs were considered effective and no longer contingent as of that date.

In December 2020, 32,189 vested RSUs held by our

non-employee directors were exchanged into the same number of shares of our common stock.

All five non-employee directors elected to return

40% of their vested RSUs in exchange for cash, in order to pay their withholding taxes on the share issuances, resulting in 12,876 of

the vested RSUs being cancelled in exchange for $31,802 in aggregate cash proceeds to those independent directors.

In March 2021, 32,189 vested RSUs held by our

non-employee directors were exchanged into the same number of shares of our common stock.

All five directors elected to return 40% of

their vested RSUs in exchange for cash, in order to pay their withholding taxes on the share issuances, resulting in 12,875 of the vested

RSUs being cancelled in exchange for $26,136 in aggregate cash proceeds to those independent directors.

There were no vested RSUs outstanding as of March 31, 2021.

STAND-ALONE GRANTS

From time to time our Board of Directors grants

common stock or options to purchase common stock or warrants exercisable to common stock to selected officers, employees and consultants

as equity compensation to such persons on a stand-alone basis outside of any of our formal stock plans.

The terms of these grants are

individually negotiated.

Please see above under the heading "Equity Transactions

in the Fiscal Year Ended March 31, 2022—RSU Grants to Non-Employee Directors" for disclosure regarding equity awards under the

Director Compensation Policy during the fiscal year ended March 31, 2022.

STOCK OPTION ACTIVITY

From February 2020 through May 2020, our compensation

committee granted options to purchase 521,476 shares of our common stock that were contingent upon stockholder approval of the 2020 Plan.

Upon approval of the 2020 Plan at the Annual Meeting, these option grants were considered effective and no longer contingent as of that

The 2020 Plan approved by our stockholders at

the 2020 Annual Meeting of Stockholders, authorizes up to 1,842,556 shares for issuance pursuant to stock option grants, RSUs or other

forms of stock-based compensation.

No future grants will be made under the 2010 Plan.

Effective as of October 30, 2020, we issued an

option to purchase 239,122 shares of our common stock pursuant to the 2020 Plan to our Chief Executive Officer, in connection with

the appointment of Dr.

Fisher as our Chief Executive Officer.

In connection with the Separation Agreement and

pursuant to Dr.

Rodell’s employment agreement with the Company, the vesting was accelerated on 50% of outstanding and unvested options

to purchase shares of our common stock held by Dr.

Rodell as of the Separation Date of October 30, 2020, such that the accelerated stock

options were fully vested and exercisable as of the Separation Date.

In December 2020, Dr.

Rodell elected to net exercise

a portion of his stock options.

As a result, we issued Dr.

Rodell an aggregate of 15,896 shares of our common stock and we paid the estimated

withholding taxes of $34,209 related to the net exercise.

During the fiscal year ended March 31, 2022, we

issued a stock option grant to our Chief Executive Officer, or CEO, for the purchase of 266,888 shares of our common stock under our 2020

The purchase price for the shares subject to the option is $ 5.17 per share, the fair market value of the common stock on the date

of the grant.

The shares subject to the option are subject to vesting over four years, commencing on the date of grant, or Vesting Commencement

Date, with twenty-five percent (25%) of the shares subject to the option vesting on the first anniversary of the Vesting Commencement

Date and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, in each case subject to

Fisher’s Continuous Service (as defined in the 2020 Plan) through each vesting date.

On February 10, 2022, after review of data provided

by the Company’s independent compensation consultant, our Compensation Committee awarded stock option grants to each of our executive

Each executive officer was granted an option to purchase shares of our common stock under the 2020 Plan, at an exercise price

equal to the fair market value on the date of grant, or $1.41 per share.

The Compensation Committee awarded the grants as follows:

Chief Executive Officer was granted an option to purchase 192,600 shares of common stock, and the Chief Medical Officer, Chief Operating

Officer and Chief Financial Officer each were granted an option to purchase 100,200 shares of common stock.

The options are subject to

vesting over four years at the rate of 25 % at the end of the first year following the grant date, then monthly vesting over the following

36 months, subject to Continuous Service with the Company, as defined in the 2020 Plan.

