AETHLON MEDICAL INC 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview The following discussion and analysis should be read in conjunction with the consolidated Financial Statements and Notes thereto appearing elsewhere in this Annual Report. We are a medical therapeutic company focused on developing the Hemopurifier® (HP), a clinical-stage immunotherapeutic device intended for applications in cancer, life-threatening viral infections, and organ transplantation and other areas of significant unmet needs. In human studies (164 sessions with 38 patients), the Hemopurifier was used safely and demonstrated the potential to remove enveloped viruses. In pre-clinical studies, the Hemopurifier has exhibited the capacity to remove harmful extracellular vesicles (EVs) and enveloped viruses from biological fluids, utilizing its proprietary lectin-based mechanism. These extracellular vesicles have been implicated in disease processes such as immune suppression and metastasis in cancer as well as in the progression of severe life-threatening infectious diseases. The U.S. Food and Drug Administration (“FDA”) has designated the Hemopurifier as a “Breakthrough Device” for two independent indications: · the treatment of individuals with advanced or metastatic cancer who are unresponsive to or intolerant of standard of care therapy, and with cancer types in which extracellular vesicles have been shown to participate in the development or severity of the disease; and · the treatment of life-threatening viruses for which no approved therapies currently exist. We are also evaluating the Hemopurifier’s potential in additional clinical contexts based on its mechanism of action and preclinical findings. 50 Oncology We believe that the Hemopurifier may be a substantial advancement in the treatment of patients with advanced and metastatic cancer through its design to bind to and remove harmful remove harmful extracellular vesicles particles that promote the growth and spread of tumors. In October 2022, we formed a wholly-owned subsidiary in Australia to initially conduct oncology-related clinical research, then seek regulatory approval and commercialize our Hemopurifier in Australia. We completed an in vitro binding study of extracellular vesicles from cancer patient samples, to provide pre-clinical evidence to support our trial design and translational endpoints. Our study indicated positive results from this study, providing evidence that our Hemopurifier removes extracellular vesicles, or EVs, from plasma. This translational study provides pre-clinical evidence to support our phase 1 safety, feasibility and dose-finding clinical trials of our Hemopurifier in patients with solid tumors who have stable or progressive disease during anti-PD-1 monotherapy treatment, such as Keytruda® or Opdivo®. We have launched in an Australia safety, feasibility and dose-finding clinical trials of the Hemopurifier in cancer patients with solid tumors who have stable or progressive disease during anti-PD-1 monotherapy treatment, such as Keytruda® (pembrolizumab) or Opdivo® (nivolumab). The primary endpoint of the approximately nine to 18-patients, is safety. Exploratory analyses will be conducted to explore the number of HP treatments required to produce sustained reductions of EVs as well as improve anti-tumor T cell activity. We plan to open a similarly designed trial in India. The following three hospitals in Australia have received ethics committee approval, have gone through training on our device and are open for patient enrollment: Royal Adelaide Hospital in Adelaide, Australia and Pindara Private Hospital in the Gold Coast section of Australia and GenesisCare North Shore Hospital in Sydney, Australia. As of 16JUN2025 we have treated three participants in the first of the three treatment cohorts. Once these patients have completed the pre-specified 7-day safety follow-up period, the data will be presented to an independent Data Safety Monitoring Board (DSMB). The DSMB will provide a recommendation to Aethlon senior leadership on advancing to the next cohort where participants will receive 2 HP treatments during the one week treatment period. The Company continues to pursue approval of a similar clinical trial in India. HREC approval has previously been obtained at Medanta Medicity Hospital. Following this a meeting with Subject Expert Committee (SEC) of the India Regulatory Agency CDSCO was held 5JUN2025. We are awaiting the formal approval letter of the CDSCO. The clinical trial at Medanta can commence following a Site Initiation Visit (SIV) by the company’s India CRO, Qualtran. Life-Threatening Viral Infections We also believe that 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 has been demonstrated to capture Ebola, Marburg virus, Zika, Lassa, MERS-CoV, Cytomegalovirus, Epstein-Barr, Herpes simplex, Chikungunya, Dengue, West Nile, H1N1 swine flu, H5N1 