What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-31 compared with 2022-03-31 · 110 added, 129 removed, 107 unchanged (69% of the section changed)

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increase in net loss of approximately $318,000 when compared to the same period in 2021.

This increase in net loss for

the year ended December 31, 2021, was primarily due to the following:

increase in interest expense and finance costs/extinguishment of debt and notes payable of

$2,843,000 is largely due to a loss on extinguishment of debt of $2,701,000 and a decrease

in leaseback interest expense;

increase in research and development expenses of $1,952,000;

increase in gain from sale of Income tax operating losses of $1,395,000;

increase in impairment losses of $1,644,000;

increase of the quarterly revaluation of certain redeemable warrants of $268,000;

This increase in net loss for the year ended

December 31, 2022, was primarily due to the following:

increase in general and administrative expenses of $4,402,000;

increase in production costs of $44,000;

decrease in interest/other income of $420,000;

increase in loss on investments of $1,478,000;

increase in interest/other income of $629,000;

decrease in interest expense and finance costs $2,768,000;

gain on sales of fixed assets of $216,000.

decrease in impairment losses of $1,779,000;

decrease in research and development expenses of $682,000;

decrease in production costs of $850,000;

decrease in gain from sale of Income tax operating losses of $829,000;

decrease in gain of sale of fixed assets of $213,000

decrease of the quarterly revaluation of certain redeemable warrants of $110,000;

loss per share was $ (0.40) and $(0.40) for the years ended December 31, 2022, and 2021, respectively.

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from our Ampligen® Cost Recovery Program were $141,000 and $135,000 for the years ended December 31, 2022, and 2021, representing

a decrease of $28,000 which is primarily related not having sales for the European EAP program in 2021.

an increase of $6,000 which is primarily related to the timing of orders.

the years ended December 31, 2022 and 2021, we had no Alferon N Injection® Finished Good product to commercially sell and all revenue

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Ampligen® for treatment in an open-label safety study.

costs were approximately $850,000 and $806,000, respectively, for the years ended December 31, 2021, and 2020, representing an increase

of $44,000 in production costs in the current period.

costs were approximately $0 and $850,000, respectively, for the years ended December 31, 2022, and 2021, representing a decrease of $850,000

in production costs in the current period.

The decrease was due primarily to the sale of the facility and no production for 2022 compared

and Development Costs

Research and Development (“R&D”) costs for the year ended December 31, 2022, were approximately $6,990,000 as compared

to $5,720,000 for the same period a year ago, reflecting an increase of approximately $1,952,000.

The primary reason for the increase

in research and development costs was due to increases in Company sponsored clinical trials expenses of $3,848,000, offset by decrease

of $1,940,000, caused by not producing two batches of Ampligen with third party CMO in 2021 compared to 2020.

to $7,672,000 for the same period a year ago, reflecting a decrease of approximately $682,000.

The primary reason for the decrease in

research and development costs was due to decreases in Company sponsored clinical trials expenses of $1,728,000, offset by increases

in salaries and outside consultant costs of $607,00, $66,000 in rent and $304,000 in patents & trademarks.

and Administrative Expenses

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The increase in G&A expenses during the current period

was mainly due to increases in stock compensation of $532,000, insurance of $182,000, offset by decreases in taxes and licenses of $64,000,

scientific advisory board of $156,000, travel of $21,000, warrant expense of $46,000, software IT expense of $17,000, consulting fees

of $119,000, accounting, professional and legal fees of $63,000 and salaries and benefits of $247,000.

Gain (loss) on Investments

Gain (loss) on investments

for the years ended December 31, 2021, and 2020 represents a net decrease of approximately $420,000, driven by a loss primarily from

the reclassification out of other comprehensive income of debt securities sold of $376,000, offset by the increase in interest income

from investments.

was mainly due to increases in legal fees of $4,582,000, public relations expenses of $348,000, insurance expenses of $439,000 and general

expense of $51,000 net of decreases in stock compensation of $613,000, salary expenses of $243,000 and depreciation of $12,000.