Options outstanding that were vested as of March

31, 2022 and options that are expected to vest subsequent to March 31, 2022 are as follows:

Options outstanding that have vested and are expected to vest

Expected to vest

1 unchanged sentence

outstanding at March 31, 2022 and 2021 and the changes during the years then ended:

Summary of stock options outstanding

Fiscal Year Ended March 31,

8 unchanged sentences

31, 2022 is as follows:

Detail of options outstanding and exercisable by exercise price

Options Outstanding

11 unchanged sentences

years ended March 31, 2022 and 2021 included the following:

Schedule of stock-based compensation

Fiscal Year Ended

23 unchanged sentences

Due to related parties were comprised of the following items:

Due to related parties

March 31, 2022

5 unchanged sentences

Other current liabilities were comprised of the following items:

Other Current Liabilities

March 31, 2022

March 31, 2021

Accrued separation expenses for former executive (see Note 11)

Accrued separation expenses for former executive

Accrued professional fees

10 unchanged sentences

assets at March 31, 2022 and 2021 are shown below:

Schedule of deferred tax assets

YEAR ENDED MARCH 31,

10 unchanged sentences

Net deferred tax assets

At March 31, 2021, we had tax net operating loss carryforwards for

federal and state purposes approximating $77 million and $60 million, portions of which began to expire in the year 2021.

The provision for income taxes on earnings subject to income taxes

differs from the statutory federal rate for the years ended March 31, 2021 and 2020 due to the following:

At March 31, 2022, we had tax net operating loss

carryforwards for federal and state purposes approximating $ 87 million and $ 69 million, portions of which began to expire in the year

The provision for income taxes on earnings subject

to income taxes differs from the statutory federal rate for the years ended March 31, 2022 and 2021 due to the following:

Provision for income taxes

Income taxes (benefit) at federal statutory rate of 21.00%

1 unchanged sentence

$ ( 1,657,000 )

State income tax, net of federal benefit

Tax effect on non-deductible expenses and credits

2 unchanged sentences

Change in valuation allowance

Income Tax Expense (Benefit)

______________

(1) Pursuant to Internal Revenue Code Section 382, use of our tax net

operating loss carryforwards may be limited.

ASC 740, “Income Taxes”, clarifies

Pursuant to Internal Revenue Code Section 382, use of our tax net operating loss carryforwards may be limited.

ASC 740, “Income Taxes”, clarifies

the accounting for uncertainty in income taxes recognized in an entity's financial statements, and prescribes recognition thresholds and

22 unchanged sentences

Our reportable segments have been determined based on the nature of the potential products being developed.

We record discrete

financial information for ESI and our chief operating decision maker reviews ESI’s operating results in order to make decisions

about resources to be allocated to the ESI segment and to assess its performance.

Aethlon’s revenue is generated primarily

from government contracts to date and ESI does not yet have any revenues.

We have not included any allocation of corporate overhead to

the ESI segment.

We record discrete financial

information for ESI, consisting of patent maintenance costs.

Aethlon’s revenue is generated primarily from government contracts

to date and ESI does not have any revenues or activities other than patent maintenance.

We have not included any allocation of corporate

overhead to the ESI segment.

The following tables set forth certain information regarding our segments:

Schedule of segments

Fiscal Years Ended March 31,

12 unchanged sentences

Total Assets:

Capital Expenditures:

Capital Expenditures

Depreciation and Amortization:

Total Depreciation and Amortization

Interest Expense:

Total Interest Expense

SUBSEQUENT EVENTS

Management has evaluated events subsequent to

March 31, 2021 through the date that the accompanying consolidated financial statements were filed with the Securities and Exchange Commission

for transactions and other events which may require adjustment of and/or disclosure in such financial statements.

SALES UNDER ATM FACILITY

In June 2021, we raised aggregate net proceeds

under the Agreement described above of $4,947,785, net of $126,922 in commissions to Wainwright and $2,154 in other offering expense through

the sale of 626,000 shares of our common stock at an average price of $7.90 per share of net proceeds.

