AIM ImmunoTech Inc. 10-K

ITEM 9A. Controls and Procedures. Effectiveness of Control Procedures As of December 31, 2020, the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our Management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Our disclosure controls and procedures are intended to ensure that the information we are required to disclose in the reports that we file or submit under the Securities Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as the principal executive and financial officers, respectively, to allow final decisions regarding required disclosures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the controls and procedures were effective as of December 31, 2020 to ensure that material information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management has concluded that the financial statements included in this Form 10-K present fairly, in all material respects our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America. 35 Changes in Internal Control over Financial Reporting We made no changes in our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Management’s Report on Internal Control over Financial Reporting Our Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) or 15d-15(f), under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and affected by our Board of Directors, Management and other personnel, and to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on its financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, Management used the criteria set forth in the framework in 2013 established by the Committee of Sponsoring Organizations of the Treadway Commission Internal Control—Integrated Framework, (COSO). Based on this assessment, Management has not identified any material weaknesses as of December 31, 2020. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has concluded that we did maintain effective internal control over financial reporting as of December 31, 2020, based on the criteria set forth in “Internal Control—Integrated Framework” issued by the COSO. ITEM 9B. Other Information. None. 36 PART III ITEM 10. Directors and Executive Officers and Corporate Governance. The following sets forth biographical information about each of our Directors and Executive Officers as of the date of this report: Name Age Position Thomas K. Equels, Esq 68 Chief Executive Officer, President, and Director Peter W. Rodino III 69 Chief Operating Officer, General Counsel & Secretary William M. Mitchell, M.D., Ph.D. 85 Chairman of the Board and Director Stewart L. Appelrouth 67 Director Ellen M. Lintal 61 Chief Financial Officer Each Director has been elected to serve until the next annual meeting of stockholders, or until his earlier resignation, removal from office, death or incapacity. Each Executive Officer serves at the discretion of the Board of Directors, subject to rights, if any, under contracts of employment. We believe our Board Members represent a desirable diversity of backgrounds, skills, education and experiences, and they all share the personal attributes of dedication to be effective directors. In recommending Board candidates, Corporate Governance and Nomination Committee considers a candidate’s: (1) general understanding of elements relevant to the success of a publicly traded company in the current business environment; (2) understanding of our business; and (3) diversity in educational and professional background. The Committee also gives consideration to a candidate’s judgment, competence, dedication and anticipated participation in Board activities along with experience, geographic location and special talents or personal attributes. The following are qualifications, experience and skills for Board members which are important to our business and its future: Leadership Experience : We seek directors who have demonstrated strong leadership qualities. Such leaders bring diverse perspectives and broad business insight to our Company. The relevant leadership experience that we seek includes a past or current leadership role in a large or entrepreneurial company, a senior faculty position at a prominent educational institution or a past elected or appointed senior government position. Industry or Academic Experience : We seek directors who have relevant industry experience, both with respect to the disease areas where we are developing new therapies as well as with the economic and competitive dynamics of pharmaceutical markets, including those in which our drugs will be prescribed. Scientific, Legal or Regulatory Experience : Given the highly technical and specialized nature of biotechnology, we desire that certain of our directors have advanced degrees, as well as drug development experience. Since we are subject to substantial regulatory oversight, both here and abroad by the FDA and other agencies, we also desire directors who have legal or regulatory experience. Finance Experience : We believe that our directors should possess an understanding of finance and related reporting processes, particularly given the complex budgets and long timelines associated with drug development programs. THOMAS K. EQUELS, has been a Director and serves as our Executive Vice Chairman (since 2008), Chief Executive Officer (since 2016) and President (since 2015). Mr. Equels was the owner of and former President and Managing Director of the Equels Law Firm headquartered in Miami, Florida that focused on litigation. For over a quarter century, Mr. Equels represented national and state governments as well as companies in the banking, insurance, aviation, pharmaceutical and construction industries. Mr. Equels received his Juris Doctor degree with high honors from Florida State University. He received his Bachelor of Science, summa cum laude, from Troy University and also obtained his Masters’ of Science Degree from Troy University. Mr. Equels began his professional career as a military pilot. He served in Vietnam and was awarded two Distinguished Flying Crosses, the Bronze Star, the Purple Heart, and fifteen Air Medals. In 2012, he was Knighted by Pope Benedict. THOMAS K. EQUELS, Esq. - Director Qualifications: ● Leadership Experience – Military, Owner and former President, Managing Director of Equels Law Firm, Court appointed receiver in numerous industries; 37 ● Industry Experience –legal counsel, General Counsel, CFO and CEO to us; and ● Scientific, Legal or Regulatory Experience - Law degree with over 25 years as a practicing attorney specializing in litigation, development of clinical trials, creating intellectual property concepts, and established plan to finance drug development. WILLIAM M. MITCHELL, M.D., Ph.D., has been a Director since July 1998 and Chairman of the Board since February 2016. Dr. Mitchell is a Professor of Pathology at Vanderbilt University School of Medicine and is a board certified physician. Dr. Mitchell earned a M.D. from Vanderbilt and a Ph.D. from Johns Hopkins University, where he served as House Officer in Internal Medicine, followed by a Fellowship at its School of Medicine. Dr. Mitchell has published over 200 papers, reviews and abstracts that relate to viruses, anti-viral drugs, immune responses to HIV infection, and other biomedical topics. Dr. Mitchell has worked for and with many professional societies that have included the American Society of Investigative Pathology, the International Society for Antiviral Research, the American Society of Clinical Oncology, the American Society of Biochemistry and Molecular Biology, the American Chemical Society, and the American Society of Microbiology. Dr. Mitchell is a member of the American Medical Association. He has served on numerous government review committees, among them the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health, including the initial AIDS and Related Research Review Group. Dr. Mitchell previously served as one of our Directors from 1987 to 1989. WILLIAM M. MITCHELL, M.D., Ph.D. - Director Qualifications: ● Leadership Experience – Professor at Vanderbilt University School of Medicine. He is a member of the Board of Directors for Chronix Biomedical and is Chairman of its Medical Advisory Board. Additionally, he has served on multiple governmental review committees of the National Institutes of Health, Centers for Disease Control and Prevention and for the European Union, including key roles as Chairman; ● Academic and Industry Experience – Well published medical researcher with extensive investigative experience on virus and immunology issues relevant to our scientific business along with being a Director of an entrepreneurial diagnostic company (Chronix Biomedical) that is involved in next generation DNA sequencing for medical diagnostics; and ● Scientific, Legal or Regulatory Experience - M.D., Ph.D. and professor at a top ranked school of medicine, and inventor of record on numerous U.S. and international patents who is experienced in regulatory affairs through filings with the FDA. STEWART L. APPELROUTH, CPA was appointed as a director and head of the Audit Committee in August 2016 and is a certified public accountant and partner at Appelrouth Farah & Co., P.A., Certified Public Accountants and Advisors. Mr. Appelrouth is also a certified forensic accountant and possesses 40 years of experience in Accounting and Consulting. He is a member of or has affiliations with the AICPA, American College of Forensic Examiners, Association of Certified Fraud Examiners, past member of the Florida Bar Grievance Committee, Florida Institute of Certified Public Accountants and InfraGard Member, a national information sharing program between the Federal Bureau of Investigation and the private sector. Mr. Appelrouth graduated from Florida State University in 1975 and received his Master’s Degree in Finance from Florida International University in 1980. The Board has determined Mr. Appelrouth to be an Independent Director as required under Section 803(2) of the NYSE: American Company Guide and Rule 10A-3 under the Exchange Act. STEWART L. APPELROUTH - Director Qualifications: ● Leadership Experience –has served in leadership positions on numerous Boards and other organizations; ● Industry Experience – Partner at certified public accounting and advisory firm; Certified Public Accountant and Certified Fraud Examiner; ● Regulatory Experience – FINRA Arbitrator. ● Financial Expert – over 40 years of accounting and audit experience. Information about our Executive Officers In addition to Mr. Equels (discussed above), the following are (or were) our Executive Officers during fiscal 2020: PETER W. RODINO III has been a Director since July 2013. On September 30, 2016, Mr. Rodino resigned as a member of our Board to permit him to serve us in a new capacity. Effective October 1, 2016, we retained Mr. Rodino as our Executive Director for Governmental Relations, and as our General Counsel and, as of October 16, 2019, Mr. Rodino assumed the role of Chief Operating Officer. Mr. Rodino has been our Secretary since November 2016. Mr. Rodino has broad legal, financial, and executive experience. In addition to being President of Rodino Consulting LLC and managing partner at several law firms during his many years as a practicing attorney, he served as Chairman and CEO of Crossroads Health Plan, the first major Health Maintenance Organization in New Jersey. He also has had experience as an investment executive in the securities industry and acted as trustee in numerous Chapter 11 complex corporate reorganizations. Previously, as founder and president of Rodino Consulting, Mr. Rodino provided business and government relations consulting services to smaller companies with a focus on helping them develop business plans, implement marketing strategies and acquire investment capital. Mr. Rodino holds a B.S. in Business Administration from Georgetown University and a J.D. degree from Seton Hall University. 38 ELLEN M. LINTAL has been our Chief Financial Officer since September 16, 2019. Ms. Lintal has more than two decades of prior public company and non-profit experience. She earned a Bachelor of Science degree in Accounting from Elmira College. Mrs. Lintal served for several years as a Chief Financial Officer and SVP of Finance & Control for an international non-profit Organization and public accounting experience at Corning Inc, Carlisle Companies and AGY where she led the organizational focus on financial management, strategic planning and mergers and acquisitions. Prior to joining the Company Mrs. Lintal was the CFO for the National Wild Turkey Federation, an international non-profit organization. Key Employee DAVID R. STRAYER, M.D. has acted as our Medical Director and Chief Scientific Officer since 1986. He has served as Professor of Medicine at the Medical College of Pennsylvania and Hahnemann University. Dr. Strayer is Board Certified in Medical Oncology and Internal Medicine with research interests in the fields of cancer and immune system disorders. He has served as principal investigator in studies funded by the Leukemia Society of America, the American Cancer Society, and the National Institutes of Health. Dr. Strayer attended the School of Medicine at the University of California at Los Angeles where he received his M.D. in 1972. Audit Committee and Audit Committee Expert The Audit Committee of our Board of Directors consists of William Mitchell, M.D. and Stewart L. Appelrouth. Dr. Mitchell and Mr. Appelrouth are determined by the Board of Directors to be Independent Directors as required under Section 803(2) of the NYSE: American Company Guide and Rule 10A-3 under the Exchange Act. The Board has determined that Mr. Appelrouth qualifies as an “audit committee financial expert” as that term is defined by Section 803B(2) of the NYSE: American Company Guide and the rules and regulations of the SEC. We believe Dr. Mitchell and Mr. Appelrouth to be independent of management and free of any relationship that would interfere with their exercise of independent judgment as members of this Committee. The principal functions of the Audit Committee are to (i) assist the Board in fulfilling its oversight responsibility relating to the annual independent audit of our consolidated financial statements and management’s assessment of internal control over financial reporting, the engagement of the independent registered public accounting firm and the evaluation of the independent registered public accounting firm’s qualifications, independence and performance; (ii) prepare the reports or statements as may be required by NYSE American or the securities laws; (iii) assist the Board in fulfilling its oversight responsibility relating to the integrity of our financial statements and financial reporting process and our system of internal accounting and financial controls; (iv) discuss the financial statements and reports with management, including any significant adjustments, management judgments and estimates, new accounting policies and disagreements with management; and (v) review disclosures by our independent registered public accounting firm concerning relationships with us and the performance of our independent accountants. This Audit Committee formally met five times in 2020 with all committee members in attendance. Our General Counsel and Chief Financial Officer support the Audit Committee in its work. The full text of the Audit Committee’s Charter, as approved by the Board, is available on our website: www.aimimmuno.com in the “Investor Relations” tab under “Corporate Governance”. Scientific Advisory Board (“SAB”) The SAB was established to leverage its member’s scientific and pharmaceutical expertise and advice to advance our drug development programs by providing guidance on steering us forward and capitalizing on business opportunities as well as interactions with the FDA. It is responsible for: (i) reviewing all submissions made by us to the FDA and other regulators to ensure that the submissions fully, accurately, and timely describe the status of any clinical trials, tests, or other studies or analyses of drug safety and efficacy undertaken by us, and any agreements, protocols, or guidance provided by relevant regulatory agencies; and (ii) monitoring and supervising our relationship with the FDA. The SAB shall have free and open access to our scientific and executive personnel, including the Chief Scientific Officer and the members of our Board of Directors. The SAB is comprised of William Mitchell, M.D., Chairman, and Ronald Brus, M.D., W. Neal Burnette, M.D., Christopher Nicodemus, M.D., and Philip Ransom Roane, Ph.D. all of whom are members. The SAB reports to the independent directors of the Company and closely interacts with the Disclosure Controls Committee. The SAB met two times in 2020. 39 Disclosure Controls Committee (“DCC”) The DCC reports to the Audit Committee and is responsible for procedures and guidelines on managing disclosure information. The purpose of the DCC is to make certain that information required to be publicly disclosed is properly accumulated, recorded, summarized and communicated to the Board and management. This process is intended to allow for timely decisions regarding communications and disclosures and to help ensure that we comply with related SEC rules and regulations. Ellen M. Lintal is the DCC’s Investor Relations Coordinator and Chairperson. The other members of the DCC are Peter Rodino, our General Counsel, William Mitchell, one of our Independent Directors, Dr. David Strayer, Medical Director and Chief Scientific Officer, Julie Mierau, our Controller, and Ann Marie Coverly, Director of HR and Administration serving as the Deputy Investor Relations Coordinator. The full text of the DCC’s Charter, as approved by the Board, is available on our website: www.aimimmuno.com in the “Investor Relations” tab under “Corporate Governance”. The DCC actively met on numerous occasions in 2020. Executive Committee In February 2016, our Board formed the Executive Committee. The Executive Committee reports to the Board and its purpose is to aid the Board in handling matters which, in the opinion of the Chairman of the Board, should not be postponed until the next scheduled meeting of the Board. Mr. Equels, our Chief Executive Officer is the chairman of the Committee, along with two of our independent directors, Mr. Appelrouth and Dr. Mitchell. The full text of the Executive Committee Charter, as approved by the Board, is available on our website: www.aimimmuno.com in the “Investor Relations” tab under “Corporate Governance”. The Committee did not meet in 2020. Code of Ethics Our Board of Directors adopted a revision to the 2003 Code of Ethics and business conduct for officers, directors, employees, agents and consultants. The principal amendments included broadening the Code’s application to our agents and consultants, adoption of a regulatory compliance policy and adoption of a policy for protection and use of Company computer technology for business purposes only. On an annual basis, this Code is reviewed and signed by each Officer, Director, employee and strategic consultant with none of the amendments constituting a waiver of provision of the Code of Ethics on behalf of our Chief Executive Officer, Chief Financial Officer, or persons performing similar functions. You may obtain a copy of this Code by visiting our web site at www.aimimmuno.com (Investor Relations / Corporate Governance) or by written request to our office at 2117 SW Highway 484, Ocala, FL 34473. ITEM 11. Executive Compensation. COMPENSATION DISCUSSION AND ANALYSIS This discussion and analysis describes our executive compensation philosophy, process, plans and practices as they relate to our “Named Executive Officers” (“NEO”) listed below and gives the context for understanding and evaluating the more specific compensation information contained in the narratives, tables and related disclosures that follow. For the purposes of discussion and analysis, the following NEOs are included in the narratives, tables and related disclosures that follow: ● Thomas K. Equels, Chief Executive Officer (“CEO”) and President. ● Ellen M. Lintal, Chief Financial Officer (“CFO”); and ● Peter Rodino, Chief Operating Officer (“COO”), General Counsel and Company Secretary (“CS”). In March 2021, subsequent to the fiscal year ended December 31, 2020, we entered into employment agreements with Peter Rodino and Ellen Lintal. The agreements run for three years and one year, respectively. Compensation is divided into both short- and long-term compensation. Short term (cash) compensation will consist of a base salary of $425,000 and $350,000, respectively. Mr. Rodino and Ms. Lintal will be awarded a year-end target bonus based on performance and goals established by the Compensation Committee. Long term compensation will be provided by 100,000 non-qualified yearly stock options with one-year vesting commencing on November 30, 2021. In addition, Mr. Rodino and Ms. Lintal shall each be entitled to awards (“Event Awards”) equal to 1% of the “Gross Proceeds” from specific events such as licensing agreements or “therapeutic indication” (each, an “Event”). Gross Proceeds means those cash amounts paid to us by the other parties for licensing agreements, therapeutic acquisitions or any other one time cash generating event. Therapeutic indications are for example target organ specific pathologically defined cancer indications, vaccine enhancers, broad spectrum antiviral indications, or medical entities associated with persistent severe fatigue. Mr. Rodino and Ms. Lintal also will each be entitled to an award (an “Acquisition Award”) equal to 1% of the Gross Proceeds, upon the sale of our Company or substantially all of its assets (an “Acquisition”). An Event Award or Acquisition Award shall be paid in cash within 90 days of our receipt of the Gross Proceeds. 