(loss) on Investments

(loss) on investments for the years ended December 31, 2022, and 2021 were approximately ($1,679,000) and ($201,000), respectively, reflecting an increase in the loss on investments of approximately ($1,478,000).

The loss was due to the

change in the fair value of equity investments.

of plant property and equipment and other assets

the year ended December 31, 2022, there was a loss of $0 related to the impairment of plant property and equipment (see Note 2 Summary

of Significant Accounting Policies).

the year ended December 31, 2021, there was a loss of $1,779,000 related to the impairment of plant property and equipment (see Note

2 Summary of Significant Accounting Policies).

the year ended December 31, 2020, there was a loss of $135,000 related to the impairment of other assets consisting of the loss of a

deposit to a supplier for use of technology which we are no longer utilizing and was written off.

Expense and Finance Costs

Interest expense and finance

costs for the year ended December 31, 2021, was $67,000 compared to $672,000 in the prior year, a decrease of $605,000.

is mainly attributed to the interest and amortization of costs of the Chicago Ventures and Atlas notes which were extinguished in the

second quarter of 2020.

Extinguishment

of Financing Obligation and Note Payable

the year ended December 31, 2021, there was a loss on the extinguishment of debt of $2,701,000 related to the repurchase of the manufacturing

facility (see Note 17 Financing Obligating Arising from Sales Leaseback Transaction.)

the year ended December 31, 2020, there was a gain of $142,000 related to the prepayment of note payable.

expense and finance costs for the year ended December 31, 2022, was $0 compared to $2,768,000 in the prior year, a decrease of $2,768,000

primarily due to the extinguishment of debt of $2,768,000 in 2021.

quarterly revaluation of certain redeemable warrants resulted in a non-cash adjustment to the redeemable warrants liability amounted

to a gain of $145,000 for the year ended December 31, 2021, compared to a loss of approximately $123,000 in December 31, 2020 (see “Financial

to a gain of $35,000 for the year ended December 31, 2022, compared to a gain of approximately $145,000 in December 31, 2021 (see “Financial

Fair Value” for the various factors considered in the valuation of redeemable warrants).

from sale of income tax operating losses

December 2021, the Company effectively sold $19,500,000 New Jersey state operating losses for approximately $1,640,000, offset

by 2020 deferred tax asset of $632,000.

Additionally, we recorded a deferred tax asset in the amount of $1,305,000 for the current

year operating losses to be sold in 2022.

In December 2020, the Company effectively sold $11,000,000 New Jersey state net operating

loss for approximately $1,090,000.

(see Note 12 Income Taxes (FASB ASC 740 Income Taxes)

effectively sold $20,500,000 New Jersey state operating losses from 2021 for approximately $1,676,000.

Additionally, we recorded a deferred

tax asset in the amount of $1,118,000 for the current year 2022 operating losses to be sold in 2023.

(see Note 12 Income Taxes (FASB

ASC 740 Income Taxes).

and Capital Resources

the first quarter of 2020 an aggregate of 8,746,990 shares were issued upon exercise of the Warrants for gross proceeds of approximately

$8,658,000 and an aggregate of 1,870,000 shares were issued upon exercise of the Prefunded Warrants.

In addition, on March 25, 2020,

the Representative’s Warrant was amended to permit exercise of such warrant to commence on March 30, 2020.

During the first quarter

of 2020, the amended warrants were exercised and an aggregate of 266,665 shares are being issued upon exercise of the warrant for gross

proceeds of approximately of $264,000.

July 2019, the Company entered into a new Equity Distribution Agreement (the “2019 EDA”) with the Maxim Group LLC (“Maxim”),

pursuant to which we could sell from time to time, shares of our Common Stock through Maxim, as agent (the “Offering”).