REGISTERED DIRECT FINANCING

In June 2021, we sold an aggregate of 1,380,555

shares of our common stock at a purchase price per share of $9.00, for aggregate gross proceeds to us of approximately $12.425 million,

before deducting fees payable to Maxim Group LLC, the placement agent and other offering expenses.

These shares were sold through a securities

purchase agreement with certain institutional investors, The shares were issued pursuant to an effective shelf registration statement

on Form S-3, which was originally filed with the SEC on March 19, 2020, and was declared effective on March 30, 2020 (File No.

and a prospectus supplement thereunder.

WARRANT EXERCISES

In June 2021, pursuant to the exercise of outstanding

warrants to purchase 531,167 shares of our common stock, we received proceeds in the amount of $820,938 from institutional investors.

Also in June 2021, pursuant to the exercise of

874,664 outstanding warrants on a cashless basis, we issued 675,554 shares of our common stock.

The difference of 199,110 shares of common

stock issuable pursuant to the warrants were cancelled.

STOCK OPTION EXERCISE

In June 2021, a former employee paid us $22,969

to exercise 9,375 stock options.

On April 1, 2021, pursuant to the terms of the

Company’s 2012 Non-Employee Directors Compensation Program, as amended, or the Directors Plan, the Compensation Committee of the

Board granted RSUs under the Company’s 2020 Plan to each non-employee director of the Company.

The Director’s Plan provides

for a grant of $50,000 worth of RSUs at the beginning of each fiscal year, priced at the average for the closing prices for the five days

preceding and including the date of grant, or $2.06 per share as of April 1, 2021.

Each eligible director was granted an RSU in the amount

of 24,295 shares under the 2020 Plan.

The RSU’s are subject to vesting in four equal quarterly installments on June 30, September

30, December 31, 2021, and March 31, 2022, subject to the recipient's continued service with the Company on each such vesting date.

CONTINGENT BONUS AWARDS

Pursuant to the terms of the Executive Employment Agreement, dated

October 30, 2020, between the Company and Charles J.

Fisher, Jr., M.D., or the Employment Agreement, the Company’s Chief Executive

Fisher is entitled to a cash bonus equal to 50% of his annual base salary upon achievement of certain qualified events, or

a Qualifying Event, as set forth in the Employment Agreement, as well as a stock option grant of a number of shares of common stock, pursuant

to the 2020 Plan, such that Dr.

Fisher’s equity holdings in the Company after the additional grant will equal 3% of the Company,

on a fully diluted basis.

Based on the market capitalization of the Company and the Company’s recent registered direct financing,

the Company believes, subject to approval of the Compensation Committee of the Company’s Board of Directors, that in June 2021 a

Qualifying Event has occurred and that Dr.

Fisher has earned the cash bonus award in the amount of $215,000 and an additional stock option

grant under the terms of the Employment Agreement.

Capital Expenditures:

Capital Expenditures

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

our contractual obligations and commitments outside the ordinary course of business during the fiscal year ended March 31, 2022:

SEPARATION AGREEMENT

On October 30, 2020, we entered into a Separation

Agreement with Timothy Rodell, M.D., our former Chief Executive Officer, or the Separation Agreement.

Under this agreement, we agreed

Rodell a total of $444,729 and to cover his medical insurance costs over a twelve-month period that began on November 1, 2020,

all in accordance with the terms of his employment agreement with the Company.

We also paid Dr.

Rodell accrued vacation in the amount

of $20,260 in November 2020.

The total expense accrued at March 31, 2021 relating

to the Separation Agreement, was $284,270 (see Note 7).

LEASE COMMITMENTS

We currently lease approximately 2,600 square

feet of executive office space at 9635 Granite Ridge Drive, Suite 100, San Diego , California 92123 under a 39-month gross plus

utilities lease that commenced on December 1, 2014 and expires on August 31, 2021.

The current rental rate under the lease extension is

$8,265 per month.

We also rent approximately 1,700 square feet of

laboratory space at 11585 Sorrento Valley Road, Suite 109, San Diego, California 92121 at the rate of $6,148 per month on a one-year lease

that originally was to expire on November 30, 2020.