bird flu, and the reconstructed 1918 Spanish flu virus. In several cases, these studies were conducted in collaboration with leading government or non-government research institutes. The Hemopurifier has previously been studied under FDA and international regulatory frameworks for the treatment of severe SARS-CoV-2 infection. While we terminated our U.S. and India-based COVID-19 studies due to low ICU patient volume and shifting priorities, these programs demonstrated real-world use of the Hemopurifier in critically ill patients. We maintain an open IDE for viral indications to preserve optionality for future outbreaks or emergent pathogens . We have sufficient inventory of Hemopurifiers to support our ongoing oncology trial in Australia as well as any near-term expansion of that study or potential trial activity in India. While we have received FDA approval to begin manufacturing at our San Diego facility under our IDE supplement, we are still awaiting FDA approval of a separate supplement to qualify an additional supplier of a key Hemopurifier component. We continue to work with the FDA on this process. 51 Pre-Clinical Exploration of Additional Clinical Uses for the Hemopurifier The Aethlon R&D laboratory continues to explore potential new indications for the Hemopurifier. We have published in the peer-reviewed journal Transplant Immunology the ability of the device to remove extracellular vesicles and their microRNA cargo from acellular perfusates of discarded kidneys that had undergone normothermic machine perfusion. On May 12, 2025, the results of our pre-clinical ex vivo study entitled “Ex Vivo Removal of CD41 positive platelet microparticles from Plasma by a Medical Device containing a Galanthus nivalis agglutinin (GNA) affinity resin” were published in the pre-print vehicle bioRxiv. This manuscript has been submitted to a peer-reviewed publication for review. Platelet -derived extracellular vesicles (PD-EVs) are the most numerous EV population in the body and are released by platelets in response to a variety of stimuli. The cargo contained within these EVs have been noted to take part in damage to blood vessels, activation of immune cells and spread of tumor cells. Excessive levels of PD-EVs have been implicated in a myriad of diseases including cancer, lupus, systemic sclerosis, multiple sclerosis, Alzheimer’s disease, sepsis, acute and Long COVID. We hypothesized that the Aethlon Hemopurifier which contains a propriety GNA affinity resin would remove platelet derived EVs from plasma. In this experiment two hundred milliliters on donated healthy human plasma were circulated over the Aethlon Hemoupurifier (HP) to simulate a clinical HP session. The study results showed a 98.5% removal of platelet -derived EVs at a timepoint equivalent to a 4-hour HP treatment. The results of this study support the current Australian Clinical Trial in Oncology as well as open the investigation of the Hemopurifier in many indications. Extracellular vesicles have been implicated in the pathogenesis of Long COVID.As we had previously demonstrated removal of extracellular vesicles by the Hemopurifier in a patient with severe acute COVID-19 infection, we hypothesized that patients with Long COVID would have extracellular vesicles with the mannose sugar on their surface that would bind to the affinity resin in our device. We partnered with investigators at the Univ of California San Francisco Medical Center Long COVID clinic to obtain samples from participants with Long COVID as well as controls that had had COVID -10 infection but had recovered. The data to be presented will review the binding of larger and smaller extracellular vesicles to the GNA lectin and the lectin affinity resin, respectively. We believe the data from this pre-clinical study calls for additional study of the Hemopurifier and look forward to receiving feedback from the Long COVID scientific community at the Keystone Symposium. Successful outcomes of human trials will also be required by the regulatory agencies of certain foreign countries where we plan to market and sell the Hemopurifier. Some of our patents may expire before FDA approval or approval in a foreign country, if any, is obtained. However, we believe that certain patent applications and/or other patents issued to us more recently will help protect the proprietary nature of our Hemopurifier treatment technology. In addition to the foregoing, we are monitoring closely the impact of inflation, recent bank failures and the war between Russia and Ukraine and the military conflicts in Israel and the surrounding areas, as well as related political and economic responses and counter-responses by various global factors on our business. Given the level of uncertainty regarding the duration and impact of these events on capital markets and the U.S. economy, we are unable to assess the impact on our timelines and future access to capital. The full extent to which inflation, recent bank failures and the ongoing military conflicts will impact our business, results of operations, financial condition, clinical trials and preclinical research will depend on future developments, as well as the economic impact on national and international markets that are highly uncertain. 