40 Governance of Compensation Committee The Compensation Committee consists of the following two directors, each of whom is “independent” under applicable NYSE American rules, a “Non-Employee Director” as defined in Rule 16b-3 under the Exchange Act, and an “Outside Director” as defined under the U.S. Treasury regulations promulgated under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”): Dr. William Mitchell, M.D. (Chair) and Stewart L. Appelrouth. The Compensation Committee makes recommendations concerning salaries and compensation for senior management and other highly paid professionals or consultants to us. The full text of the Compensation Committee’s Charter, as approved by the Board, is available on our website: www.aimimmuno.com in the “Investor Relations” tab under “Corporate Governance”. This Committee formally met six times in 2020 and all committee members were in attendance for the meetings. Our General Counsel, Chief Financial Officer and Director of Human Resources support the Compensation Committee in its work. Results of Stockholder Advisory Vote on Executive Compensation At the October 7, 2020 Annual Meeting of Stockholders, the Stockholders approved the annual, non-binding advisory vote on Executive Compensation. Objectives and Philosophy of Executive Compensation The primary objectives of the Compensation Committee of our Board of Directors with respect to Executive compensation are to attract and retain the most talented and dedicated Executives possible, to tie annual and long-term cash and stock incentives to achievement of measurable performance objectives, and to align Executives’ incentives with stockholder value creation. To achieve these objectives, the Compensation Committee expects to implement and maintain compensation plans that tie a substantial portion of Executives’ overall compensation to key strategic financial and operational goals such as the establishment and maintenance of key strategic relationships, the development of our products, the identification and advancement of additional products and the performance of our common stock price. The Compensation Committee evaluates individual Executive performance with the goal of setting compensation at levels the Committee believes are comparable with Executives in other companies of similar size and stage of development operating in the biotechnology industry while taking into account our relative performance, our own strategic goals, governmental regulations and the results of Stockholder Advisory Votes regarding executive compensation. EXECUTIVE COMPENSATION The following table provides information on the compensation during the fiscal years ended December 31, 2020 and 2019 of Thomas Equels, our Chief Executive Officer, Ellen Lintal, our Chief Financial Officer, and Peter Rodino, who, during 2018 was our General Counsel and Secretary, constituting the Company’s Named Executive Officers, based on the year ended 2020 for each fiscal year. Summary Compensation Table Name & Principal Position Year Salary / Fees $ (2) Bonus $ Stock Awards $ Option Awards $ (1) Non-Equity Incentive Plan Compensation $ Change in Pension Valued and NQDC Earnings $ All Other Compensation $ Total $ (1) Thomas K Equels 2020 806,599 652,000 — 1,139,267 — — 65,509 2,663,375 CEO & President (2)3 2019 703,125 — 46,875 62,537 70,702 883,239 Ellen Lintal 2020 239,583 177,000 — 111,616 — — 25,403 553,602 CFO (4) 2019 143,750 — 10,417 — — — 33,575 187,742 Peter Rodino 2020 394,792 244,500 — 111,616 — — 42,570 793,478 COO, General Counsel & Secretary (5) 2019 333,333 — 21,875 29,184 45,710 430,102 Notes: (1) All option awards were valued using the Black-Scholes method. 41 (2) For Named Executive Officers, who are also Directors that receive compensation for their services as a Director, the Salary/Fees and Option Awards columns include compensation that was received by them for their role as a member of the Board of Directors. As is required by Regulation S-K, Item 402(c), compensation for services as a Director have been reported within the “Summary Compensation Table” (above) for fiscal years of 2020 and 2019 as well as reported separately in the “Compensation of Directors” section (see below) for calendar year 2020. As stated in Thomas Equels’ prior employment contract, he is entitled to 5% of Ampligen sales. In the years 2019 and 2018, a bonus of 5% of Ampligen sales totaled $37,425 and was accrued. In 2020 Mr. Equels’ was paid $44,100, representing the 2020 sales bonus of $6,675 and the previous years accrued sales bonuses of $37,425. Pursuant to his current employment agreement, Mr. Equels is entitled to 3% of the “Gross Proceeds” (as defined in the employment agreement) for “significant events” (as described in the employment agreement) There were no payments during 2020. (3) Mr. Equels’ All Other Compensations consists of: 2020 2019 Life & Disability Insurance $ 27,131 $ 32,642 Healthcare Insurance 20,378 20,060 Car Expenses/Allowance 18,000 18,000 401(k) Matching Funds — — Total $ 65,509 $ 70,702 (4) Ms. Lintal’s All Other Compensations consists of: 2020 2019 Life & Disability Insurance $ 2,383 $ 3,407 Healthcare Insurance 8,620 19,368 Car Expenses/Allowance 14,400 10,800 401(k) Matching Funds — — Total $ 25,403 $ 33,575 (5) Mr. Rodino’s All Other Compensations consists of: 2020 2019 Life & Disability Insurance $ 2,542 $ 4,560 Healthcare Insurance 25,629 26,750 Car Expenses/Allowance 14,400 14,400 401(k) Matching Funds — — Total $ 42,570 $ 45,710 42 Outstanding Equity Awards at Fiscal Year End Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Options Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock that Have Not Vested (#) Market Value of Shares or Units of Stock that Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) Thomas K Equels 569 — — 216.48 6/24/2021 — — — — President and Chief 190 — — 153.12 6/6/2022 — — — — Executive Officer 569 — — 163.68 6/11/2022 — — — — 569 — — 163.68 6/6/2023 — — — — 285 — — 132.00 8/2/2023 — — — — 569 — — 190.08 6/6/2024 — — — — 569 — — 132.00 6/8/2025 — — — — 569 — — 73.92 6/8/2026 — — — — 6,819 — — 24.64 6/8/2027 — — — — 323 — — 21.56 6/15/2027 — — — — 324 — — 21.56 6/30/2027 — — — — 412 — — 21.12 7/15/2027 — — — — 473 — — 18.48 7/31/2027 — — — — 485 — — 18.04 8/15/2027 — — — — 556 — — 15.84 8/31/2027 — — — — 8,446 — — 16.28 2/13/2028 — — — — 2,841 — — 16.72 4/12/2028 — — — — 6,819 — — 13.20 5/16/2028 — — — — 5,682 — — 13.20 5/16/2028 — — — — 2,444 1,222 — 13.64 7/18/2028 — — — — 6,457 — — 9.68 10/17/2028 — — — — 23 — — 9.68 11/14/2028 — — — — 9,685 — — 9.68 1/28/2029 — — — — — 300,000 — 3.05 8/12/2030 — — — — — 300,000 — 1.96 11/11/2030 — — — — Total 55,678 601,222 — — — — — Ellen Lintal 23 — — 9.68 11/14/2029 — — — — Chief Financial Officer — 75,000 — 1.85 12/9/2030 — — — Total 23 75,000 — — — — — Peter Rodino 285 — — 132.00 8/2/2023 — — — — COO, General Counsel and Secretary 285 — — 68.65 6/21/2026 — — — — 151 — — 21.56 6/15/2027 — — — — 151 — — 21.56 6/30/2027 — — — — 193 — — 21.12 7/15/2027 — — — — 221 — — 18.48 7/31/2027 — — — — 227 — — 18.04 8/15/2027 — — — — 260 — — 15.84 8/31/2027 — — — — 3,942 — — 16.28 2/13/2028 — — — — 2,273 — — 16.72 4/12/2028 — — — — 2,652 — — 13.20 5/16/2028 — — — — 1,142 569 — 13.64 7/18/2028 — — — — 3,013 — — 9.68 10/17/2028 — — — — 23 — — 9.68 11/14/2028 — — — — 4,520 — — 9.68 1/28/2029 — — — — — 75,000 — 1.85 12/9/2030 — — — — Total 19,339 75,569 — — — — — 43 Payments on Disability As of December 31, 2020, we had an employment agreement with Mr. Equels which entitled him to his base salary, applicable benefits otherwise due and payable through the last day of the month in which disability occurs and for an additional two year period. All of his unvested options vest too. On March 24, 2021, we entered into employment agreements with Mr. Rodino and Ms. Lintal which entitled them to their base salary, applicable benefits otherwise due and payable through the last day of the month in which disability occurs and for an additional two year period. All of each NEO’s unvested options vest too. In addition, each NEO has the same short and long-term disability coverage which is available to all eligible employees. The coverage for short-term disability provides up to six months of full salary continuation up to 60% of weekly pay, less other income, with a $1,500 weekly maximum limit. The coverage for group long-term disability provides coverage at the exhaustion of short-term disability benefits of full salary continuation up to 60% of monthly pay, less other income, with a $10,000 monthly maximum limit. The maximum benefit period for the group long-term disability coverage is 60 months for those age 60 and younger at the time of the claim with the coverage period proportionately reduced with the advanced age of the eligible employee to a minimum coverage period of 12 months for those of 69 years old and older as of the date of the claim. For the period June 2010 through December 2020, Mr. Equels was entitled to receive total disability coverage of $400,000 pursuant to his employment agreement and payable by us. Payments on Death Pursuant to their employment agreements, the NEOS are entitled to their base salary and applicable benefits otherwise due and payable through the last day of the month in which death occurs and for an additional two year period. In addition, all of their unvested options vest. Each NEO, has coverage of group life insurance, along with accidental death and dismemberment benefits, consistent to the dollar value available to all eligible employees. The benefit is equal to two times current salary or wage with a maximum limit of $300,000, plus any supplemental life insurance elected and paid for by the NEO. For the period June 2010 and through December 2020, Mr. Equels is entitled to receive total death benefit coverage of $3,000,000 pursuant to his employment agreement and payable by us. Estimated Payments Following Severance — Named Executive Officers (NEO) Pursuant to his employment agreement, Mr. Equels is entitled to severance benefits on certain types of employment terminations not related to a change in control or termination not for cause. Mr. Rodino and Ms. Lintal are not covered by an employment severance agreement and therefore would only receive severance as determined by the Compensation Committee in its discretion. The dollar amounts below assume that the termination occurred on January 1, 2021. The actual dollar amounts to be paid can only be determined at the time of the NEO’s separation from us based on their prevailing compensation and employment agreements along with any determination by the Compensation Committee in its discretion. 44 Name Event Cash Severance ($) Value of Stock Awards That Will Become Vested (1) ($) Continuation of Medical Benefits ($) Additional Life Insurance ($) Total ($) Thomas K. Equels, Involuntary (no cause) $ 4,180,000 $ 1,139,000 — — $ 5,319,000 CEO & President Termination (for cause) — — — — — Death or disability $ 4,180,000 $ 1,139,000 — — $ 5,319,000 Termination by employee or retirement — $ 1,139,000 — — $ 1,139,000 Ellen Lintal Involuntary (no cause) — — — — — CFO Termination (for cause) — — — — — Death or disability — — — — — Termination by employee or retirement — — — — — Peter Rodino Involuntary (no cause) — — — — — COO, General Counsel and Termination (for cause) — — — — — Secretary Death or disability — — — — — Termination by employee or retirement — — — — — Notes: (1) Consists of stock options contractually required per the employee’s respective employment agreement or arrangement to be granted during each calendar year of the term under our 2018 Equity Incentive Plan. The stock options have a ten-year term and an exercise price equal to the closing market price of our common stock on the date of grant. The value was obtained using the Black-Scholes-Merton pricing model for stock-based compensation in accordance with FASB ASC 718. Payments on Termination in Connection with a Change in Control of Named Executive Officers Pursuant to their employment agreements, each NEO is entitled to severance benefits on certain types of employment terminations related to a change in control. In such event, the term of their employment agreements would automatically be extended for three additional years, except where such change in control occurs as a result of certain “significant events” (as described in his or her employment agreement). The dollar amounts in the chart below assume that change in control termination occurred on January 1, 2021, based on the employment agreements that existed at that time. The actual dollar amounts to be paid can only be determined at the time of the NEO’s separation from us based on their prevailing compensation and employment agreements along with any determination by the Compensation Committee in its discretion. Estimated Benefits on Termination Following a Change in Control — December 31, 2020 The following table shows potential payments to the NEO if employment terminates following a change in control under contracts, agreements, plans or arrangements at December 31, 2020. The amounts assume a January 4, 2021 termination date regarding base pay and use of the opening price of $1.79 on the NYSE American for our common stock at that date. Name Aggregate Severance Pay ($) PVSU Acceleration (2) ($) Early Vesting of Restricted Stock (4) (5) ($) Early Vesting of Stock Options and SARs (3) ($) Acceleration and Vesting of Supplemental Award (5) ($) Welfare Benefits Continuation ($) Outplacement Assistance ($) Parachute Tax Gross-up Payment ($) Total ($) Thomas K. Equels 3,472,000 (1) — — 1,139,000 $ 1,298,843 (4) — — — $ 5,909,843 Ellen Lintal — — — — — — — — — Peter Rodino — — — — — — — — — Notes: (1) This amount represents the Base Salary and benefits for the remaining current term of the NEO’s employment agreement plus a three-year extension in the term upon the occurrence of a termination from a change in control. The employment agreement with Mr. Equels has a term through December 31, 2025. This amount excludes the following payments as they cannot be calculated unless and until certain events occur: Mr. Equels is entitled to 3% of the “Gross Proceeds” (as defined in the employment agreement) for “significant events” (as described in his employment agreement) and 3% of the Gross Proceeds from any sale of our company or substantially all of our assets. 45 (2) This amount represents the payout of all outstanding performance-vesting share units (“PVSU”) awarded on a change in control at the target payout level with each award then pro-rated based on the time elapsed for the applicable three-year performance period. (3) This amount is the intrinsic value [fair market value] on January 1, 2018 ($0.18 per share) minus the per share exercise price of $0.30 of all unvested stock options for each NEO, including Stock Appreciation Rights (“SAR”). Any option with an exercise price of greater than fair market value was assumed to be cancelled for no consideration and, therefore, had no intrinsic value. (4) This amount represents the options to be issued annually for the remaining term of the NEO’s employment agreement plus a three-year extension in the occurrence of termination from a change in control. For the purpose of this schedule, a NYSE American closing price at January 4, 2021of $1.79 was used with an estimated exercise price of $0.30 for Mr. Equels. The value was obtained using the Black-Scholes-Merton pricing model for stock-based compensation in accordance with FASB ASC 718. (5) Any purchase rights represented by the Option not then vested shall, upon a change in control, shall become vested. Post-Employment Compensation The following is a description of post-employment compensation payable to the respective NEO. If a NEO does not have a specific benefit, they will not be mentioned in the subsection. In such event, the NEO does not have any such benefits upon termination unless otherwise required by law. Termination for Cause All of our NEOs can be terminated for cause. For each NEO “Cause” means willful engaging by any NEO in illegal conduct, gross misconduct or gross violation of our Code of Ethics and Business Conduct for Officers, which is demonstrably and materially injurious to our company. Mr. Equel’s agreement provides that he shall not be deemed to have been terminated for Cause unless and until we initiate a process by delivery to him a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the directors of the Board specifying the grounds for termination. After reasonable notice to Mr. Equels and an opportunity for him to be heard, the issues shall be adjudicated by a retired Florida judge or a Florida certified mediator mutually acceptable to the Board of Directors and Mr. Equels. Termination requires a finding that Mr. Equels was guilty of intentional and material misconduct according to the standards set forth above, and specifying the particulars thereof in detail supported by legally admissible evidence and utilizing the legal standard of beyond reasonable doubt. In the event that an NEO’s employment is terminated for Cause, we shall pay such NEO, at the time of such termination, only the compensation and benefits otherwise due and payable to him or her through the last day of his actual employment by us. Termination without Cause In the event that an NEO is terminated at any time without “Cause”, we shall pay to him or her, at the time of such termination, the compensation and benefits otherwise due and payable through the last day of the then current term of his or her Agreement. However, benefit distributions that are made due to a “separation from service” occurring while he or she is a Named Executive Officer shall not be made during the first six months following separation from service. Rather, any distribution which would otherwise be paid to him or her during such period shall be accumulated and paid to him or her in a lump sum on the first day of the seventh month following the “separation from service”. All subsequent distributions shall be paid in the manner specified. Death or Disability An NEO can be terminated for death or disability. “Disability” means the NEO’s inability effectively to carry out substantially all of his or her duties by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. In the event his or her employment is terminated due to his or her death or disability, we will pay him or her (or their estate as the case may be), at the time of such termination, his or her base salary, applicable benefits, and immediate vesting of unvested stock options. In the event of permanent disability, we will provide an additional two years of base salary. 