In December 2020, we entered into a short-term lease extension running from December

1, 2020 through the completion date of our construction of our planned new laboratory space which is adjacent to our current laboratory.

Rent expense, which is included in general and

administrative expenses, approximated $192,000 and $178,000 for the fiscal years ended March 31, 2021 and 2020, respectively.

Future minimum lease payments under the Granite Ridge Lease as of March

31, 2021, are as follows:

April 1, 2021 through August 31, 2021

Total lease liability

During the fiscal year ended March 31, 2020, we

adopted ASU Topic 842 on April 1, 2019 utilizing the alternative transition method allowed for under this guidance.

As a result, we recorded

lease liabilities and right-of-use lease assets of $228,694 on our balance sheet as of April 1, 2019.

The lease liabilities represent

the present value of the remaining lease payments of our corporate headquarters lease, discounted using our incremental borrowing rate

as of April 1, 2019.

The corresponding right-of-use lease assets are recorded based on the lease liabilities and the cumulative difference

between rent expense and amounts paid under its corporate headquarters lease.

We also elected the short-term lease recognition exemption

for its laboratory lease.

For the laboratory lease that qualified as short-term, we did not recognize right-of-use assets or lease liabilities

Previous Office and Lab Leases

In September 2021, our lease of approximately

2,600 square feet of our previous executive office space at 9635 Granite Ridge Drive, Suite 100, San Diego, California 92123 expired.

Through December 31, 2021, we rented approximately

1,700 square feet of laboratory space at 11585 Sorrento Valley Road, Suite 109, San Diego, California 92121, at the rate of $6,148 per

month on a one-year lease that originally was to expire on November 30, 2020.

In December 2020, we entered into a short-term lease extension

running from December 1, 2020 through the completion date of our construction of our new laboratory space which is adjacent to our current

New Office and Lab Leases

In December 2020, we entered into an agreement

to lease approximately 2,823 square feet of office space and 1,807 square feet of laboratory space.

The agreement carries a term of 63

months and we will commence paying rent when we take occupancy of those spaces, which is expected to occur in the third quarter of 2021.

Upon taking occupancy of the space, we will record lease liabilities and right-of-use lease assets related to this agreement on our balance

We estimate that the present value of the contractual payments under the lease agreement to be approximately $806,000.

In addition, the new lease agreement required

to lease approximately 2,823 square feet of office space and 1,807 square feet of laboratory space located at 11555 Sorrento Valley Road,

Suite 203, San Diego, California 92121 and 11585 Sorrento Valley Road, Suite 109, San Diego, California 92121, respectively.

The agreement

carries a term of 63 months and we took possession of the office space effective October 1, 2021.

We took possession of the lab space

effective January 1, 2022.

On October 1, 2021, we recorded a $ 343,633 right-of-use

lease asset and associated lease liability related to the office space component of the lease based on the present value of lease payments

over the expected lease term of 63 months, discounted using our estimated incremental borrowing rate of 4.25 %.

The current monthly base

rent under the office component of the lease is $ 6,121 .

During the three months ended March 31, 2022,

we recorded a $ 400,797 right-of-use lease asset and associated lease liability related to the lab space component of the lease based on

the present value of lease payments over the expected lease term of 63 months, discounted using our estimated incremental borrowing rate

The initial monthly base rent under the lab component of the lease is $ 7,456 .

As of our March 31, 2022 consolidated balance

sheet, we have a right-of-use lease asset of $ 696,698 .

In addition, the new lease agreement of the new

office and lab required us to post a standby letter of credit in favor of the landlord in the amount of $ 46,726 in lieu of a security

We arranged for our bank to issue the standby letter of credit in the fiscal year ended March 31, 2021 and transferred a like

amount to a restricted certificate of deposit which secured the bank’s risk in issuing that letter of credit.

We have classified

that restricted certificate of deposit on our balance sheet as restricted cash.