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. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this Annual Report. Our common stock is listed on the Nasdaq Capital Market under the symbol “AEMD.” 52 Fiscal Years Ended March 31, 2025 and 2024 Results of Operations Government Contract Revenues For the fiscal years ended March 31, 2025 and 2024, we did not have any active revenue-generating government contracts and, consequently, did not record any government contract revenue for that period. Operating Costs and Expenses Consolidated operating expenses were $9,341,364 for the fiscal year ended March 31, 2025, compared to $12,636,568 for the fiscal year ended March 31, 2024, a decrease of $3,295,203. The $3,295,203 decrease in the fiscal year ended March 31, 2025 was due to a decrease in payroll and related expenses of $1,332,359, a decrease of $1,302,834 in professional fees and a decrease of $660,010 in general and administrative expenses. Payroll and related expenses decreased by $1,332,359 for the fiscal year ended March 31, 2025, compared to the prior year. The decrease was driven by a $876,511 reduction in salaries and related expenses and a $804,136 decrease in stock-based compensation. The reduction in salary expense reflects the termination of three executives—one in the prior year, one in July 2024, and one in October 2024—as well as a workforce reduction of non-executive employees implemented in August 2024. The decrease in stock-based compensation was primarily due to the absence of accelerated vesting charges recognized in the prior year in connection with the termination of our former Chief Executive Officer, as well as lower stock-based compensation expense associated with the departure of executives and non-executive staff. The overall decrease was partially offset by an increase of $348,287 in severance expenses mostly related to the termination of two former executives. Professional fees decreased by $1,302,834 for the fiscal year ended March 31, 2025, compared to the prior year. The decrease was primarily driven by a $553,377 reduction in legal fees related to the transition to a new legal firm, a $462,154 decrease primarily attributable to the termination of services with a contract manufacturing organization and the completion of a project involving outside laboratory services . In addition, consulting fees related to scientific projects and regulatory projects decreased by $239,640 and $125,478 respectively. These decreases were partially offset by $84,900 increase in accounting fees associated with obtaining consents from prior audit firm for various SEC filings. General and administrative expenses decreased by $660,010 for the fiscal year ended March 31, 2025, compared to the prior year. The decrease was primarily driven by a $534,069 reduction in costs related to lower purchases of raw materials for the production of Hemopurifiers, reduced cleanroom certification expenses, and fewer outside services for maintenance of the manufacturing facility. Laboratory supplies and testing costs also declined by $337,109 following the completion of oncology and transplant-related projects. Insurance expenses decreased by $141,453, including reductions in medical and workers’ compensation premiums due to lower headcount, as well as overall decrease in business insurance costs. Additional decreases included $44,122 in travel and entertainment expenses, $24,356 decrease in office supplies and $19,498 in depreciation expense related to the disposal of certain equipment. These decreases were partially offset by a $466,661 increase in clinical trial expenses related to our ongoing oncology study in Australia. As a result of the above factors, our operating loss decreased to $9,341,364 for the fiscal year ended March 31, 2025, from $12,636,568 for the fiscal year ended March 31, 2024. Other Income (Expense) Other expense for the year ended March 31, 2025, included a non-cash charge of $4,612,862 related to a warrant inducement offer. In March 2025, the Company offered certain warrant holders the opportunity to exercise existing warrants at a temporarily reduced exercise price in exchange for the issuance of new warrants. The inducement expense recognized represents the combined fair value of the new warrants issued and the incremental fair value resulting from the modification of the exercise price of the existing warrants . This transaction did not impact cash flows from operating activities. 