46 Compensation of Directors Our Compensation, Audit and Corporate Governance and Nomination Committees, consist of Dr. William M. Mitchell, Compensation and Corporate Governance and Nomination Committee Chair, and Stewart L. Appelrouth, Audit Committee Chair, both of whom are independent Board of Director members. We reimburse Directors for travel expenses incurred in connection with attending board, committee, stockholder and special meetings along with other Company business-related expenses. We do not provide retirement benefits or other perquisites to non-employee Directors under any current program. There was no cost of living increase granted in 2019 or 2020. Directors’ fees were being deferred beginning in August 2018. When cash became available, they were paid their deferred fees in 2019. All Directors have been granted options to purchase common stock under our Stock Option Plans and/or Warrants to purchase common stock. We believe such compensation and payments are necessary in order for us to attract and retain qualified outside directors. Options shares for stock compensation were issued under the 2009 and 2018 Equity Incentive Plans. Director Compensation – 2020 & 2019 Name and Title of Director Year Fees Earned or Paid in Cash $ Stock Award $ Option Award $ Non-Equity Incentive Plan Compensation $ Change in Pension Value & Nonqualified Deferred Compensation Earnings $ All Other Compensation As Director $ Total $ T. Equels 2020 — — — — — — — Executive Vice Chairman 2019 — — — — — — — W. Mitchell 2020 182,462 112,158 — — — 294,620 Chairman of the Board (1) 2019 182,462 — 37,766 — — — 220,228 S. Appelrouth Director (1) 2020 182,462 — 112,158 — — — 294,620 2019 182,462 — 37,766 — — — 220,228 Notes: (1) Independent Director of the Company. Beginning August 16, 2018, the independent directors are deferring payment of 100% of their director’s fees until cash is available. During 2019 cash became available and the directors were paid their deferred compensation. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth as of March 26, 2021, the number and percentage of outstanding shares of Common Stock beneficially owned by: ● Each person, individually or as a group, known to us to be deemed the beneficial owners of five percent or more of our issued and outstanding Common Stock; ● Each of our Directors and the Named Executives Officers; and ● All of our officers and directors as a group. ● Total number of shares of Common Stock at March 26, 2021 was 47,821,935. 47 Name and Address of Shares Beneficially % Of Shares Beneficial Owner Owned Beneficially Owned Thomas K. Equels, Executive Vice Chairman, Chief Executive Officer, President* 866,530 (1) **0.02 % Peter W. Rodino III, Chief Operating Officer, General Counsel, Secretary* 144,153 (2) ** % William M. Mitchell, M.D., Chairman of the Board of Directors* 156,482 (3) ** % Stewart L. Appelrouth, Director* 171,753 (4) ** % Ellen Lintal, Chief Financial Officer* 99,144 (5) ** % All directors and executive officers as a group (5 persons) 1,438,062 0.03 % ** Less than 1% (1) For Mr. Equels, shares beneficially owned include 55,678 shares issuable upon exercise of options and excludes 601,222 shares issuable upon exercise of options not vested or not exercisable within the next 60 days. (2) For Mr. Rodino, shares beneficially owned include 19,339 shares issuable upon exercise of options and excludes 75,569 shares issuable upon exercise of options not vested or not exercisable within the next 60 days. (3) For Dr. Mitchell, shares beneficially owned include 29,328 shares issuable upon exercise of options and excludes 50,742 shares issuable upon exercise of options not vested or not exercisable within the next 60 days. Also includes 190 shares of common stock owned by his spouse and 194 shares owned by family trusts. (4) For Mr. Appelrouth, shares beneficially owned include 28,473 shares issuable upon exercise of options and excludes 50,742 shares issuable upon exercise of options not vested or not exercisable within the next 60 days. (5) For Ms. Lintal, shares beneficially owned include 23 shares issuable upon exercise of options and excludes 75,000 shares issuable upon exercise of options not vested or not exercisable within the next 60 days. The following table gives information about our Common Stock that may be issued upon the exercise of options, warrants and rights under all of our equity compensation plans as of December 31, 2020: Plan Category Number of Securities to be issued upon exercise of outstanding options, warrants and rights Weighted Average Exercise Price Per Share Number of securities Remaining available for future issuance under equity compensation plans (excluding securities reflected in column) (a) (a) (c) Equity compensation plans approved by security holders: 218,729 $ 2.759 28,268 Equity compensation plans not approved by security holders: 376,236 $ 13.09 — Total 591,965 $ 2.63 228,268 48 ITEM 13. Certain Relationships and Related Transactions, and Director Independence. Review, Approval or Ratification of Transactions with Related Persons Our policy is to require that any transaction with a related party required to be reported under applicable SEC rules, other than compensation related matters and waivers of our code of business conduct and ethics, be reviewed and approved or ratified by a majority of independent, disinterested Directors. We have adopted procedures in which the Audit Committee shall conduct an appropriate review of all related party transactions for potential conflict of interest situations on an annual and case-by-case basis with the approval of this Committee required for all such transactions. We have employment agreements with certain of our executive officers and have granted such Officers and Directors options and warrants to purchase our Common Stock, as discussed under the headings, Item 11. “Executive Compensation”, and Item 12. “Security Ownership of Certain Beneficial Owners and Management”, as noted above. ITEM 14. Principal Accountant Fees and Services. All audit and professional services are approved in advance by the Audit Committee to assure such services do not impair the auditor’s independence from us. The total fees by BDO USA, LLP (“BDO”) and Morrison, Brown, Argiz & Farra LLC (“MBAF”) for 2020 were $52,500 and $301,000, respectively. Total fees by MBAF for 2019 were $391,000. The following table shows the aggregate fees for professional services rendered during the year ended December 31, 2020 and 2019. Amount ($) 2020 2019 Description of Fees: Audit Fees $ 260,000 $ 299,500 Audit-Related Fees 93,500 91,500 Tax Fees — — All Other Fees — — Total $ 353,500 $ 391,000 Audit Fees Audit fees include the audit of our annual financial statements and the review of our financial statements included in our quarterly reports and services in connection with statutory and regulatory filings. Audit-Related Fees Represents the fees for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements. Audit-related fees include professional services related to the Company’s filing of SEC Form S-3 and S-8 (i.e., stock shelf offering procedures). The Audit Committee has determined that BDO’s rendering of these audit-related services and all other fees were compatible with maintaining auditor’s independence. The Board of Directors considered BDO to be well qualified to serve as our independent public accountants. The Committee also pre-approved the charges for services performed in 2020 and 2019. The Audit Committee pre-approves all auditing and accounting services and the terms thereof (which may include providing comfort letters in connection with securities underwriting) and non-audit services (other than non-audit services prohibited under Section 10A(g) of the Exchange Act or the applicable rules of the SEC or the Public Company Accounting Oversight Board) to be provided to us by the independent auditor; provided, however, the pre-approval requirement is waived with respect to the provisions of non-audit services for us if the “de minimus” provisions of Section 10A (i)(1)(B) of the Exchange Act are satisfied. This authority to pre-approve non-audit services may be delegated to one or more members of the Audit Committee, who shall present all decisions to pre-approve an activity to the full Audit Committee at its first meeting following such decision. 49 PART IV ITEM 15. Exhibits and Financial Statement Schedules. Financial Statements and Schedules - See index to financial statements on page F-1 of this Annual Report. All other schedules called for under regulation S-X are not submitted because they are not applicable or not required, or because the required information is included in the financial statements or notes thereto. (i) Exhibits - See exhibit index below. Exhibit No. Description 3.1(i) Amended and Restated Certificate of Incorporation of the Company, as amended, along with Certificates of Designations. (2) 3.2(i) Amendment to Certificate of Incorporation. (3) 3.3(i) Amendment to Certificate of Incorporation. (4) 3.4(i) Amendment to Certificate of Incorporation. (52) 3.5(i) Amendment to Certificate of Incorporation. (53) 3.6(i) Certificate of Designation of Preference, Rights and Limitations of Series B Convertible Preferred Stock. (51) 3.7(ii) Amended and Restated By-Laws of Registrant. (33) 4.1 Specimen certificate representing our Common Stock. (2) 4.2 Amended and Restated Rights Agreement, dated as of November 14, 2017, between the Company and American Stock Transfer & Trust Company LLC. The Amended and Restated Right Agreement includes the Form of Certificate of Designation, Preferences and Rights of the Series A Junior Participating Preferred Stock, the Form of Rights Certificate and the Summary of the Right to Purchase Preferred Stock. (5) 4.3 Form of Indenture filed with Form S-3 Universal Shelf Registration Statement. (6) 4.4 Form of Warrant pursuant to August 30, 2016 Securities Purchase Agreement. (36) 4.5 Form of Warrant pursuant to February 1, 2017 Securities Purchase Agreement. (38) 4.6 Form of Series A Warrant-June 2017. (41) 4.7 Form of Series B Warrant-June 2017. (41) 4.8 Form of New Series A Warrant-August 2017. (40) 4.9 Form of New Series B Warrant-August 2017. (40) 4.10 Form of Warrant issued to Purchaser of facility. (21) 4.11 Form of Class A Warrant- April 2018. (44) 4.12 Form of Class B Warrant- April 2018. (44) 4.13 September 28, 2018 Secured Convertible Promissory Note from the Company to Iliad Research and Trading, L.P. (49) 4.14 Rights Offering Form of Non-Transferable Subscription Rights Certificate. (51) 4.15 Rights Offering Form of Warrant Agreement. (61) 50 4.16 Rights Offering Form of Warrant Certificate. (51) 4.17 Rights Offering Warrant Agency Agreement with American Stock Transfer & Trust. (50) 4.18 AGP Offering-Form of Pre-Funded Warrant. (58) 4.19 AGP Offering-Form of Warrant. (58) 4.20 AGP Offering-Form of Representative’s Warrant. (59) 4.21 March 2019 Amendment to September 28, 2018 Secured Convertible Promissory Note from the Company to Iliad Research and Trading, L.P. (1) 4.22 December 5, 2019 Secured Promissory Note with Atlas Sciences, LLC. (62) 4.23 Description of Common Stock.* 10.1 Form of Confidentiality, Invention and Non-Compete Agreement. (2) 10.2 Form of Clinical Research Agreement. (2) 10.3 Employee Wage or Hours Reduction Program. (7) 10.4 Supply Agreement with Hollister-Stier Laboratories LLC dated December 5, 2005. (9) 10.5 Amendment to Supply Agreement with Hollister-Stier Laboratories LLC dated February 25, 2010. (10) 10.6 Vendor Agreement with Bio Ridge Pharma, LLC dated August 15, 2011. (31). 10.7 Vendor Agreement with Armada Healthcare, LLC dated August 15, 2011. (31). 10.8 Amendment to Supply Agreement with Hollister-Stier Laboratories LLC executed September 9, 2011. (16) 10.9 Equity Distribution Agreement, dated July 23, 2012, with Maxim Group LLC (18) 10.10 Vendor Agreement extension with Bio Ridge Pharma, LLC dated August 14, 2012. (17) 10.11 Vendor Agreement extension with Armada Healthcare, LLC dated August 14, 2012. (19) 10.12 Vendor Agreement extension with Armada Healthcare, LLC dated July 19, 2013. (19) 10.13 Vendor Agreement extension with Bio Ridge Pharma, LLC dated July 19, 2013. (19) 10.14 Vendor Agreement extension with Bio Ridge Pharma, LLC and Armada Healthcare, LLC dated August 8, 2014.(20) 10.15 Sales, Marketing, Distribution, and Supply Agreement with Emerge Health Pty Ltd. dated March 9, 2015.(Confidential Treatment granted with respect to portions of the Agreement) (20) 10.16 August 4, 2015 Amendment to Equity Distribution Agreement between the registrant and Maxim Group LLC. (23) 10.17 Vendor Agreement extension with Armada Healthcare, LLC dated July 29, 2015. (24) 10.18 Vendor Agreement extension with Bio Ridge Pharma, LLC dated July 29, 2013. (24) 10.19 Early Access Agreement with Impatients N.V. dated August 3, 2015.(Confidential Treatment granted with respect to portions of the Agreement) (25) 10.20 Sales, Marketing, Distribution, and Supply Agreement with Emerge Health Pty Ltd. dated August 6, 2015. (Confidential Treatment granted with respect to portions of the Agreement) (25) 51 10.21 Addendum to Early Access Agreement with Impatients N.V. dated October 16, 2015.(Confidential Treatment granted with respect to portions of the Agreement) (25) 10.22 November 23, 2015 Thomas K. Equels Employment Agreement Waiver. (26) 10.23 Equity Distribution Agreement, dated December 15, 2015 with Chardan Capital Markets, LLC. (27) 10.24 Termination of Chardan Equity Distribution Agreement. (60) 10.25 2016 Senior Executive Deferred Cash Performance Award Plan. (29) 10.26 2016 Voluntary Incentive Stock Award Plan. (29) 10.27 Amended and Restated 2016 Senior Executive Deferred Cash Performance Award Plan. (30) 10.28 Sales, Marketing, Distribution and Supply Agreement (the “Agreement”) with Scientific Products Pharmaceutical Co. LTD dated March 3, 2016 (Confidential Treatment granted with respect to portions of the Agreement). (32) 10.29 Agreement between Avrio Biopharmaceuticals (“Avrio”) and the Company dated July 20, 2016 (Confidential Treatment granted with respect to portions of the Agreement). (34) 10.30 Licensing Agreement dated April 13, 2016 with Lonza Sales AG (Confidential Treatment granted with respect to portions of the Agreement). (35) 10.31 Form of Securities Purchase Agreement entered into on August 30, 2016. (36) 10.32 Amended and Restated Early Access Agreement with Impatients N.V. dated May 20, 2016. (Confidential Treatment granted with respect to portions of the Agreement) (37) 10.33 December 13, 2016 Amendment No. 1 to Amended and Restated Early Access Agreement with Impatients N.V. (21) 10.34 June 28, 2017 Amendment No. 2 to Amended and Restated Early Access Agreement with Impatients N.V. (21) 10.35 February 14, 2018 Amendment No. 3 to Amended and Restated Early Access Agreement with Impatients N.V. (21) 10.36 March 26, 2018 Amendment No. 4 to Amended and Restated Early Access Agreement with Impatients N.V. (21) 10.37 Form of Securities Purchase Agreement entered into on February 1, 2017. (38) 10.38 August 2017 Form of Employee Pay Reduction Plan. (39) 10.39 August 2017Form of Executive Compensation Deferral Plan. (39) 10.40 August 2017 Form of Directors’ Compensation Deferral Plan. (39) 10.41 Form of August 2017 Agreement between the Company and the Warrant holders. (40) 10.42 Form of June 2017 Agreement between the Company and the Warrant holders. (41) 10.43 Mortgage and Security Agreement with SW Partners LLC dated May 12, 2017. (42) 10.44 Promissory Note with SW Partners LLC dated May 12, 2017. (42) 10.45 September 11, 2017 Purchase and Sale Agreement- 5 Jules Lane. (21) 10.46 January 8, 2018 Purchase and Sale Agreement- 783 Jersey Lane. (21) 10.47 Lease Agreement for 783 Jersey Lane. (21) 52 10.48 Form of Stock Purchase Agreement entered into on March 21, 2018. (43) 10.49 Form of Securities Purchase Agreement entered into on May 24, 2018. (47) 10.50 2018 Equity Incentive Plan. (48) 10.51 September 28, 2018 Securities Purchase Agreement with Iliad Research and Trading, L.P. (49) 10.52 September 28, 2018 Security Agreement with Iliad Research and Trading, L.P. (49) 10.53 October 9, 2018, Clinical Trial Agreement with Roswell Park Comprehensive Cancer Center. (46) 10.54 October 8, 2018, Restated First Amendment to Purchase and Sale Agreement. (46) 10.55 October 9, 2018, Restated Bill of Sale for the Restated First Amendment and Sale Agreement. (46) 10.56 Form of Agreement between the Company and the Warrantholders.- May 2, 2019. (54) 10.57 Termination of August 4, 2015 Equity Distribution Agreement between the registrant and Maxim Group LLC. (55) 10.58 July 19, 2019 Equity Distribution Agreement between the registrant and Maxim Group LLC. (55) 10.59 Note Purchase Agreement dated August 5, 2019 with Chicago Venture Partners, L.P. (56) 10.60 Secured Promissory Note dated August 5, 2019 issued to Chicago Venture Partners, L.P. (56) 10.61 Security Agreement dated August 5, 2019 with Chicago Venture Partners, L.P. (56) 10.62 Salary Reduction and Restricted Stock Award Memo (August 2019). (57) 10.63 Form of Restricted Stock Award. (57) 10.64 December 5, 2019 Note Purchase Agreement with Atlas Sciences, LLC. (62) 10.65 December 5, 2019 Security Agreement with Atlas Sciences, LLC. (62) 10.66 March 20, 2020 Amendment to 2017 Material Transfer and Research Agreement with Roswell Park Cancer Institute. (63) 10.67 April 1, 2020 Material Transfer and Research Agreement with Shenzhen Smoore Technology Limited. (64) 10.68 April 21, 2020 Mutual Confidentiality Agreement with UMN Pharma Inc., National Institute of Infectious Diseases, and Shionogi & Co., Ltd.(65) 10.69 June 1, 2020, Material Transfer and Research Agreement with the University of Rochester. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10))(66) 10.70 June 23, 2020, Specialized Services Agreement with Utah State University. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10))(66) 10.71 July 1, 2020, Material Transfer and Research Agreement with the Japanese National Institute of Infectious Diseases and Shionogi & Co., Ltd. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10))(66) 10.72 July 6, 2020, Clinical Trial Agreement with Roswell Park Comprehensive Cancer Center. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10))(66) 53 10.73 August 6, 2020, Project Work Order with Amarex Clinical Research LLC. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10))(66) 10.74 November 10, 2020 employment agreement with Thomas K. Equels.(67) 10.75 December 22, 2020 Master Service Agreement with Pharmaceutics International Inc. as a Fill & Finish provider for Ampligen.* 10.76 January 11, 2021 Sponsor Agreement with Centre for Human Drug Research. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) * 10.77 November 29, 2020, Material Transfer and Research Agreement with Leyden Laboratories, B.V. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10))* 10.78 December 30, 2020 Amendment to Project Work Order with Amarex Clinical Research LLC. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10))* 10.79 December 23, 2020 Amendment to Master Service Agreement with Pharmaceutics International Inc. as a Fill & Finish provider for Ampligen.* 10.80 March 24, 2021 employment agreement with Peter Rodino.* 10.81 March 24, 2021 employment agreement with Ellen Lintal.* 16.1 January 16, 2021 Letter from MBAF (65) 21.1 List of Subsidiaries. (47) 23.1 Consent of BDO USA, LLP.* 23.2 Consent of Morrison, Brown, Argiz & Farra, LLC.* 31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 from the Company’s Chief Executive Officer. * 31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 from the Company’s Chief Financial Officer. * 32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 from the Company’s Chief Executive Officer. * 32.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 from the Company’s Chief Financial Officer. * 101 The following materials from AIM’ Annual Report on Form 10-K for the year ended December 31, 2019, formatted in eXtensible Business Reporting Language (“XBRL”): (i) the Condensed Consolidated Statements of Income; (ii) the Condensed Consolidated Balance Sheets; (iii) the Condensed Consolidated Statements of Cash Flows; and (iv) Notes to Condensed Consolidated Financial Statements. * Filed herewith. (1) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed March 15, 2019 and is hereby incorporated by reference. 