Manufacturing Space Lease

In October 2021, we entered into another lease

for an initial period of 58 months for (i) approximately 22,260 square feet of space located at 11588 Sorrento Valley Road, San Diego,

California 92121, or the Building, and (ii) 2,655 square feet of space located in the Building and commonly known as Suite 18 to house

our manufacturing operations.

That manufacturing space is located at 11588 Sorrento Valley Road, San Diego, California 92121 and it is

near our new lab and office locations.

We anticipate that the landlord will complete construction on this new space in the third calendar

quarter of 2022 and we will take occupancy at that time.

The initial base rent for the manufacturing space will be $12,080 per month.

Based on the assumptions that we used to calculate

the right-of-use lease asset for the new office and lab spaces, we estimate that we will record a right- of- use lease asset of $614,240

and associated lease liability for the manufacturing space lease when we take possession of that space.

The lease for the manufacturing space also required

us to post a standby letter of credit in favor of the landlord in the amount of $ 40,780 in lieu of a security deposit.

We arranged for

our bank to issue the standby letter of credit in the fiscal year ended March 31, 2021 and transferred a like amount to a restricted certificate

of deposit which secured the bank’s risk in issuing that letter of credit.

We have classified that restricted certificate of deposit

on our balance sheet as restricted cash.

our bank to issue the standby letter of credit in October 2021 and transferred a like amount to a restricted certificate of deposit which

secured the bank’s risk in issuing that letter of credit.

We have classified that restricted certificate of deposit on our balance

sheet as restricted cash.

Mobile Clean Room

In addition, we rent a mobile clean room on a

short term, month-to-month basis, where we house our manufacturing operations until our permanent manufacturing space is completed.

also rent the land on which the mobile clean room is based on a month-to-month basis.

The mobile clean room is located on leased land

near our office and lab and we pay $ 2,000 per month for the right to locate it there.

We paid approximately $ 189,000 in rent expense to

lease the mobile clean room located on this space during the fiscal year ended March 31, 2022.

Overall, our rent expense, which is included in

general and administrative expenses, approximated $ 401,000 and $ 192,000 for the fiscal years ended March 31, 2022 and 2021, respectively.

LEGAL MATTERS

8 unchanged sentences

a party to any pending or threatened legal proceedings.

SUBSEQUENT EVENTS

Management has evaluated events subsequent to

March 31, 2022 through the date that the accompanying consolidated financial statements were filed with the Securities and Exchange Commission

for transactions and other events which may require adjustment of and/or disclosure in such financial statements.

Sales Under 2022 ATM Agreement

In June 2022, we raised net proceeds of $448,760,

net of $11,583 in commissions to Wainwright and $2,994 in other offering expense, through the sale of, 411,055 shares of our common stock

at an average price of $1.09 per share under the 2022 ATM Agreement.

The Compensation Committee approved, effective

as of April 1, 2022, pursuant to the terms of the Directors Compensation Policy, the grant of the annual RSUs under the Director Compensation

Policy to each of the two non-employee directors of the Company then serving on the Board and a new grant for the newly appointed director,

with each such grant subject to stockholder approval of an increase of 1,800,000 shares of common stock in the number of authorized shares

of common stock, or the 2022 Plan Increase, available for issuance under the 2020 Plan at the Company’s 2022 annual meeting of stockholders,

or the 2022 Annual Meeting.

The Director Compensation Policy provides for a grant of stock options or $50,000 worth of RSUs at the beginning

of each fiscal year for current directors then serving on the Board and for a grant of stock options or $75,000 worth of RSUs for a newly

elected director, with each RSU priced at the average for the closing prices for the five days preceding and including the date of grant,

or $1.46 per share as of April 1, 2022.

The two then-current eligible directors each was granted a contingent RSU in the amount of 34,247

shares under the 2020 Plan and the newly appointed director received a contingent RSU grant for 51,370 shares under the 2020 Plan.

contingent RSUs are subject to vesting in three installments, 50% on September 30, 2022, and 25% on each of December 31, 2022, and

March 31, 2023, subject to stockholder approval of the 2022 Plan Increase at the 2022 Annual Meeting and subject to the recipient's continued

service with the Company on each such vesting date.

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-K

Item 9A. Controls and Procedures