53 During the fiscal year ended March 31, 2025, we recognized $324,450 in other income related to the Employee Retention Tax Credit (“ERTC”) under the CARES Act and subsequent legislation. We recorded the ERTC as other income in the periods in which the payments were received. In addition, we recognized $36,339 in interest income related to the ERTC during fiscal 2025. As of March 31, 2025, the remaining expected credit was recorded as another receivable within other current assets on our consolidated balance sheet. No amounts were recorded in the prior fiscal year. Liquidity and Capital Resources As of March 31, 2025, we had a cash balance of $5,501,261 and working capital of $4,050,514. This compares to a cash balance of $5,441,978 and working capital of $4,395,889 at March 31, 2024. While the Company has been carrying out certain expense reductions since November 2023; our planned additional expense reductions may not materialize and/or our patient recruitment may occur more rapidly than expected along with the concomitant increases in expenses, therefore there is substantial doubt that our cash on hand will carry the company for 12 months beyond the filing date of the financial statements included in this Annual Report. During the fiscal year ended March 31, 2025 we raised capital through a warrant inducement offer and a public offering. In the fiscal year ended March 31, 2024 we raised money through our then existing At The Market Offering Agreement, or the 2022 ATM Agreement, with H.C. Wainwright & Co., LLC, or Wainwright. In October 2024, the S-3 registration underlying our At The Market Offering Agreement expired and the ATM was cancelled. Financings During the Fiscal Year Ended March 31, 2025: During the fiscal year ended March 31, 2025, we raised aggregate net proceeds of $7,746,311, net of $405,002 in commission and legal expenses to Maxim and $753,090 in direct legal and accounting fees. This total included $3,539,907 from a public offering in May 2024 and $2,054,940 from subsequent exercise of Class A and Class B warrants and $2,151,464 in net proceeds from a warrant inducement offering in March 2025. In connection with that transaction, we paid the placement agent fees totaling $153,979, consisting of a 6% commission on gross proceeds of $138,979 and $15,000 for legal and out-of-pocket expenses to Maxim and $10,877 in direct legal fees. On March 16, 2025, Aethlon Medical, Inc. (the “Company”) entered into a inducement offer to exercise existing Class A and Class B Warrants (the “Agreement”) with a certain accredited and institutional holder (the “Holder”) of the Company’s outstanding Class A and Class B Warrants issued on May 17, 2024 (the “Existing Warrants”). Pursuant to the Agreement, the Holder, upon exercise, will receive a new unregistered Common Stock Purchase Warrant (“New Warrant”) pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (“Securities Act”), to purchase up to a number of shares equal to 200% of the number of Warrant Shares issued pursuant to the exercise of Existing Warrants pursuant to this Agreement (the “New Warrant Shares”), which New Warrant shall have an exercise price per share equal to $0.3736, subject to adjustment as provided in the New Warrant, will be exercisable at any time on or after six (6) months from the date of issuance and have a term of exercise of five and one-half (5.5) years from the date of issuance and a reduction of the exercise price of the Existing Warrants to $0.3736 per share, representing the closing price on March 14, 2025, but only with respect to a cash exercise under the Existing Warrants (as reduced from the current respective exercise price per share as set forth in the Existing Warrants). The closing took place on March 17, 2025. Gross proceeds to the Company from the exercise of the Existing Warrants was $2,316,320, prior to deducting closing costs and placement agent fees as further described below. The Company intends to use the net proceeds from the offering for working capital and general corporate purposes. As a result of the Holder exercising the Existing Warrants, the Company issued an aggregate of 775,000 shares of its common stock. The shares underlying the Existing Warrants have all been registered on Form S-1 registration statement (Registration Number 333-278188). The Company agreed to file a resale registration statement registering the shares underlying the Replacement Warrants (“Resale Registration Statement”) within ninety (90) days of the date of the Agreement and to use commercially reasonable best efforts to cause the Resale Registration Statement to be effective on or prior to the 150th calendar day after the date of the Agreement. 