54 (2) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Registration Statement on Form S-1 (No. 33-93314) filed November 2, 1995 and is hereby incorporated by reference. (3) Filed with the Securities and Exchange Commission as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on September 16, 2011 and is hereby incorporated by reference. (4) Filed with the Securities and Exchange Commission as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on June 27, 2016 and is hereby incorporated by reference. (5) Filed with the Securities and Exchange Commission on November 14, 2017 as an exhibit to the Company’s Registration Statement on Form 8-A12B (No. 0-27072) and is hereby incorporated by reference. (6) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Form S-3 Registration Statement (No. 333-205228) on June 25, 2015 and is hereby incorporated by reference. (7) Filed with the Securities and Exchange Commission as an exhibit to the Company’s annual report on Form 10-K (No. 000-27072) for the year ended December 31, 2008 and is hereby incorporated by reference. (8) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2010 and is hereby incorporated by reference. (9) Filed with the Securities and Exchange Commission as an exhibit to the Company’s annual report on Form 10-K (No. 000-27072) for the year ended December 31, 2005 and is hereby incorporated by reference. (10) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Annual Report on Form 10-K (No. 000-27072) for the year ended December 31, 2009 and is hereby incorporated by reference. (11) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) dated May 28, 2010 and is hereby incorporated by reference. (12) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q (No. 000-27072) for the period ended March 31, 2011 and is hereby incorporated by reference. (13) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q (No. 000-27072) for the period ended September 30, 2011 and is hereby incorporated by reference. (14) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) filed September 23, 2011 and is hereby incorporated by reference. (15) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) filed December 12, 2011 and is hereby incorporated by reference. (16) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Annual Report on Form 10-K (No. 000-27072) for the year ended December 31, 2011 and is hereby incorporated by reference. (17) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) filed August 15, 2012 and is hereby incorporated by reference. (18) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) filed July 23, 2012 and is hereby incorporated by reference. (19) Filed with the Securities and Exchange Commission as an exhibit to the Company’s annual report on Form 10-K (No. 000-27072) for the year ended December 31, 2013 and is hereby incorporated by reference. (20) Filed with the Securities and Exchange Commission as an exhibit to the Company’s annual report on Form 10-K (No. 000-27072) for the year ended December 31, 2014 and is hereby incorporated by reference. 55 (21) Filed with the Securities and Exchange Commission as an exhibit to the Company’s annual report on Form 10-K (No. 000-27072) for the year ended December 31, 2017 and is hereby incorporated by reference left blank. (22) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) filed June 23, 2015 and is hereby incorporated by reference. (23) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) filed August 4, 2015 and is hereby incorporated by reference. (24) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2015 and is hereby incorporated by reference. (25) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q (No. 1-13441) for the period ended September 30, 2015 and is hereby incorporated by reference. (26) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) filed November 23, 2015 and is hereby incorporated by reference. (27) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) filed December 15, 2015 and is hereby incorporated by reference. (28) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) filed January 14, 2016 and is hereby incorporated by reference. (29) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) filed February 4, 2016 and is hereby incorporated by reference. (30) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K (No. 000-27072) filed March 1, 2016 and is hereby incorporated by reference. (31) Filed with the Securities and Exchange Commission as an exhibit to the Company’s amended quarterly report on Form 10-Q/A (No. 000-27072) for the period ended September 30, 2011 and is hereby incorporated by reference. (32) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q for the period ended March 31, 2016 and is hereby incorporated by reference. (33) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed June 10, 2016 and is hereby incorporated by reference. (34) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q for the period ended June 30, 2016 and is hereby incorporated by reference. (35) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q/A for the period ended March 31, 2016 and is hereby incorporated by reference. (36) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed September 1, 2016 and is hereby incorporated by reference. (37) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K/A filed May 8, 2017 and is hereby incorporated by reference. (38) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed February 3, 2017 and is hereby incorporated by reference. (39) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed August 29, 2017 and is hereby incorporated by reference. (40) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed August 23, 2017 and is hereby incorporated by reference. (41) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed June 1, 2017 and is hereby incorporated by reference. 56 (42) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q (No. 000-27072) for the period ended March 31, 2017 and is hereby incorporated by reference. (43) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed March 22, 2018 and is hereby incorporated by reference. (44) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed April 20, 2018 and is hereby incorporated by reference. (45) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed May 6, 2018 and is hereby incorporated by reference. (46) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q (No. 000-27072) for the period ended September 30, 2018 and is hereby incorporated by reference. (47) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Registration Statement on Form S-1 (No. 333-226057) filed July 2, 2018 and is hereby incorporated by reference. (48) Filed with the Securities and Exchange Commission as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on August 3, 2018 and is hereby incorporated by reference. (49) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed October 4, 2018 and is hereby incorporated by reference. (50) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed March 8, 2019 and is hereby incorporated by reference. (51) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Registration Statement on Form S-1/A (No. 333-229051) filed February 6, 2019 and is hereby incorporated by reference. (52) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed June 5, 2019 and is hereby incorporated by reference. (53) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed August 23, 2019 and is hereby incorporated by reference. (54) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed May 2, 2019 and is hereby incorporated by reference. (55) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed July 22, 2019 and is hereby incorporated by reference. (56) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2019 and is hereby incorporated by reference. (57) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed August 26, 2019 and is hereby incorporated by reference. (58) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed September 27, 2019 and is hereby incorporated by reference. (59) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Registration Statement on Form S-1/A (No. 333-233657) filed September 24, 2019 and is hereby incorporated by reference. (60) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed December 11, 2018 and is hereby incorporated by reference. (61) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed February 27, 2019 and is hereby incorporated by reference. 57 (62) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed December 11, 2019 and is hereby incorporated by reference. (63) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed March 26, 2020 and is hereby incorporated by reference. (64) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed April 6, 2020 and is hereby incorporated by reference. (65) Filed with the Securities and Exchange Commission as an exhibit to the Company’s Current Report on Form 8-K filed April 27, 2020 and is hereby incorporated by reference. (66) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2020 and is hereby incorporated by reference. (67) Filed with the Securities and Exchange Commission as an exhibit to the Company’s quarterly report on Form 10-Q (No. 000-27072) for the period ended September 30, 2020 and is hereby incorporated by reference. (b) Financial Statement Schedules All schedules have been omitted because either they are not required, are not applicable or the information is otherwise set forth in the financial statements and related notes thereto. Item 16. Form 10-K Summary None. 58 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AIM IMMUNOTECH INC. By: /s/ Thomas K. Equels Thomas K. Equels Chief Executive Officer March 30, 2021 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange of 1934, as amended, this report has been signed below by the following persons on behalf of this Registrant and in the capacities and on the dates indicated. /s/ Thomas K Equels Chief Executive Officer & President, March 30, 2021 Thomas K. Equels Director of the Board /s/ William Mitchell Chairman of the Board March 30, 2021 William Mitchell, M.D., Ph.D. and Director /s/ Stewart L Appelrouth Director March 30, 2021 Stewart L. Appelrouth /s/ Ellen M Lintal Chief Financial Officer March 30, 2021 Ellen M Lintal 59 AIM IMMUNOTECH INC. AND SUBSIDIARIES Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firms F-2 Consolidated Balance Sheets at December 31, 2020 and 2019 F-4 Consolidated Statements of Comprehensive Loss for each of the years in the two-year period ended December 31, 2020 F-5 Consolidated Statements of Changes in Stockholders’ Equity for each of the years in the two-year period ended December 31, 2020 F-6 Consolidated Statements of Cash Flows for each of the years in the two-year period ended December 31, 2020 F-7 Notes to Consolidated Financial Statements F-8 F- 1 Report of Independent Registered Public Accounting Firm Stockholders and Board of Directors AIM ImmunoTech Inc. Ocala, Florida Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of AIM ImmunoTech Inc. (the “Company”) as of December 31, 2020, the related consolidated statement of operations and comprehensive loss, stockholders’ equity, and cash flows for the year ended December 31, 2020 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020 , in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Calculation of the fair value of redeemable warrants As discussed in Note 18 to the consolidated financial statements, the Company has certain redeemable warrants issued in conjunction with offerings that contain a cash settlement feature upon the occurrence of a Fundamental Transaction. The Company calculates the fair value of the redeemable warrants at the end of each quarterly reporting period using a Monte Carlo Simulation, which includes subjective assumptions. Subsequent changes in the fair value of the redeemable warrants are recorded in the consolidated statement of operations and comprehensive loss. As of December 31, 2020, the fair value of the redeemable warrants was approximately $180 thousand. We identified the calculation of the fair value of the redeemable warrants as a critical audit matter. Specifically, there was a high degree of management subjectivity and judgment in selecting the assumptions used in the Monte Carlo Simulation, including the expected probability of a Fundamental Transaction and the expected stock price volatility. Auditing these elements involved especially subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including the use of personnel with specialized skill and knowledge to evaluate the Company’s Monte Carlo Simulation. The primary procedures we performed to address this critical audit matter included: ● Testing management’s process for developing the fair value estimate and evaluating the significant assumptions used to calculate the fair value of the redeemable warrants, including the probability of a Fundamental Transaction and testing the accuracy and completeness of data used by management to estimate the fair value of the redeemable warrants, including considering evidence obtained in other areas of the audit to determine if contradictory evidence existed. ● Utilizing personnel with specialized skills and knowledge in valuation to assist in evaluating (i) the appropriateness of the Monte Carlo Simulation model, and (ii) the expected stock price volatility range that was independently developed in consideration of daily historical stock price volatility information. /s/ BDO USA, LLP We have served as the Company’s auditor since 2021. Miami, Florida March 30, 2021 F- 2 Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders of AIM ImmunoTech Inc. Opinion on the Financial Statement We have audited the accompanying balance sheet of AIM ImmunoTech Inc. (the “Company”) as of December 31, 2019, and the related statement of operations, stockholders’ equity and cashflows for the year in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Morrison, Brown, Argiz & Farra, LLC We have served as the Company’s auditor since 2018. Miami, Florida March 30, 2020 F- 3 AIM IMMUNOTECH INC. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2020 and 2019 (in thousands, except for share and per share amounts) 2020 2019 ASSETS Current assets: Cash and cash equivalents $ 38,501 $ 1,470 Marketable securities 501 7,308 Funds receivable from New Jersey net operating loss 1,090 776 Accounts receivable, net 34 44 Prepaid expenses and other current assets 184 848 Total current assets 40,310 10,446 Property and equipment, net 6,473 7,116 Right of use asset, net 179 152 Patent and trademark rights, net 1,498 1,151 Marketable securities, long term 15,376 — Other assets 748 1,889 Total assets $ 64,584 $ 20,754 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 383 $ 472 Accrued expenses 442 403 Current portion of operating lease liability 47 38 Current portion of financing obligation 230 214 Total current liabilities 1,102 1,127 Long-term liabilities: Operating lease liability 132 114 Notes payable — 3,910 Financing obligation arising from sale leaseback transaction (Note 19) 1,876 2,104 Redeemable warrants 180 57 Commitments and contingencies (Notes 9, 11, 12, 14, 15 and 19) Stockholders’ equity: Series B Convertible Preferred Stock, stated value $1,000 per share, 732 shares designated, 778 shares issued and outstanding 732 778 Common Stock, par value $0.001 per share, authorized 350,000,000 shares; issued and outstanding 42,154,371 and 10,386,754, respectively 42 10 Additional paid-in capital 402,541 340,228 Accumulated other comprehensive loss (47 ) — Accumulated deficit (341,974 ) (327,574 ) Total stockholders’ equity 61,294 13,442 Total liabilities and stockholders’ equity $ 64,584 $ 20,754 See accompanying notes to consolidated financial statements. F- 4 AIM IMMUNOTECH INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Loss (in thousands, except share and per share data) Years ended December 31, 2020 2019 Revenues: Clinical treatment programs - US $ 144 $ 110 Clinical treatment programs - Europe 19 30 Total Revenues 163 140 Costs and Expenses: Production costs 806 893 Research and development 5,720 4,651 General and administrative 8,654 7,039 Impairment of other assets 135 — Total Costs and Expenses 15,315 12,583 Operating loss (15,152 ) (12,443 ) Interest and other income 219 89 Interest expense and other finance costs (672 ) (427 ) Settlement of litigation/Insurance Claim — 1,217 Extinguishment of debt 142 (345 ) Fair value of convertible note adjustment — 90 Redeemable warrants valuation adjustment (123 ) 1,510 Gain from sale of income tax operating losses 1,186 905 Net Loss (14,400 ) (9,404 ) Other comprehensive (loss) Unrealized loss on marketable securities (47 ) — Net comprehensive loss $ (14,447 ) $ (9,404 ) Basic and diluted loss per share $ (0.45 ) $ (2.58 ) Weighted average shares outstanding basic and diluted 31,842,799 3,642,717 See accompanying notes to consolidated financial statements. F- 5 AIM IMMUNOTECH INC. AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders’ Equity (in thousands except share data) Common Accumulated Series B Common Stock Additional other Total Preferred Stock .001 Paid-in Comprehensive Accumulated Stockholders’ Shares Shares Par Value Capital Income (Loss) Deficit Equity Balance December 31, 2018 — 1,107,607 $ 1 $ 323,749 $ — $ (318,170 ) $ 5,580 Shares issued for: Common Stock issuance, net of costs — 8,956,228 9 16,946 — — 16,955 Convertible note origination shares — 204,246 — 1,473 — — 1,473 Deemed dividends — — — (135 ) — — (135 ) Equity based compensation — 1,932 — 853 — — 853 Redeemable warrants — — — (2,787 ) — — (2,787 ) Shares issued to pay accounts payable — 116,741 — 129 — — 129 Series B preferred shares issued, net of offering costs 5,312 — — — — — 5,312 Series B preferred shares converted to Common shares (4,534 ) — — — — — (4,534 ) Net comprehensive loss — — — — — (9,404 ) (9,404 ) Balance December 31, 2019 778 10,386,754 10 340,228 — (327,574 ) 13,442 Shares issued for: Common Stock issuance, net of costs — 31,761,210 32 61,216 — — 61,248 Warrant Modification — — — 46 — — 46 Equity-based compensation — — — 1,036 — — 1,036 Shares issued to pay accounts payable — 6,407 — 15 — — 15 Series B preferred shares converted to Common shares (46 ) — — — — — (46 ) Net comprehensive loss — — — — (47 ) (14,400 ) (14,447 ) Balance December 31, 2020 732 42,154,371 $ 42 $ 402,541 $ (47 ) $ (341,974 ) $ 61,294 See accompanying notes to consolidated financial statements F- 6 AIM IMMUNOTECH INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) Years ended December 31, 2020 2019 Cash flows from operating activities: Net loss $ (14,400 ) $ (9,404 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation of property and equipment 665 735 Redeemable warrants valuation adjustment 123 (1,236 ) Abandonment of patents and trademarks 158 — Fair value of convertible note adjustment — (70 ) Allowance for bad debt recovery (30 ) — Warrant modification 46 — Extinguishment of convertible note 142 345 Amortization of patent, trademark rights 68 57 Changes in ROU assets (27 ) 37 Inventory write-off 1,095 — Impairment of other assets 135 — Gain from sale of income tax operating losses (96 ) (129 ) Equity-based compensation 1,036 853 Amortization of finance and debt issuance costs 112 288 Change in assets and liabilities: Accounts receivables 40 191 Funds receivable from New Jersey net operating loss (314 ) 83 Prepaid expenses and other current assets and other non current assets 671 29 Lease liability 27 (37 ) Accounts payable (89 ) (207 ) Accrued interest expense 231 129 Accrued expenses 39 (731 ) Net cash used in operating activities (10,368 ) (9,067 ) Cash flows from investing activities: Proceeds from sale of marketable securities 10,044 — Purchase of short-term marketable securities (18,613 ) (5,782 ) Purchase of property and equipment (22 ) (68 ) Purchase of patent and trademark rights (573 ) (297 ) Net cash used in investing activities (9,164 ) (6,147 ) Cash flows from financing activities: Financing obligation payments (355 ) (340 ) Proceeds from note payable, net of issuance costs — 3,632 Payoff of note payable (4,330 ) (2,210 ) Proceeds from sale of stock, net of issuance costs 61,248 15,303 Net cash provided by financing activities 56,563 16,385 Net increase in cash and cash equivalents 37,031 1,171 Cash and cash equivalents at beginning of period 1,470 299 Cash and cash equivalents at end of period $ 38,501 $ 1,470 Supplemental disclosures of non-cash investing and financing cash flow information: Stock issued to settle accounts payable $ 15 $ 129 Conversion of note payable in shares $ — 1,236 Conversion of Series B preferred $ 46 4,534 Operating Lease – Right of Use Assets $ 66 $ 188 See accompanying notes to consolidated financial statements. F- 7 AIM IMMUNOTECH INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Business AIM ImmunoTech Inc. and its subsidiaries (collectively, “AIM” or the “Company”) are an immuno-pharma company headquartered in Ocala, Florida and focused on the research and development of therapeutics to treat multiple types of cancers, various viruses and immune-deficiency disorders. The Company has established a strong foundation of laboratory, pre-clinical and clinical data with respect to the development of nucleic acids and natural interferon to enhance the natural antiviral defense system of the human body and to aid the development of therapeutic products for the treatment of certain cancers and chronic diseases. AIM’s flagship products include Ampligen® (rintatolimod), a first-in-class drug of large macromolecular RNA (ribonucleic acid) molecules, and Alferon N Injection® (Interferon Alfa-N3). A first-in-class drug is also known as a new molecular entity that contains an active moiety. Ampligen has not been approved by the FDA or marketed in the US. Since the outbreak of SARS-CoV-2, the novel virus that causes COVID-19, the Company has been actively engaged in determining whether Ampligen could be an effective treatment for this virus or could be part of a vaccine. The Company believes that Ampligen has the potential to be both an early-onset treatment for and prophylaxis against SARS-CoV-2. Ampligen also has potential as a COVID-19 vaccine strategy that combines Ampligen as an immune enhancer seeking to boost the efficacy of the vaccine and also convey cross-reactivity and cross-protection against future mutations. The Company believes that prior studies of Ampligen in SARS-CoV-1 animal experimentation may predict similar protective effects against the new virus. Beginning in April 2020, the Company entered into confidentiality and non-disclosure agreements with numerous companies for the potential outsourcing of the production of polymer, enzyme, placebo as well as Ampligen and one Contract Research Organization which may also assist with the planning, presentation and filing of documents with the FDA. These confidentiality and non-disclosure agreements are only the initial step in forging relationships with these entities to obtain contract manufacturers and research partners. No assurance can be given as to how many of these, initial explorations, if any, will result in definitive arrangements or, with regard to potential research partners, what research arrangements will develop and thereafter prove fruitful. Ampligen represents an RNA being developed for globally important cancers, viral diseases and disorders of the immune system. Ampligen has in the clinic demonstrated the potential for standalone efficacy in a number of solid tumors. The Company has also seen success in increasing survival rates and efficacy in the treatment of animal tumors when Ampligen is used in combination with checkpoint blockade therapies. This success in the field of immuno-oncology has guided our focus toward the potential use of Ampligen as a combinational therapy for the treatment of a variety of solid tumor types. There are currently multiple Ampligen clinical trials testing Ampligen in humans — both underway and planned — at major cancer research centers. Ampligen was used as a monotherapy to treat pancreatic cancer patients in an Early Access Program (EAP) approved by the Inspectorate of Healthcare in the Netherlands at Erasmus Medical Center. In September, AIM reported receipt of statistically significantly results of positive survival benefit when using Ampligen in patients with locally advanced/metastatic pancreatic cancer after systemic chemotherapy. AIM will work with its Contract Research Organization, Amarex Clinical Research LLC, to seek FDA “fast-track” and possibly even FDA “breakthrough” designations and to obtain authorization to conduct a follow-up pancreatic cancer Phase 2/3 clinical trial with sites in the Netherlands at Erasmus MC under Prof. van Eijck, and also at major cancer research centers in the United States. Ampligen is also being evaluated for the treatment of myalgic encephalomyelitis/chronic fatigue syndrome (ME/CFS). AIM is currently sponsoring an expanded access program for ME/CFS patients in the U.S. In August 2016, the Company received approval of our NDA from Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica (ANMAT) for commercial sale of Ampligen in the Argentine Republic for the treatment of severe CFS. With regulatory approval in Argentina, Ampligen is the world’s only approved therapeutic for ME/CFS. On June 10, 2020, the Company received import clearance from ANMAT to import the first shipment of commercial grade vials of Ampligen to Argentina. The next steps in the commercial launch of Ampligen include ANMAT conducting a final inspection of the product and release tests before granting final approval to begin commercial sales. AIM has supplied GP Pharm with the Ampligen required for testing and ANMAT release. Once final approval by ANMAT is obtained, GP Pharm will begin distributing Ampligen in Argentina. The Company continues to pursue our Ampligen New Drug Application, or NDA, for the treatment of CFS with the FDA. Alferon N Injection is approved for a category of sexually transmitted diseases infection and patients that are intolerant to recombinant interferon in Argentina. Alferon is the only natural-source, multi-species alpha interferon currently approved for sale in the U.S. for the intralesional treatment of refractory (resistant to other treatment) or recurring external condylomata acuminata/genital warts (GW) in patients 18 years of age or older. Certain types of human papilloma viruses cause GW. AIM also has approval from ANMAT for the treatment of refractory patients that failed or were intolerant to treatment with recombinant interferon in Argentina. F- 8 The Company operates a 30,000 sq. ft. facility in New Brunswick, NJ, where it conducts testing and has produced limited quantities of active pharmaceutical ingredients (“API”) for its products. The Company has reviewed its operations at the facility and believes that some of the equipment most likely should be upgraded to realize greater efficiencies, when and if it requires more API than is currently in storage. The Company is also exploring engaging a Contract Manufacturing Organization (“CMO”) to produce API. While the Company believes it has sufficient API to meet its current needs, is also continually exploring new efficiencies so as to maximize its ability to fulfill future obligations. The consolidated financial statements include the financial statements of AIM ImmunoTech Inc. and its wholly-owned subsidiaries, which are incorporated in Delaware and are dormant. The Company’s foreign subsidiary, Hemispherx Biopharma Europe N.V./S.A., was established in Belgium in 1998. All significant intercompany balances and transactions have been eliminated in consolidation. (2) Summary of Significant Accounting Policies (a) Cash and Cash Equivalents Cash and Cash Equivalents consist of cash and money market accounts and total $38,501,000 and $1,470,000 at December 31, 2020 and 2019, respectively. (b) Marketable Securities Marketable securities consist of mutual funds and debt securities. The Company’s securities are stated at fair value. The Company records changes in fair value of mutual funds in results of operations and the changes in fair value of debt securities in other comprehensive income. (c) Property and Equipment, net (in thousands) December 31, 2020 2019 Land, buildings and improvements $ 10,547 $ 10,547 Furniture, fixtures, and equipment 5,136 5,114 Total property and equipment 15,683 15,661 Less: accumulated depreciation and amortization (9,210 ) (8,545 ) Property and equipment, net $ 6,473 $ 7,116 Property and equipment are recorded at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective assets, ranging from three to thirty-nine years. (d) Patent and Trademark Rights, net Patents and trademarks are stated at cost (primarily legal fees) and are amortized using the straight line method over the established useful life of 17 years. The Company reviews its patents and trademark rights periodically to determine whether they have continuing value or their value has become impaired. Such review includes an analysis of the patent and trademark’s ultimate revenue and profitability potential. Management’s review addresses whether each patent continues to fit into the Company’s strategic business plans. (e) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure (“GAAP”) of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates, and those differences may be material. Accounts requiring the use of significant estimates include valuation allowances for inventory, determination of other-than-temporary impairment on securities, valuation of deferred taxes, patent and trademark valuations, stock-based compensation calculations, building valuation, fair value of warrants, convertible note payable and contingency accruals. F- 9 Impact of the Novel Coronavirus On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. Management is actively monitoring the global situation on its financial condition, liquidity, operations, scientific collaborations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2021. Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity for the fiscal year 2021. Coronavirus Aid, Relief and Economic Security Act On March 27, 2020, the U.S. Government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. The CARES Act includes various income and payroll tax provisions. The Company has analyzed the tax provisions of the CARES Act and determined they have no significant financial impact to the consolidated financial statements. The Company has no intention of taking advantage of other benefits but will continue to evaluate the impact on the Company’s financial position. (f) Revenue Effective January 1, 2018, the Company adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers, using the modified retrospective method and there was no impact to financial position and results of operations as a result of the adoption. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Overall, adoption of the new standard did not result in an adjustment to amounts previously reported in our consolidated financial statements and there were no other significant changes impacting the timing or measurement of our revenue or our business processes and controls. Revenue from the sale of Ampligen under cost recovery clinical treatment protocols approved by the FDA is recognized when the product is shipped. The Company has no other obligation associated with its products once shipment has been accepted by the customer. Revenue from the sale Ampligen under the EAP is recognized as the product is distributed and administered to patients involved in the cost recovery program. (g) Accounting for Income Taxes Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits which are not expected to be realized. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. F- 10 The Company applies the provisions of FASB ASC 740-10 Uncertainty in Income Taxes. As a result of the implementation, there has been no material change to the Company’s tax positions as they have not paid any corporate income taxes due to operating losses. With the exception of net operating losses generated in New Jersey, all tax benefits will likely not be recognized due to the substantial net operating loss carryforwards which will most likely not be realized prior to expiration. With no tax due for the foreseeable future, the Company has determined that a policy to determine the accounting for interest or penalties related to the payment of tax is not necessary at this time. Immaterial Revision of Previously Reported Amounts During the preparation of the consolidated financial statements as of and for the period ended December 31, 2020, Management noted an error in the Company’s previously issued Consolidated Financial Statements. The error in the amount of approximately $535,000 related to the Company’s accounting for income taxes that resulted in a deferred tax benefit associated with the sale of net operating losses. In evaluating whether the previously issued Consolidated Financial Statements were materially misstated, the Company applied the guidance of ASC 250, Accounting Changes and Error Corrections, SEC Staff Accounting Bulletin (“SAB”) Topic 1.M, Assessing Materiality and SAB Topic 1.N, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements and concluded that the effect of the errors on prior period financial statements was immaterial. The cumulative effect of adjustments required to correct the misstatements in the Consolidated Financial Statements years prior to 2019 are reflected in the revised opening accumulated deficit balance as of January 1, 2019. The cumulative effect of those adjustments on all periods reduced previously reported accumulated deficit by approximately $406,000. As a result, certain amounts presented in the Company’s Consolidated Balance Sheet and Consolidated Statement of Operations have been revised from the amounts previously reported to correct this error which include an adjustment to decrease Accumulated deficit in the amount of approximately $406,000, increase Other assets in the amount of approximately $535,000, increase Gain from the sale of income tax operating losses of approximately $129,000, decrease Net loss in the amount of approximately $129,000 and increase Basic and diluted loss per share of $(0.04). (h) Recent Accounting Standards and Pronouncements In February 2016, the FASB issued ASU 2016-02 - Leases, which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018, and early adoption of is permitted as of the standard’s issuance date. ASU 2016-02 allows a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company evaluated the effects and the adoption of this guidance will have on the consolidated financial statements. (See Note 12 : Leases). In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments, and subsequent amendments to the guidance, ASU 2018-19 in November 2018 and ASU 2020-02 in February 2020. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. The amendment will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2018-19 clarifies that receivables arising from operating leases are accounted for using lease guidance and not as financial instruments. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. This ASU will be effective for us beginning the first day of our 2023 fiscal year. Early adoption is permitted. We are evaluating the impact of adoption of this ASU on our financial condition, results of operations and cash flows, and, as such, we are not able to estimate the effect the adoption of the new standard will have on our financial statements. Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future financial statements. (i) Stock-Based Compensation The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires recognition of compensation expense related to stock-based compensation awards over the period during which an employee is required to provide service for the award. Compensation expense is equal to the fair value of the award at the date of grant, net of estimated forfeitures. F- 11 (j) Accounts Receivable, net Concentration of credit risk, with respect to accounts receivable, is limited due to the Company’s credit evaluation process. The Company does not require collateral on its receivables. The Company’s receivables were $34,000 and $44,000, net of $30,000 allowance for doubtful accounts, as of December 31, 2020 and 2019, respectively. (k) Common Stock Per Share Calculation Basic and diluted net loss per share is computed using the weighted average number of shares of Common Stock outstanding during the period. Equivalent Common shares, consisting of 548,374, and 8,351,113 of stock options and warrants, are excluded from the calculation of diluted net loss per share for the years ended December 31, 2020 and 2019, respectively, since their effect is antidilutive due to the net loss of the Company. (l) Long-Lived Assets The Company assesses long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant under-performance of a business or product line in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in its use of the assets. The Company measures the recoverability of assets that it will continue to use in its operations by comparing the carrying value of the asset grouping to our estimate of the related total future undiscounted net cash flows. If an asset grouping’s carrying value is not recoverable through the related undiscounted cash flows, the asset grouping is considered to be impaired. The Company measures the impairment by comparing the difference between the asset grouping’s carrying value and its fair value. Long-lived assets are considered a non-financial asset and are recorded at fair value only if an impairment charge is recognized. Impairments are determined for groups of assets related to the lowest level of identifiable independent cash flows. The Company makes subjective judgments in determining the independent cash flows that can be related to specific asset groupings. In addition, as the Company reviews its manufacturing process and other manufacturing planning decisions, the useful lives of assets are shorter than the Company had originally estimated, it accelerates the rate of depreciation over the assets’ new, shorter useful lives. (3) Inventories The Company uses the lower of first-in, first-out (“FIFO”) cost or net realizable value method of accounting for inventory. Commercial sales of Alferon in the U.S. will not resume until new batches of commercial filled and finished product are produced and released by the Food and Drug Administration (“FDA”). While the facility is approved by the FDA under the Biologics License Application (“BLA”) for Alferon, this status will need to be reaffirmed by an FDA pre-approval inspection. The Company also will need the FDA’s approval to release commercial product once it has submitted satisfactory stability and quality release data. Currently, the manufacturing process is on hold and there is no definitive timetable to have the facility back online. The Company estimates it will need approximately $10,000,000 to commence the manufacturing process. Due to the Company extending the timeline of Alferon production to an excess of one year, the Company reclassified Alferon work in process inventory of $1,095,000 to other assets within our balance sheet as of December 31, 2019. Based on the Company’s current oncology and growing projects related to COVID-19 and ability to ready the manufacturing plant to utilize the current Alferon work in process in a timely manner prior to expiration of the WIP the Company concluded to write off the value of the Alferon as of December 31, 2020 and included within Research and Development expenses on the Consolidated Statement of Comprehensive Loss. (4) Marketable Securities Marketable securities consist of mutual funds and debt securities. At December 31, 2020 and 2019, it was determined that none of the marketable securities had an other-than-temporary impairment. At December 31, 2020 and December 31, 2019, all securities were measured as Level 1 instruments of the fair value measurements standard (See Note 18: Fair Value). As of December 31, 2020 and December 31, 2019 the Company held $15,877,000 and $7,308,000 in debt and equity securities respectively. As of December 31, 2019 there were no debt securities. F- 12 Debt Securities classified as available for sale consisted of: December 31, 2020 (in thousands) Securities Amortized Cost Gross Unrealized Gains /(Losses) Gross Unrealized Gains /(Losses) Fair Value Marketable Securities U.S. Treasury notes $ 5,746 $ — $ (47 ) $ 5,699 $ 5,699 U.S. Government mortgage backed securities 4,890 — (52 ) 4,838 4,838 Corporate bonds 5,288 — 52 5,340 5,340 Totals $ 15,924 $ — $ (47 ) $ 15,877 $ 15,877 December 31, 2020 (in thousands) Less than 12 Months 12 Months or More Total Securities Fair Value Gross Unrealized Gains Fair Value Gross Unrealized Gains Fair Value Gross Unrealized Gains U.S. Treasury notes $ 501 $ — $ 5,245 $ (47 ) $ 5,699 $ (47 ) U.S. Government mortgage backed securities — — 4,890 (52 ) 4,838 (52 ) Corporate bonds — — 5,288 52 5,340 52 Totals $ 501 $ — $ 15,423 $ (47 ) $ 15,877 $ (47 ) December 31, 2019 (in thousands) Securities Fair Value Short-Term Investments Mutual Funds $ 7,308 $ 7,308 Totals $ 7,308 $ 7,308 Net gain and loss recognized during 2020 and 2019 respectively was $1,000 and $3,000. (5) Patents, Trademark Rights, net December 31, 2018 $ 911 Acquisitions 297 Amortization (57 ) December 31, 2019 $ 1,151 Acquisitions 573 Amortization (68 ) Abandonments (158 ) December 31, 2019 $ 1,498 F- 13 Patents and trademarks are stated at cost (primarily legal fees) and are amortized using the straight-line method of the estimated useful life of 17 years. During the years ended December 31, 2020, the Company decided not to pursue certain patents in various countries for strategic reasons and recorded abandonment charges which are included in research and development. Amortization of patents and trademarks for each of the next five years is as follows: Year Ending December 31, 2021 $ 75 2022 89 2023 105 2024 124 2025 146 Thereafter 959 Total $ 1,498 (6) Accrued Expenses Accrued expenses at December 31, 2020 and 2019 consist of the following: (in thousands) December 31, 2020 2019 Compensation $ 2 $ 94 Professional fees 124 73 Clinical trial expenses — 56 Other expenses 316 180 $ 442 $ 403 (7) Stockholders’ Equity (a) Preferred Stock The Company is authorized to issue 5,000,000 shares of $0.01 par value preferred stock with such designations, rights and preferences as may be determined by the Board of Directors. Of our authorized preferred stock, 250,000 shares have been designated as Series A Junior Participating Preferred Stock and 8,000 shares have been designated as Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock has a stated value $1,000 per share. The Company is authorized to issue 8,000 Series B Convertible Preferred Stock, no par value, stated value $1,000 per share. As of December 31, 2020, and December 31, 2019, the Company had 732 and 778 shares of Series B Convertible Preferred Stock outstanding, respectively. Each such Preferred Share is convertible into 114 shares of common stock. Pursuant to a registration statement relating to a rights offering declared effective by the SEC on February 14, 2019, AIM distributed to its holders of common stock and to holders of certain options and warrants as of February 14, 2019, at no charge, one non-transferable subscription right for each share of common stock held or deemed held on the record date. Each right entitled the holder to purchase one unit, at a subscription price of $1,000 per unit, consisting of one share of Series B Convertible Preferred Stock with a face value of $1,000 (and immediately convertible into common stock at an assumed conversion price of $8.80) and 114 warrants with an assumed exercise price of $8.80. The warrants are exercisable for five years after the date of issuance. The net proceeds realized from the rights offering were approximately $4,700,000. During the twelve months ending December 31, 2020, 46 shares of Series B Convertible Preferred Stock were converted into common stock. (b) Common Stock The Company has authorized shares of 350,000,000 with specific limitations and restrictions on the usage of 8,000,000 of the 350,000,000 authorized shares. F- 14 In June 2019, the Company effected a 44-to-1 reverse stock split of the outstanding shares, in order to become compliant with the NYSE regulations. This did not affect the number of authorized shares. All references herein to shares of common stock, options, warrants and preferred stock have been adjusted to give effect to this reverse stock split. On July 7, 2020, the board of directors approved up to $500,000 for all directors, officers and employees to buy company shares from the Company at the market price. As of August 31, 2020, the Company has issued 10,730 shares of its common stock at a price of $2.33 for a total of $25,000. This plan expired September 10,2020. On September 4, 2020, the board of directors approved up to $500,000 for all directors, officers and employees to buy company shares from the Company at the market price. As of October 31, 2020, the Company has issued 12,316 shares of its common stock at a price of $2.03 for a total of $25,000. This plan expired November 1,2020. On November 5, 2020, the board of directors approved up to $500,000 for all directors, officers and employees to buy company shares from the Company at the market price. As of December 31, 2020, the Company has issued 14,435 shares of its common stock at a price of $1.72 for a total of $25,000. This plan expired January 2, 2021. On June 11, 2019, the board of directors approved up to $500,000 for all directors, officers and employees to buy company shares from the Company at the market price. As of June 28, 2019, the Company has issued 67,767 shares of its common stock at prices between $4.03 and $4.37 for a total of $274,000. This plan expired August 19, 2019. On September 27, 2019, the Company closed a public offering underwritten by A.G.P./Alliance Global Partners, LLC (the “Offering”) of (i) 1,740,550 shares of Common Stock; (ii) pre-funded warrants exercisable for 7,148,310 shares of Common Stock (the “Pre-funded Warrants”), and (iii) warrants to purchase up to an aggregate of 8,888,860 shares of Common Stock (the “Warrants”). In conjunction with the Offering, a Representative’s Warrant to purchase up to an aggregate of 266,665 shares of common stock (the “Representative’s Warrant”). The shares of Common Stock and Warrants were sold at a combined Offering price of $0.90, less underwriting discounts and commissions. Each Warrant sold with the shares of Common Stock represents the right to purchase one share of Common Stock at an exercise price of $0.99 per share. The Pre-Funded Warrants and Warrants were sold at a combined Offering price of $0.899, less underwriting discounts and commissions. The Pre-Funded Warrants were sold to purchasers whose purchase of shares of Common Stock in the Offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% of the Company’s outstanding Common Stock immediately following the consummation of the Offering, in lieu of shares of Common Stock. Each Pre-Funded Warrant represents the right to purchase one share of Common Stock at an exercise price of $0.001 per share. The Pre-Funded Warrants are exercisable immediately and may be exercised at any time until the Pre-Funded Warrants are exercised in full. A registration statement on Form S-1, relating to the Offering was filed with the SEC and was declared effective on September 25, 2019, the net proceeds were approximately $7,200,000. During the year ending December 31, 2020, 1,870,000 of the Pre-funded Warrants were exercised and 7,687,860 Warrants were exercised. In addition, on March 25, 2020, the Representative’s Warrant was amended to permit exercise of such warrant to commence on March 30, 2020. These warrants were exercised on March 31, 2020 and an aggregate of 266,665 shares were issued upon exercise of this warrant for gross proceeds of approximately $264,000 and a $46,000 expense for the warrant modification. On April 20, 2018, the Company entered into Securities Purchase Agreements (the “Purchase Agreements”) with certain investors (the “Investors”) for the sale by the Company of an aggregate of 150,000 shares (the “Common Shares”) of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), at a purchase price of $17.16 per share. Concurrently with the sale of the Common Shares, pursuant to the Purchase Agreements the Company also sold 150,000 warrants, 50% of which are Class A Warrants and 50% of which are Class B Warrants (collectively, the “Warrants”). The Company received gross proceeds from the sale of the Warrants solely to the extent such Warrants are exercised for cash. Both classes of Warrants will not be exercisable until six months after issuance and will have an exercise price of $17.16 per share, subject to adjustments as provided under the terms of the Warrants. The Class A Warrants and Class B Warrants will expire, respectively, two and five years after the date on which they are first exercisable. The closing of the sales of these securities under the Purchase Agreements took place on April 24, 2018. The Company received net proceeds from the transactions of $2,343,820 after deducting certain fees due to the placement agent and the Company’s transaction expenses. On May 2, 2019, the Company entered into an agreement with the holders of the August 23, 2017 and April 20, 2018 respectively. The warrant exercise price was reduced to $6.60 and 103,410 warrants were exercised, reducing the liability attributed to the warrants by approximately $404,000, and the Company realized about $682,000 in net proceeds, resulting in an addition to stockholders’ equity of approximately $1,086,000. On November 27, 2017, the Company reactivated its equity distribution agreement (the “EDA”) with Maxim Group LLC (“Maxim”). During the year ended December 31, 2019, the Company sold an aggregate of 49,463 shares under the EDA for proceeds of $827,000 net of $25,000 in commissions. F- 15 On July 19, 2019, the Company entered into a new Equity Distribution Agreement (the “2019 EDA”) with Maxim, pursuant to which it could sell from time to time, shares of its Common Stock through Maxim, as agent (the “Offering”). The 2019 EDA replaced the EDA with Maxim. For the year ended December 31, 2020, the Company sold 20,444,807 shares under the 2019 EDA for total gross proceeds of $53,936,615, which includes a 3.5% fee to Maxim of $1,888,727. The 2018 Equity Incentive Plan, effective September 12, 2018, authorizes the grant of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards. Initially, a maximum of 7,000,000 shares of Common Stock is reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. Unless sooner terminated, the 2018 Equity Incentive Plan will continue in effect for a period of 10 years from its effective date. On October 17, 2018, the Board of Directors issued 26,324 options to the officers and directors at the exercise price of $9.68 expiring in 10 years, and on November 14, 2018, the Board of Directors issued 23 options to each employee, officer and director at the exercise price of $9.68 expiring in ten years. On January 28, 2019, 27,570 options were issued to each of these officers with an exercise price of $9.68 for a period of ten years with a vesting period of one year. In August 2020, 400,000 options were issued to each of these officers with an exercise price range of $2.77 to $3.07 for a period of ten years with a vesting period of one year. During December 2020, 675,000 options were issued to employees with an exercise price range of $1.85 to $1.96 for a period of ten years with a vesting period of one year. As of December 31, 2020, and 2019, there were 42,154,371 and 10,386,754 shares outstanding, respectively. (c) Equity Financings See (b) above (d) Common Stock Options and Warrants (i) Stock Options The Equity Incentive Plan of 2009, effective June 24, 2009, as amended, authorizes the grant of non-qualified and incentive stock options, stock appreciation rights, restricted stock and other stock awards. A maximum of 22,000,000 shares of common stock is reserved for potential issuance pursuant to awards under the Equity Incentive Plan of 2009. Unless sooner terminated, the Equity Incentive Plan of 2009 will continue in effect for a period of 10 years from its effective date. The 2018 Equity Incentive Plan, effective September 12, 2018, authorizes the grant of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards. Initially, a maximum of 7,000,000 shares of common stock is reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. Unless sooner terminated, the 2018 Equity Incentive Plan will continue in effect for a period of 10 years from its effective date. On October 17, 2018, the Board of Directors issued 26,234 options to the officers and directors at the exercise price of $9.68 expiring in 10 years, and on November 14, 2018, the Board of Directors issued 23 options to each employee, officer and director at the exercise price of $9.68 expiring in ten years. On January 28, 2019, 27,570 options were issued to each of these officers with an exercise price of $9.68 for a period of ten years with a vesting period of one year. The Equity Incentive Plans of 2009 and 2018 are administered by the Board of Directors. The Plans provide for awards to be made to such Officers, other key employees, non-employee Directors, consultants and advisors of the Company and its subsidiaries as the Board may select. Stock options awarded under the Plans may be exercisable at such times (not later than 10 years after the date of grant) and at such exercise prices (not less than fair market value at the date of grant) as the Board may determine. The Board may provide for options to become immediately exercisable upon a “change in control”, which is defined in the Plans to occur upon any of the following events: (a) the acquisition by any person or group, as beneficial owner, of 20% or more of the outstanding shares or the voting power of the outstanding securities of the Company; (b) either a majority of the Directors of the Company at the annual stockholders meeting has been nominated other than by or at the direction of the incumbent Directors of the Board, or the incumbent Directors cease to constitute a majority of the Company’s Board; (c) the Company’s stockholders approve a merger or other business combination pursuant to which the outstanding common stock of the Company no longer represents more than 50% of the combined entity after the transaction; (d) the Company’s stockholders approve a plan of complete liquidation or an agreement for the sale or disposition of all or substantially all of the Company’s assets; or (e) any other event or circumstance determined by the Company’s Board to affect control of the Company and designated by resolution of the Board as a change in control. F- 16 The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton pricing option valuation model. Expected volatility is based on the historical volatility of the price of the Company’s stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option and equity warrant. The Company uses historical data to estimate expected dividend yield, life and forfeiture rates. The expected life of the options and equity warrants was estimated based on historical option and equity warrant holders’ behavior and represents the period of time that options and equity warrants are expected to be outstanding. The fair values of the options and equity warrants granted were estimated based on the following weighted average assumptions: Year Ended December 31, 2020 2019 Risk-free interest rate 0.3% - 0.46 % 2.6 % Expected dividend yield — — Expected life 5 years 5 years Expected volatility 115.24% - 116.79 % 82.60 % Weighted average grant date fair value for options and equity warrants issued $2.28 per option for 1,025,000 options $9.68 per option for 39,267 options The exercise price of all stock options and equity warrants granted was equal to or greater than the fair market value of the underlying common stock on the date of the grant. Information regarding the options approved by the Board of Directors under Equity Plan of 2009 is summarized below. The plan expired June 24, 2019: 2020 2019 Shares Option Price Weighted Average Exercise Price Shares Option Price Weighted Average Exercise Price Outstanding, beginning of year 132,615 13.20 – 2,127.84 31.65 144,060 13.20 -2,127.84 15.84 Granted — — — — — Forfeited (2,935 ) 9.68 – 380.16 82.38 (11,445 ) 13.20 – 2,127.84 37.45 Exercised — — — — — Outstanding, end of year 129,680 13.20-2,127.84 23.05 132,615 13.20 - 2,127.84 31.65 Exercisable, end of year 98,138 13.20-2,127.84 50,552 13.20 – 2,127.84 Weighted average remaining contractual life (years) 5.6 years 6.7 years Information regarding the options approved by the Board of Directors under the Equity Plan of 2018 is summarized below: 2020 2019 Shares Option Price Weighted Average Exercise Price Shares Option Price Weighted Average Exercise Price Outstanding, beginning of year 61,806 9.68 9.68 27,029 — — Granted 1,025,000 1.85 – 3.07 2.33 39,268 9.68 9.68 Forfeited (257 ) 9.68 – 16.72 2.75 (4,491 ) — — Exercised — — — — — — Outstanding, end of year 1,086,549 1.85 – 9.68 2.75 61,806 9.68 9.68 Exercisable, end of year 243,750 1.85 – 9.68 2.75 49,376 9.68 9.68 Weighted average remaining contractual life (years) 9.4 years 9.1 years Available for future grants 38,268 87,798 F- 17 Stock option activity during the years ended December 31, 2020 and 2019 is as follows: Stock option activity for employees Number of Options Weighted Average Exercise Price Weighted Average Remaining Contracted Term (Years) Aggregate Intrinsic Value Outstanding December 31, 2018 116,149 $ 33.00 5.89 — Granted 27,570 9.68 — — Forfeited (15,972 ) 19.76 — — Outstanding December 31, 2019 127,747 $ 29.61 6.41 — Granted 925,000 2.28 9.78 — Forfeited (2,483 ) 19.50 Expired (569 ) 348.48 — — Outstanding December 31, 2020 1,049,695 $ 5.38 9.28 — Vested and expected to vest at December 31, 2020 1,049,695 $ 5.38 9.28 — Exercisable at December 31, 2020 282,666 $ 6.57 8.00 — The weighted-average grant-date fair value of employee options granted during the year 2020 was $2,110,250 for 925,000 options at $2.28 per option and during year 2019 was $267,000 for 27,570 options at $9.68 per option. Unvested stock option activity for employees: Number of Options Weighted Average Exercise Price Average Remaining Contracted Term (Years) Aggregate Intrinsic Value Unvested December 31, 2018 100,177 $ 21.12 8.62 — Granted 27,570 9.68 9.10 — Vested (59,464 ) 12.02 8.40 — Forfeited — — — — Unvested December 31, 2019 68,283 $ 23.79 7.48 — Granted 925,000 2.28 9.78 — Vested (226,254 ) 3.93 7.53 — Forfeited — — — — Unvested December 31, 2020 726,209 $ 3.71 10.16 — F- 18 Stock option activity for non-employees during the year: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contracted Term (Years) Aggregate Intrinsic Value Outstanding December 31, 2018 55,130 $ 29.92 5.69 — Granted 11,697 9.68 — — Exercised — — — — Forfeited (152 ) 151.52 — — Outstanding December 31, 2019 66,675 $ 24.09 5.47 — Granted 100,000 2.77 9.58 — Exercised — — — — Forfeited (142 ) 104.29 — — Outstanding December 31, 2020 166,533 $ 11.03 7.54 — Vested and expected to vest at December 31, 2020 166,533 $ 11.03 7.54 — Exercisable at December 31, 2020 59,222 $ 5.95 9.15 — The weighted-average grant-date fair value of non-employee options granted during year 2020 was $277,000 for 100,000 options at $2.77 per option and during the year 2019 was $113,000 for 11,697 options at $9.68 per option. Unvested stock option activity for non-employees: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contracted Term (Years) Aggregate Intrinsic Value Unvested December 31, 2018 55,130 $ 13.64 5.84 — Granted 11,697 9.68 — — Vested — — — — Forfeited (152 ) 151.52 — — Unvested December 31, 2019 66,675 $ 12.80 5.59 — Granted 100,000 2.77 9.58 — Vested (59,364 ) 5.95 — — Forfeited — — — — Unvested December 31, 2020 107,311 $ 7.24 6.88 — Stock-based compensation expense was approximately $1,036,000 and $853,000 for the years ended December 31, 2020, and 2019 resulting in an increase in general and administrative expenses and loss per share of $0.03 and $0.23, respectively. As of December 31, 2020, and 2019, there was $1,599,000 and $696,000, respectively, of unrecognized stock-based compensation cost related to options granted under the Equity Incentive Plans. Stock-based compensation related to options granted under the Equity Incentive Plans will be recorded over the vesting period which is typically one year or upon reaching agreed upon company and/or individual performance milestones being met which is indefinite. F- 19 (ii) Stock Warrants Stock warrants are issued as needed by the Board of Directors and have no formal plan. The fair value of each warrant award is estimated on the date of grant using a Black-Scholes-Merton pricing option valuation model. Expected volatility is based on the historical volatility of the price of the Company’s stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the warrant. The Company uses historical data to estimate expected dividend yield, life and forfeiture rates. The expected life of the warrants was estimated based on historical option holder’s behavior and represents the period of time that options are expected to be outstanding. There were 16,907,471 granted in 2019 at $0.99 - $8.80 per warrant. No warrants were granted in 2020. Information regarding warrants outstanding and exercisable into shares of common stock is summarized below: 2020 2019 Shares Warrant Price Weighted Average Exercise Price Shares Warrant Price Weighted Average Exercise Price Outstanding, beginning of year 10,201,761 $ .909 – 469.92 $ 1.54 325,802 $ 17.16-469.92 $ 15.84 Granted — — — 16,907,471 0.99-8.80 1.23 Forfeited — — — (930 ) 269.28 269.28 Exercised (9,826,661 ) 0.90-8.80 0.97 (7,030,582 ) 0.80-8.80 1.42 Outstanding, end of year 375,100 $ 0.99-469.92 $ 116.38 10,201,761 $ 0.90 – 469.92 $ 1.54 Exercisable 375,100 $ 0.99-469.92 $ 116.38 10,201,761 $ 0.90 – 469.92 $ 1.54 Weighted average remaining contractual life 5.75 years 6.75 years Years exercisable 2021-2024 2020-2024 Stock warrants are issued at the discretion of the Board. In 2020 there were no warrants issued and in 2019, there were 16,907,471 warrants issued at a weighted average price of $1.23. 9,826,661 warrants were exercised in 2020 and 7,030,582 were exercised in 2019. (8) Segment and Related Information The Company operates in one segment, which performs research and development activities related to Ampligen and other drugs under development. The Company’s revenues for the two-year period ended December 31, 2020, were earned in the United States and overseas. All assets are maintained in the United States of America. (9) Research, Consulting and Supply Agreements In 2016, the Company entered into a five-year agreement (the “Impatients Agreement”) with Impatients, N.V. (“myTomorrows”), a Netherlands based company, for the commencement and management of an EAP in Europe and Turkey (the “Territory”) related to ME/CFS. Pursuant to the agreement, myTomorrows, as the exclusive service provider and distributor in the Territory, is performing EAP activities. Jubilant HollisterStier (Jubilant) is AIM’s authorized CMO for Ampligen for the approval in Argentina. In 2017, the Company entered into a purchase order with Jubilant pursuant to which Jubilant will manufacture batches of Ampligen® for the Company. Since the 2017 engagement of Jubilant, four lots of Ampligen consisting of more than 16,000 units have been manufactured and released in year 2018. The first lot was designated for human use in the US in the cost recovery CFS program and for expanded oncology clinical trials. The second lot has been designated for these programs in addition to commercial distribution in Argentina for the treatment of CFS. We paid Jubilant $320,000 in 2017 and $1,078,000 in 2018 for a total of $1,398,000 to date for these services. In 2019, the Company entered into a purchase order with Jubilant pursuant to which Jubilant will manufacture two additional batches of Ampligen for the Company. Two commercial size batches will be filled and finished for human use in early 2020. The company paid Jubilant $383,320 in 2019 to date for these services. The production of additional polymer (Ampligen intermediates) took place in 2019 at the Company’s New Brunswick facility. Additionally, two lots of Ampligen were manufactured in December 2019 and January 2020 at Jubilant. The current manufactured lots of Ampligen have been fully tested and released for commercial product launch in Argentina and for clinical trials. F- 20 In December 2020, AIM added Pharmaceutics International Inc. (“Pii”) as a “Fill & Finish” provider to enhance the Company’s capacity to produce the drug Ampligen. This addition amplifies AIM’s manufacturing capability by providing redundancy and cost savings. The contracts augment AIM’s existing fill and finish capacity. As agreed to in the Master Services Agreement, the terms of each of AIM’s projects with Pii will be negotiated separately and defined in individual Service Contracts. (10) 401(k) Plan The Company has a defined contribution plan, entitled the AIM ImmunoTech Employees 401(k) Plan and Trust Agreement (the “401(k) Plan”). Full time employees of the Company are eligible to participate in the 401(k) Plan following one year of employment. Subject to certain limitations imposed by federal tax laws, participants are eligible to contribute up to 15% of their salary (including bonuses and/or commissions) per annum. Participants’ contributions to the 401(k) Plan may be matched by the Company at a rate determined annually by the Board of Directors. Each participant immediately vests in his or her deferred salary contributions, while Company contributions will vest over one year. A 6% Company matching contribution was established, effective as of January 1, 2010 through December 31, 2015. As of January 1, 2016, the matching has been terminated. For 2020 and 2019, the Company made no contributions towards the 401(k) Plan in these years. (11) Royalties, License and Employment Agreements The Company had contractual agreements with Named Executive Officers, exclusive of Mr. Pascale, who retired in September 2019, (“Officers”) in 2020, and 2019. The aggregate annual base compensation for these Officers under their respective contractual agreements for 2020, and 2019 was $ 850,000, and $750,000, respectively. In addition, certain of these Officers were entitled to receive performance bonuses of up to 25% or 20% of their respective annual base salary, at the sole discretion of the Compensation Committee of the Board of Directors. In 2020 and 2019, Officers’ bonuses were $913,500 and $0 respectively. In 2020, equity was granted as a form of compensation to these Officers. a. The Company granted 300,000 ten-year options to purchase common stock with exercise prices of $3.05 per share to vest in a year to Thomas K. Equels, Chief Executive Officer. b. The Company granted 300,000 ten-year options to purchase common stock with exercise prices of $1.96 per share to vest in a year to Thomas K. Equels, Chief Executive Officer. c. The Company granted 75,000 ten-year options to purchase common stock with exercise prices of $1.85 per share which vest in one year to Peter Rodino, Chief Operating Officer and General Counsel. d. The Company granted 75,000 ten-year options to purchase common stock with exercise prices of $1.85 per share which vest in one year to Ellen Lintal, Chief Financial Officer. In 2019, equity was granted as a form of compensation to these Officers: a. The Company granted 9,685 ten-year options to purchase common stock with exercise prices of $9.68 per share to vest in a year to Thomas K. Equels, Chief Executive Officer. b. The Company granted 4,520 ten-year options to purchase common stock with exercise prices of $9.68 per share which vest in one year to Peter Rodino, Chief Operating Officer and General Counsel. c. The Company granted to Thomas K. Equels, Chief Executive Officer, 97,500 shares of Restricted Stock Awards with an exercise price ranging from $0.40 to $0.55 per share which vest in 6 months, for 25% cut in salary. d. The Company granted to Peter Rodino, Chief Operating Officer General Counsel, 45,500 Restricted Stock Awards with an exercise price ranging from $0.40 to $0.55 per share which vest in 6 months, for 25% cut in salary. e. The Company granted to Ellen M. Lintal, Chief Financial Officer, 22,528 shares of Restricted Stock Awards with an exercise price ranging from $0.40 to $0.55 per share which vest in 6 months, for 25% cut in salary. The Company recorded stock compensation expense of approximately $433,000 and $118,000 during the years ended December 31, 2020 and 2019 respectively with regard to these issuances. (12) Leases In February 2016, the FASB established Topic 842, Leases, by issuing ASU No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; ASU No. 2018-11, Targeted Improvements; and ASU No. 2018-20, Narrow-Scope Improvements for Lessors. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. F- 21 The new standard was effective for the Company on January 1, 2019, with early adoption permitted. A modified retrospective transition approach was required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company adopted the new standard on January 1, 2019 and used the effective date as the date of initial application. The new standard provides several optional practical expedients in transition. The Company elected the ‘package of practical expedients’, which permits it not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The Company elected all the new standard’s available transition practical expedients other than the use-of hindsight. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, it will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient to not separate lease and non-lease components for leases of office equipment. This standard had a material effect on the Company’s financial statements. The most significant effect related to the recognition of new ROU assets and lease liabilities on the balance sheet for real estate and equipment operating leases and providing significant new disclosures about the Company’s leasing activities. The Company entered into a Lease Agreement for a term of five years commencing on September 14, 2020 with Fraser Advanced Information Systems, pursuant to which the Company agreed to lease two Sharp copiers. The base of $1,415 per month. On June 13, 2018, the Company entered into a Lease Agreement for a term of six years commencing on July 1, 2018 with SML FL Holdings LLC, pursuant to which the Company agreed to lease approximately 3,000 rentable square feet. The base rent increases by 3% each year, and ranges from $2,100 per month for the first year to $2,785 per month for the sixth year. On May 1, 2019, the Company entered into a Lease Agreement for a term of three years commencing on May 1, 2019 with 604 Associates LLC, pursuant to which the Company agreed to lease approximately 3,000 rentable square feet. The base rent is $1,500 per month for the term of the lease. The expected lease term includes both contractual lease periods and, when applicable, cancelable option periods when it is reasonably certain that the Company would exercise such options. The Company’s leases have remaining lease terms between 6 months and 4 years. As of December 31, 2020, the weighted-average remaining term is 1.92 years. The Company has determined that the incremental borrowing rate is 10% as of December 31, 2020 based upon the recently completed financing transaction in December 2019. Year Ending December 31, 2021 $ 52 2022 48 2023 47 2024 34 2025 18 Less imputed interest (20 ) Total $ 179 As of December 31, 2020, the balance of the right of use assets was $179,000 and the corresponding lease liability balance was $179,000. The total rent expense for the years ended December 31, 2020 and 2019 amounted to approximately $53,000 and $59,000, respectively. The total short term rent expense for the years ended December 31, 2020 and 2019 amounted to approximately $34,000 and $23,000, respectively. F- 22 (13) Income Taxes (FASB ASC 740 Income Taxes) The Company’s applies the provisions of FASB ASC 740-10 Uncertainty in Income Taxes. As a result of the implementation, there has been no material change to the Company’s tax positions as they have not paid any corporate income taxes due to operating losses. With the exception of net operating losses and research and development credits generated in New Jersey, all tax benefits will likely not be recognized due to the substantial net operating loss carryforwards which will most likely not be realized prior to expiration. As of December 31, 2020, the Company has approximately $180.8M of Federal net operating loss carryforwards (expiring in the years 2021 through 2038) and $33.7M of Federal net operating loss with no expiration date available to offset future federal taxable income. The Company also has approximately $13.1M of New Jersey state net operating loss carryforwards (expiring in 2041) available to offset future state taxable income and net operating loss carryforwards in Belgium of approximately $2.8M with no expiration. In December 2020, the Company effectively sold $10,000,000 of its New Jersey state net operating loss carryforward for the year 2019 for approximately $1,090,000. In December 2019, the Company effectively sold $8,000,000 of its New Jersey state net operating loss carryforward for the year 2018 for approximately $776,000. The utilization of certain state net operating loss carryforwards may be subject to annual limitations. With no tax due for the foreseeable future, the Company has determined that a policy to determine the accounting for interest or penalties related to the payment of tax is not necessary at this time. Under the Tax Reform Act of 1986, the utilization of a corporation’s net operating loss carryforward is limited following a greater than 50% change in ownership. Due to the Company’s prior and current equity transactions, the Company’s net operating loss carryforwards may be subject to an annual limitation generally determined by multiplying the value of the Company on the date of the ownership change by the federal long-term tax-exempt rate. Any unused annual limitation may be carried forward to future years for the balance of the net operating loss carryforward period. Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the carrying amounts used for income tax purposes. In assessing the realizability of deferred tax assets, Management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. With the exception of net operating losses generated in New Jersey which can be surrendered for 80% of their values, due to the uncertainty of the Company’s ability to realize the benefit of the deferred tax asset, the remainder of our deferred tax assets are fully offset by a valuation allowance at December 31, 2020 and 2019. The components of the net deferred tax assets and liabilities as of December 31, 2020 and 2019 consist of the following: (in thousands) Deferred tax assets: December 31, 2020 2019 Net operating losses $ 46,648 $ 44,653 Amortization & depreciation 150 150 R&D credits — 69 Stock compensation 271 223 Total deferred tax assets 47,069 45,095 Deferred tax liabilities: Research and development costs (91 ) (91 ) Deferred tax assets, net 46,978 45,004 Less: Valuation allowance (46,346 ) (44,468 ) Deferred tax assets, net 632 536 F- 23 Deferred tax assets are included within other assets in the accompanying Consolidated Balance Sheets. The benefits of deferred tax assets are included within the gain from sale of income tax operating losses in the accompanying Consolidated Statements of Comprehensive Loss. (14) Convertible Note Payable On September 28, 2018, the Company entered into a $3,170,000 10% Secured Convertible Promissory Note (the “IR Note”) with Iliad Research and Trading, L.P. (the “Holder”), which was issued to the Holder in conjunction with 500,000 shares of common stock (the “Origination Shares”). The Company collected $3,000,000 in cash from the Holder during September 2018 and the remainder $170,000 was retained by the Holder for the Holder’s legal fees of $20,000 for the issuance of the IR Note and the Original Issue Discount of $150,000. The Company incurred $210,000 in third-party fees directly attributed to the issuance of the IR Note. The Company promised to pay the principal amount, together with guaranteed interest at the annual rate of 10%, with principal and accrued interest on the IR Note due and payable on September 28, 2019, unless converted under terms and provisions as set forth within the IR Note. The IR Note provides the Holder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company’s common stock at a conversion price of $0.30 per share. In addition, beginning on March 28, 2019, the IR Note also provides the Holder with the right to redeem all or any portion of the IR Note (“Redemption Amount”). The payments of each Redemption Amount may be made, at the option of the Company, in cash, by converting such Redemption Amount into shares of common stock (“Redemption Conversion Shares”), or a combination thereof. The number of Redemption Conversion Shares equals the portion of the applicable Redemption Amount being converted divided by the lesser of $0.30 or 80% of the lowest Volume Weighted Average Price (“VWAP”) during the ten (10) trading days immediately preceding the applicable measurement date (the “Market Price”). The Purchase Agreement requires the Company to reserve at least 8,900,000 shares of common stock from its authorized and unissued common stock to provide for all issuances of common stock under the IR Note. However, the IR Note provides that the aggregate number shares of common stock issued to the Holder under the IR Note and Purchase Agreement shall not exceed 19.99% of the total number of shares of common stock outstanding as of the closing date unless the Company has obtained stockholder approval of the issuance. The Origination Shares were to be returned to the Company in the event that the Company could provide within 30 days of the closing of the transaction certain requested assets as security for repayment of the IR Note. The security was not provided so the Origination Shares remained with the Holder. The Company determined the IR Note should be recorded at fair value with subsequent changes in fair value recorded in earnings. This conclusion is based on the redemption conversion feature, which allows the Holder to trigger the redemption of the IR Note for cash or conversion of the IR Note for common shares prior to its maturity date at a price of the lesser of $0.30 per share or the Market Price as defined within the IR Note. The choice of cash redemption or conversion of the IR Note for common shares is at the option of the Company. This feature may require the Company to issue a variable number of common shares to settle the IR Note which was determined to have a predominantly fixed monetary value at inception. On March 13, 2019, the Company amended the Purchase Agreement pursuant to which it issued the Convertible IR Note (the “Amendment”). The Amendment extends the maturity of the IR Note to September 28, 2020. In addition, the redemption conversion rates were revised to a price to be determined by mutual agreement between the Company and the Holder. In the event that the Company and the Holder are unable to reach a mutually agreeable price, the Company will be required to pay the applicable redemption amount in cash. The maximum amount of the IR Note the Lender will be able to redeem in any given calendar month is $300,000. The Company evaluated the Amendment in accordance with ASC 470, Debt (“ASC 470”) and determined the Amendment is considered an extinguishment of the existing debt and issuance of net debt. As a result, the Company derecognized the liability and recorded a loss on the extinguishment of debt of $345,000 in 2019 which was equal to the difference between the reacquisition price of the debt and the net carrying amount (amount due at maturity, adjusted for unamortized discounts) of the extinguished debt. Subsequently, the amended note was recorded in accordance with ASC 480 at the fair value that the note was issued with changes in fair value recorded through earnings at each reporting period. There were a series of debt conversions during 2019 which partially converted $1,400,000 of the $3,408,000 convertible debt, as amended, into stockholders’ equity, adding approximately $1,400,000 to stockholders’ equity. The number of shares issued in these conversions were 204,246 shares. In October 2019 and November 2019 respectively, the lender redeemed $300,000 pursuant to the terms of the modification. In connection with the IR Note, the Company recorded a gain equal to $127,000 for the year-end December 31, 2019. See Note 15: Note Payable. F- 24 Interest expense associated with the IR Note was $0 for the year ended December 31, 2020, and $224,000 for