54 Subject to the terms of the Agreement, the Company will be required to pay certain liquidated damages if the shares underlying the New Warrants are not filed within the ninety (90) period, as more fully described in the Agreement. The Company further agreed that until sixty (60) days after the closing date of the warrant exercise, it will not (other than in connection with limited enumerated exceptions) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents or file any registration statement or any amendment or supplement (other than the registration statement registering the shares underlying the Replacement Warrants). In connection with the transactions contemplated in the Agreement, the Company agreed to pay its placement agent, Maxim Group, LLC (the “Agent”) the following compensation, (i) a cash fee equal to 6.0% of the gross proceeds received by the Company in the transactions contemplated by the Agreement, and (ii) legal fees and out-of-pocket expenses of $15,000. On May 17, 2024, we closed a public offering pursuant to which we sold an aggregate of: (i) 306,250 shares of our common stock and accompanying Class A warrants to purchase up to 306,250 shares of common stock and Class B warrants to purchase up to 306,250 shares of common stock, at a combined public offering price of $4.64 per share and accompanying warrants; and (ii) in lieu of common stock, pre-funded warrants to purchase 706,250 shares of common stock and accompanying Class A warrants to purchase up to 706,250 shares of common stock and Class B warrants to purchase up to 706,250 shares of common stock, at a combined public offering price of $4.63 per pre-funded warrant and accompanying warrants, which is equal to the public offering price per share of common stock, and accompanying warrants less the $0.001 per share exercise price of each such pre-funded warrant. The gross proceeds from the offering, before deducting the placement agent’s fees and other offering expenses, were approximately $4.7 million. Financings During the Fiscal Year Ended March 31, 2024: During the fiscal year ended March 31, 2024, we raised aggregate net proceeds of $1,322,383, net of $34,118 in commissions to Wainwright and $8,202 in other offering expense, through the sale of 37,011 shares of our common stock at an average price of $35.76 per share under the 2022 ATM Agreement. 2022 At The Market Offering Agreement with H.C. Wainwright & Co., LLC On March 24, 2022, we entered into 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. This agreement was terminated in October 2024. The offering was registered under the Securities Act pursuant to our shelf registration statement on Form 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 that provides for the sale of shares of our common stock, or the 2022 ATM Shares, having an aggregate offering price of up to $15,000,000, which was subsequently and most recently updated pursuant to our prospectus supplement, dated September 29, 2022, filed with the SEC that provides for the sale of 2022 ATM Shares having an aggregate offering price of up to $6,625,000. As of March 31, 2024, $5,302,617 of 2022 ATM Shares remained available for sale under the 2022 ATM Agreement. 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. In addition, 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 further 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. 55 Material Cash Requirements We expect our clinical trial expenses for the planned oncology trials in Australia and India to increase for the foreseeable future. While these increases are primarily related to trial activities, additional Hemopurifiers may also be manufactured to support the studies. In addition, we have entered into leases for our headquarters, laboratory and manufacturing facilities. We expect our rent payments to continue to increase for the foreseeable future. Future capital requirements will depend upon many factors, including progress with pre-clinical testing and clinical trials, the number and breadth of our clinical programs, the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other proprietary rights, the time and costs involved in obtaining regulatory approvals, competing technological and market developments, as well as our ability to establish collaborative arrangements, effective commercialization, marketing activities and other arrangements. We expect to continue to incur increasing negative cash flows and net losses for the foreseeable future. We will continue to need to raise additional capital either through equity and/or debt financing for the foreseeable future. As a result of global events, political changes, bank failures, actual or perceived changes in interest rates and economic inflation, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in inflation and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. Any of these actions could materially harm our business, results of operations and future prospects. While we currently has been carrying out certain expense reductions since November 2023; our planned additional expense reductions may not materialize and/or our patient recruitment may occur more rapidly than expected along with the concomitant increases in expenses; therefore there is substantial doubt that our cash on hand will carry the company for 12 months beyond the filing date of the financial statements included in this Annual Report. We do plan to access the equity markets for additional capital, however, there can be no assurance that we will be able to access such additional capital. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to and volatility in the credit and financial markets in the United States, including due to bank failures, actual or perceived changes in interest rates and economic inflation , and worldwide resulting from macroeconomic factors. Because of the numerous risks and uncertainties associated with product development, we cannot predict the timing or amount of increased expenses and we may never be profitable or generate positive cash flow from operating activities. Cash Flows Cash flows from operating, investing and financing activities, as reflected in the accompanying Consolidated Statements of Cash Flows, are summarized as follows (in thousands): For the year ended March 31, 2025 March 31, 2024 Cash provided by (used in): Operating activities $ (7,646 ) $ (10,130 ) Investing activities – (251 ) Financing activities 7,727 1,288 Effect of exchange rate on cash (12 ) 2 Net increase (decrease) in cash $ 69 $ (9,091 ) 56 Net Cash Used in Operating Activities We used cash in our operating activities due to our losses from operations. Net cash used in operating activities was approximately $7,646,000 in fiscal 2025, compared to net cash used in operating activities of approximately $10,130,000 in fiscal 2024, a decrease of approximately $2,484,000. The decrease in cash flows was primarily driven by a decrease of $2,869,000 in net loss after non-cash charges partially offset by a negative change in our working capital items of $385,000 mainly from the approximately $210,000 decrease in accounts payable and other current liabilities and approximately $299,000 decrease in due to related parties. These decreases were partially offset by a decrease of approximately $124,000 in prepaids. Net Cash Used in Investing Activities During the fiscal year ended March 31, 2025 we did not purchase equipment. For the year ended March 31, 2024, we purchased approximately $251,000 of equipment, respectively. Net Cash from Financing Activities Net cash generated from financing activities increased from approximately $1,288,000 in the fiscal year ended March 31, 2024 to approximately $7,277,000 in the fiscal year ended March 31, 2025. In the fiscal year ended March 31, 2025, we raised approximately $3,540,000 from the issuance of common stock. We also raised approximately $2,055,000 from the exercise of warrants under standard terms and approximately $2,316,000 from the exercise of warrants under induced terms. These proceeds were partially offset by $154,000 in commissions and $11,000 in legal fees related to the induced warrant exercises. Additionally, we used approximately $19,000 used to satisfy tax withholding obligations associated with the issuance of restricted stock units (RSUs). During the fiscal year ended March 31, 2024, we raised $1,322,383 from the issuance of common stock, which was partially offset by the use of approximately $35,000 to pay for the tax withholding on the issuance of restricted stock units, or RSUs. Critical Accounting Policies and Significant Judgments and Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions affect the reported amounts of expenses during the reporting period. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions. We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require the most difficult, subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. There were no accounting estimates in the year ended March 31, 2025 with a high degree of uncertainty or amounts that are with a high likelihood to change from period to period that would materially impact the presentation of our financial statements for the year ended March 31, 2025. 57 Warrant Inducement Transactions From time to time, the Company may enter into warrant inducement arrangements, in which modifications to the terms of outstanding equity-classified warrants—such as reductions in exercise price or the issuance of additional warrants—are offered to incentivize early exercise. These transactions require significant judgment in determining whether the arrangement constitutes a routine equity modification or a substantive inducement that should be accounted for as an expense. In making this determination, the Company evaluates the structure and purpose of the transaction, including whether incremental value was transferred to the holder to accelerate capital inflows. In cases where the substance of the arrangement reflects an inducement, the Company records the incremental value as an expense in the period the transaction