the year ended December 31, 2019. (15) Note Payable On August 5, 2019, the Company issued a Secured Promissory Note (the “CV Note”) with Chicago Venture Partners, L.P. (the “CV”). The Note has an original principal amount of $2,635,000, bears interest at a rate of 10% per annum and will mature in 24 months, unless earlier paid in accordance with its terms. The Company received proceeds of $1,900,000 after an original issue discount and payment of Lender’s legal fees. Pursuant to a Security Agreement between the Company and the Lender, repayment of the Note is secured by substantially all of our assets other than its intellectual property. During the quarter ending June 30, 2020, the Holder made redemptions of $650,000 reducing the principal to $1,985,000. On May 29, 2020, the Company paid off the outstanding CV note consisting of principal of $1,985,000, and accrued interest payable of $220,000. The net payment of $1,795,000, less the write off of the origination discount of $369,000 and issuance costs of $6,000, resulted in a gain on extinguishment of $66,000. Interest expense associated with the CV Note was approximately $116,000, for the year ended December 31, 2020 and was approximately $241,000, for the year ended December 31, 2019, which included approximately $127,000 associated with the amortization of applicable discounts to the CV Note. On December 5, 2019, the Company issued a secured Promissory Note (the “AS Note”) to Atlas Sciences L.P. (“AS”). The AS Note has an original principal amount of $2,175,000, bears interest at a rate of 10% per annum and will mature in 24 months, unless earlier paid in accordance with its term. In conjunction with the AS Note, the Company utilized $1,650,000 of the net proceeds from the AS Note to pay off in full its obligation to Iliad, an entity with affiliations to AS, pursuant to the IR Note (see Note 14). The Company evaluated the IR Note transaction in accordance with ASC 470, Debt (“ASC 470”) and determined the exchange is considered an extinguishment of the existing debt and issuance of new debt. As a result, the Company derecognized the liability and recorded a loss on the extinguishment of debt of $250,000 which was equal to the difference between the reacquisition price of the debt and the net carrying amount (amount due at maturity, adjusted for unamortized discounts) of the extinguished debt. Subsequently, the AS Note was recorded in accordance with ASC 470 whereby the Company recorded a liability equal to the proceeds received on December 5, 2019. On June 19, 2020, the Company paid off the outstanding AS note which consisted of original principal of $2,175,000, and accrued interest payable of $122,000 less origination discount of $376,000 and issuance costs of $7,000, with a net note payable of $1,838,000, including a gain on extinguishment of $76,000. Interest expense associated with AS Note for the period ending December 31, 2020 was $106,000, and was approximately $37,000 for the year ended December 31, 2019. (16) Certain Relationships and Related Transactions The Company has an employment agreement with its Chief Executive Officer and has granted its executive officers and directors options and warrants to purchase its common stock. Please see details of these Employment Agreements in Note 11 - Royalties, License and Employment Agreements. As set forth in Section 3(c)(ii) of his prior employment agreement, Mr. Equels earned $8,000 and $7,000 for 5% of the Ampligen cost recovery sales in 2020 and 2019, respectively. (17) Concentrations of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, cash equivalents, investments and accounts receivable. The Company places its cash with high-quality financial institutions and, at times, such amounts in non-interest-bearing accounts may be in excess of Federal Deposit Insurance Corporation insurance limits. There were no credit-based sales for 2020 and 2019. (18) Fair Value The Company is required under U.S. GAAP to disclose information about the fair value of all the Company’s financial instruments, whether or not these instruments are measured at fair value on the Company’s consolidated balance sheets. F- 25 The Company estimates that the fair values of cash and cash equivalents, other assets, accounts payable and accrued expenses approximate their carrying values due to the short-term maturities of these items. The Company also has certain warrants with a cash settlement feature in the occurrence of a Fundamental Transaction. The fair value of the redeemable warrants (“Warrants”) related to the Company’s August 2016, February 2017, June 2017, August 2017, April 2018, and March 2019 common stock and warrant issuance, are calculated using a Monte Carlo Simulation. While the Monte Carlo Simulation is one of a number of possible pricing models, the Company has determined it to be industry accepted and fairly presented the fair value of the Warrants. As an additional factor to determine the fair value of the Put’s liability, the occurrence probability of a Fundamental Transaction event was factored into the valuation. The Company recomputes the fair value of the Warrants at the issuance date and the end of each quarterly reporting period. Such value computation includes subjective input assumptions that are consistently applied each period. If the Company were to alter its assumptions or the numbers input based on such assumptions, the resulting fair value could be materially different. The Company utilized the following assumptions to estimate the fair value of the August 2016 Warrants: December 31, December 31, 2020 2019 Underlying price per share $ 1.79 $ 0.54 Exercise price per share $ 82.50 $ 82.50 Risk-free interest rate 0.09 % 1.58 % Expected holding period 0.67 1.67 Expected volatility 90 % 96 % Expected dividend yield — — The Company utilized the following assumptions to estimate the fair value of the February 2017 Warrants: December 31, December 31, 2020 2019 Underlying price per share $ 1.79 $ 0.54 Exercise price per share $ 30.25-$33.00 $ 30.25-$33.00 Risk-free interest rate 0.12 % 1.6 % Expected holding period 1.58-1.60 2.59-2.60 Expected volatility 160 % 89 % Expected dividend yield — — The Company utilized the following assumptions to estimate the fair value of the June 2017 Warrants: December 31, December 31, 2020 2019 Underlying price per share $ 1.79 $ 0.54 Exercise price per share $ 27.50 $ 27.72 Risk-free interest rate 0.11 % 1.60 % Expected holding period 1.42 2.42 Expected volatility 175 % 91 % Expected dividend yield — — F- 26 The Company utilized the following assumptions to estimate the fair value of the August 2017 Warrants: December 31, December 31, 2020 2019 Underlying price per share $ 1.79 $ 0.54 Exercise price per share $ 19.80 $ 19.80 Risk-free interest rate 0.11 % 1.59 % Expected holding period 1.18 2.18 Expected volatility 165 % 94 % Expected dividend yield — — The Company utilized the following assumptions to estimate the fair value of the April 2018 Warrants: December 31, December 31, 2020 2019 Underlying price per share $ 1.79 $ 0.54 Exercise price per share $ 17.16 $ 17.16 Risk-free interest rate 0.16 % 1.59%-1.65% Expected holding period 2.81 0.82-3.82 Expected volatility 130 % 86% - 124% Expected dividend yield — — The Company utilized the following assumptions to estimate the fair value of the March 2019 Warrants: December 31, December 31, 2020 2019 Underlying price per share $ 1.79 $ 0.54 Exercise price per share $ 8.80 $ 8.80 Risk-free interest rate 0.19 % 1.66 % Expected holding period 3.19 4.19 Expected volatility 125 % 87 % Expected dividend yield — — The significant assumptions using the Monte Carlo Simulation approach for valuation of the Warrants are: (i) Risk-Free Interest Rate . The risk-free interest rates for the Warrants are based on U.S. Treasury constant maturities for periods commensurate with the remaining expected holding periods of the warrants. (ii) Expected Holding Period . The expected holding period represents the period of time that the Warrants are expected to be outstanding until they are exercised. The Company utilizes the remaining contractual term of the Warrants at each valuation date as the expected holding period. (iii) Expected Volatility . Expected stock volatility is based on daily observations of the Company’s historical stock values for a period commensurate with the remaining expected holding period on the last day of the period for which the computation is made. (iv) Expected Dividend Yield . Expected dividend yield is based on the Company’s anticipated dividend payments over the remaining expected holding period. As the Company has never issued dividends, the expected dividend yield is 0% and this assumption will be continued in future calculations unless the Company changes its dividend policy. (v) Expected Probability of a Fundamental Transaction. The possibility of the occurrence of a Fundamental Transaction triggering a Put right is extremely remote. As discussed above, a Put right would only arise if a Fundamental Transaction 1) is an all cash transaction; (2) results in the Company going private; or (3) is a transaction involving a person or entity not traded on a national securities exchange. The Company believes such an occurrence is highly unlikely because: 1. The Company only has one product that is FDA approved but is currently not available for commercial sales. 2. The Company will have to perform additional clinical trials for FDA approval of its flagship product. F- 27 3. Industry and market conditions continue to include a global market recession, adding risk to any transaction. 4. Available capital for a potential buyer in a cash transaction continues to be limited. 5. The nature of a life sciences company is heavily dependent on future funding and high fixed costs, including Research & Development. 6. The Company has minimal revenues streams which are insufficient to meet the funding needs for the cost of operations or construction at their manufacturing facility; and 7. The Company’s Rights Agreement and Executive Agreements make it less attractive to a potential buyer. With the above factors utilized in analysis of the likelihood of the Put’s potential Liability, the Company estimated the range of probabilities related to a Put right being triggered as: Range of Probability Probability Low 0.5 % Medium 1.0 % High 5.0 % The Monte Carlo Simulation has incorporated a 5.0% probability of a Fundamental Transaction to date for the life of the securities. (vi) Expected Timing of Announcement of a Fundamental Transaction. As the Company has no specific expectation of a Fundamental Transaction, for reasons elucidated above, the Company utilized a discrete uniform probability distribution over the Expected Holding Period to model in the potential announcement of a Fundamental Transaction occurring during the Expected Holding Period. (vii) Expected 100 Day Volatility at Announcement of a Fundamental Transaction . An estimate of future volatility is necessary as there is no mechanism for directly measuring future stock price movements. Daily observations of the Company’s historical stock values for the 100 days immediately prior to the Warrants’ grant dates, with a floor of 100%, were utilized as a proxy for the future volatility. (viii) Expected Risk-Free Interest Rate at Announcement of a Fundamental Transaction . The Company utilized a risk-free interest rate corresponding to the forward U.S. Treasury rate for the period equal to the time between the date forecast for the public announcement of a Fundamental Transaction and the Warrant expiration date for each simulation. (ix) Expected Time Between Announcement and Consummation of a Fundamental Transaction. The expected time between the announcement and the consummation of a Fundamental Transaction is based on the Company’s experience with the due diligence process performed by acquirers and is estimated to be six months. The Monte Carlo Simulation approach incorporates this additional period to reflect the delay Warrant Holders would experience in receiving the proceeds of the Put. While the assumptions remain consistent from period to period (e.g., utilizing historical stock prices), the numbers input change from period to period (e.g., the actual historical prices input for the relevant period). The carrying amount and estimated fair value of the above Warrants was approximately $180,000 and $57,000 at December 31, 2020 and 2019, respectively. The Company applies FASB ASC 820 (formerly Statement No. 157 Fair Value Measurements ) that defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The guidance does not impose any new requirements around which assets and liabilities are to be measured at fair value, and instead applies to asset and liability balances required or permitted to be measured at fair value under existing accounting pronouncements. The Company measures its warrant liability for those warrants with a cash settlement feature at fair value. FASB ASC 820-10-35-37 (formerly SFAS No. 157) establishes a valuation hierarchy based on the transparency of inputs used in the valuation of an asset or liability. Classification is based on the lowest level of inputs that is significant to the fair value measurement. The valuation hierarchy contains three levels: ● Level 1 – Quoted prices are available in active markets for identical assets or liabilities at the reporting date. Generally, this includes debt and equity securities that are traded in an active market. ● Level 2 – Observable inputs other than Level 1 prices such as quote prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Generally, this includes debt and equity securities that are not traded in an active market. F- 28 ● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. As of December 2020, the Company has classified the warrants with cash settlement features and a convertible note payable as Level 3. Management evaluates a variety of inputs and then estimates fair value based on those inputs. As discussed above, the Company utilized the Monte Carlo Simulation Model in valuing the warrants and the convertible note. The table below presents the balances of assets and liabilities measured at fair value on a recurring basis by level within the hierarchy as: (in thousands) As of December 31, 2020 Total Level 1 Level 2 Level 3 Assets: Marketable securities $ 15,877 $ 15,877 $ — $ — Liabilities: Redeemable warrants $ 180 — — $ 180 (in thousands) As of December 31, 2019 Total Level 1 Level 2 Level 3 Assets: Marketable securities $ 7,308 $ 7,308 $ — $ — Liabilities: Redeemable warrant $ 57 — — $ 57 The changes in Level 3 Liabilities measured at fair value on a recurring basis are summarized as follows (in thousands): Redeemable warrants: Balance at December 31, 2019 $ 57 Fair value adjustments 123 Balance at December 31, 2020 $ 180 (19) Financing Obligation Arising from Sale Leaseback Transaction On March 16, 2018, the Company sold land and a building for $4,080,000 and concurrently entered into an agreement to lease the property back for ten years at $408,000 per year for two years through March 31, 2020. The lease payments will increase 2.5% per year for the next three years through March 31, 2023 and the lease payments will increase 3% for the remaining five years through March 31, 2028. The sale of the property includes an option to repurchase the property at fair value which does not permanently transfer all the risks and rewards of ownership to the buyer. The option to repurchase the property also would be at a higher price than the sales price and is considered likely based upon the Company’s plans going forward. Because the sale of the property includes the option to repurchase the property and includes the above attributes, the transaction was accounted for as a financing transaction whereby the Company debited cash for the amount of cash received and credited financing obligation. The Company will continue to report the property as an asset and the property will continue to be depreciated. If the option is exercised, the cash payment by the seller-lessee is to pay off the financing obligation. As part of the sale of this building, warrants were provided to the buyer for the purchase of up to 3,225,806 shares of Company common stock for a period of five years at an exercise price of $0.3875 per share, 125% of the closing price of the common stock on the NYSE American on the date of execution of the letter of intent for the purchase. The warrants cannot be exercised to the extent that any exercise would result in the purchaser owning in excess of 4.99% of the Company’s issued and outstanding shares of common stock. The Property and equipment in “Note 7 Stockholders’ Equity” above are the property and equipment involved in this transaction. Depreciation on the building will continue until a sale has been recognized. Future minimum payments required under the Financing Obligation and the balance of the Finance Obligation as of December 31, 2020, are as follows: During the Year: (amount in thousands) 2021 $ 426 2022 437 2023 449 2024 463 2025 477 Thereafter 1,091 Total of Payments $ 3,343 Less Deferred Issuance Costs (192 ) Less Discount on Debt Instrument (824 ) Less Imputed Interest (221 ) Total Balance $ 2,106 Less Current Portion (230 ) Long Term Portion $ 1,876 Interest expense relating to this financing agreement was $61,000 for the year ended December 31, 2020 an $67,000 for the year ended December 31, 2019. F- 29 (20) Subsequent Events In January 2021, the Company entered into a sponsorship agreement with the Centre for Human Drug Research (“CHDR”) for a proposed clinical study on the safety of the Company’s drug Ampligen as an intranasal therapy. CHDR, an independent institute located in Leiden in the Netherlands, will conduct and manage the proposed clinical study, titled “A Phase I, Randomized, Double-Blind, Placebo-Controlled Study to Evaluate the Safety and Activity of Repeated Intranasal Administration of Ampligen (Poly I:Poly C12U) in Healthy Subjects.” The Company is funding the clinical study at a cost of approximately $980,000. In February 2021, the Company completed its At-The-Market (ATM) facility and closed the ATM’s Equity Distribution Agreement (EDA) with Maxim Group LLC. In February 2021, the Company received formal notification from the European Commission (“EC”) that the European Medicines Agency (“EMA”) has designated Ampligen as an Orphan Medicinal Product (“OMP”) for treatment of pancreatic cancer. Medications that have an OMP designation by the EMA, once commercially approved in the European Union (“EU”), receive benefits including up to ten years of protection from market competition from similar medicines with similar active component and indication for use that are not shown to be clinically superior. In March 2021, the Company entered into employment agreements with Peter Rodino and Ellen Lintal. The agreements run for three years and one year, respectively. Compensation is divided into both short- and long-term compensation. Short term (cash) compensation will consist of a base salary of $425,000 and $350,000, respectively. Mr. Rodino and Ms. Lintal will be awarded a year-end target bonus based on performance and goals established by the Compensation Committee. Long term compensation will be provided by 100,000 non-qualified yearly stock options with one-year vesting commencing on November 30, 2021. In addition, Mr. Rodino and Ms. Lintal shall each be entitled to awards (“Event Awards”) equal to 1% of the “Gross Proceeds” from specific events such as licensing agreements or “therapeutic indication” (each, an “Event”). Gross Proceeds means those cash amounts paid to the Company by the other parties for licensing agreements, therapeutic acquisitions or any other one time cash generating event. Therapeutic indications are for example target organ specific pathologically defined cancer indications, vaccine enhancers, broad spectrum antiviral indications, or medical entities associated with persistent severe fatigue. Mr. Rodino and Ms. Lintal also will each be entitled to an award (an “Acquisition Award”) equal to 1% of the Gross Proceeds, upon the sale of the Company or substantially all of its assets (an “Acquisition”). An Event Award or Acquisition Award shall be paid in cash within 90 days of our receipt of the Gross Proceeds. F- 30