occurs. Determining the fair value of such inducements and the appropriate timing of recognition involves complex estimates and careful consideration of the facts and circumstances of each arrangement . Share-based Compensation We account for share-based compensation awards using the fair-value method and record such expense based on the grant date fair value in the consolidated financial statements over the requisite service period. This requires management to make estimates and assumptions regarding the fair value of the awards, including the expected term, volatility, risk-free interest rate, and forfeiture rates. These assumptions are inherently subjective and involve significant judgment. The fair value of stock options is typically determined using the Black-Scholes option pricing model. Compensation expense is recognized over the vesting period of the awards in a manner that reflects the service period or any applicable performance conditions. RSU Grants to Non-Employee Directors The Company maintains the Amended and Restated Non-Employee Director Compensation Policy, or the Director Compensation Policy, which provides for 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 of 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 16, 2024, our Board of Directors approved, pursuant to the terms of the Director Compensation Policy, the grant of the annual RSUs under the Director Compensation Policy to each of the four non-employee directors of the Company then serving on the Board of Directors. 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 non-employee directors then serving on the Board of Directors, and for a grant of stock options or $75,000 worth of RSUs for a newly elected non-employee director, with each RSU priced at the average for the closing prices for the five days preceding and including the date of grant, or $12.16 per share for the RSUs granted in April 2024. As a result, in April 2024 the four eligible directors were each granted an RSU in the amount of 4,112 shares under the Company’s 2020 Equity Incentive Plan, or the 2020 Plan. The RSUs are subject to vesting in four equal installments, with 25% of the restricted stock units vesting on each of June 30, 2024, September 30, 2024, December 31, 2024, and March 31, 2025, subject in each case to the director’s Continuous Service (as defined in the 2020 Plan), through such dates. Vesting will terminate upon the director’s termination of Continuous Service prior to any vesting date. There were no vested RSUs outstanding as of March 31, 2025. Recent Events Reverse Split – Following the approval of a reverse stock split at a Special Meeting of Stockholders on May 13, 2025, our Board of Directors approved a 1-for-8 reverse stock split or our outstanding shares of Common Stock, effective as of the close of business on June 6, 2023. Accordingly, each 8 shares of outstanding common stock held by stockholders were combined into one share of common stock. Our authorized common stock remained at 60,000,000 shares following the stock split. We issued 77 additional shares shares as a result of rounding up fractional shares related to the reverse stock split. 58 On June 2, 2025, a second patient was treated with the Hemopurifier at GenesisCare North Shore Hospital in Sydney, Australia. The patient was treated with the Aethlon Hemopurifier for 4 hours in a single day and tolerated the procedure without complications. The patient will have follow-up safety visits, EV and T cell measurements as well as imaging for clinical response. RSU Grants In April 2025, our Board of Directors approved, pursuant to the terms of the Director Compensation Policy, the grant of the annual RSUs under the Director Compensation Policy to each of the four non-employee directors of the Company then serving on the Board of Directors. 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 non-employee directors then serving on the Board of Directors, and for a grant of stock options or $75,000 worth of RSUs for a newly elected non-employee director, with each RSU priced at the average for the closing prices for the five days preceding and including the date of grant, or $2.80 per share for the April 2024 RSU grants. As a result, in April 2025 the four eligible directors were each granted an RSU in the amount of 17,858 shares under the 2020 Plan. The RSUs are subject to vesting in four equal installments, with 25% of the restricted stock units vesting on each of June 30, 2025, September 30, 2025, December 31, 2025, and March 31, 2026, subject in each case to the director’s Continuous Service (as defined in the 2020 Plan), through such dates. Vesting will terminate upon the director’s termination of Continuous Service prior to any vesting date. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable to a “smaller reporting company” as defined under Item 10(f)(1) of Regulation S-K of the Securities Act.