2019 EDA replaced prior EDA with Maxim.

During the year ended December 31, 2020, we sold 20,444,807 shares under the 2019 EDA for total

gross proceeds of $53,936,615, which included a 3.5% fee to Maxim of $1,888,727.

During 2021, we sold 5,655,731 shares under the 2019

EDA for total gross proceeds of $13,301,526, which includes a 3.5% fee to Maxim of $465,553.

The 2019 EDA was terminated in early February

In February 2022, the Company filed a universal shelf registration statement with the SEC on Form S-3 registering future sales

of up to $100 million of the Company’s securities.

This registration statement will allow the Company to raise additional capital

as needed in the future.

used in operating activities for the year ended December 31, 2022, was approximately $16,108,000 compared to approximately $13,965,000

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The primary reasons for this increase in cash used in operations in 2022 was

related to the loss on the extinguishment of financing obligation with the repurchase of the building of $2,701,000, tax benefit from

the gain on the sale of $646,000 offset by the increase in stock compensation of $532,000.

used in investing activities for the year ended December 31, 2021 was approximately $631,000 compared to $9,164,000 for the same period

in 2020, representing a change of $8,525,000.

The primary reason for the change during the current period is the net purchase

and sale of marketable securities activity of $243,000 compared to the $8,569,000 for the same period in 2020, and by the

proceeds from the sale of property and equipment of $245,000.

related to the loss on marketable securities of $1,679,000, as well as in increase in the prepaid expenses of $151,000 and an increase

in accounts payable of $179,000.

provided by investing activities for the year ended December 31, 2022, was approximately $10,988,000 compared to cash used in 2021

was approximately $631,000, representing a change of $11,619,000.

The primary reason for the change

during the current period is the net purchase and sale of marketable securities activity of $7,359,000 compared to the $243,000 for

the same period in 2021, and by the proceeds from the sale of the asset held for sale of $3,900,000 in 2022.

provided by financing activities for the year ended December 31, 2022, was approximately $80,000 compared to approximately $8,188,000

for the same period in 2021, a decrease of $8,108,000.

The primary reason for this decrease was our receipt of $13,042,000

in net proceeds from the sale of shares compared to $61,248,000 from the sale of shares in 2020.

of December 31, 2021, we had approximately $48,268,000 in cash, cash equivalents and marketable securities, inclusive of approximately

The primary reason for this decrease was our receipt of $13,042,000 in net proceeds

from the sale of shares in 2021compared to $80,000 from the proceeds from sale of stock, net of issuance costs in 2022.

As of December

31, 2022, we had approximately $34,190,000 in cash, cash equivalents and marketable securities, inclusive of approximately $7,137,000

in Marketable Securities, representing a decrease of approximately $14,078,000 from December 31, 2021.

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to commercialize the many potential therapeutic aspects of our experimental drugs and our FDA approved drug Alferon N Injection.

Today, some two years after COVID-19 first appeared, the world has a number of vaccines and some promising therapeutics.

Our quest to prove the antiviral activities of Ampligen continues.

If Ampligen has the broad-spectrum antiviral properties that

we believe that it has, it could be a very valuable tool in treating variants of existing viral diseases, including COVID-19,

or novel ones that arise in the future.

Unlike most developing therapeutics which attack the virus, Ampligen works differently.

that it activates antiviral immune system pathways that fight not just a particular virus or viral variant, but other similar viruses

development of our products requires the commitment of substantial resources to conduct the time-consuming research, preclinical development,

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that we have adequate funds to meet our anticipated operational cash needs and fund current clinical trials over approximately the next

twenty-four months.

At present we do not generate any material revenues from operations and we do not anticipate doing so in the near

We may need to obtain additional funding in the future for new studies and/or if current studies do not yield positive results,

require unanticipated changes and/or additional studies.

If we are unable to commercialize and sell Ampligen and/or recommence material

sales of Alferon N Injection, our operations, financial position and liquidity may be adversely impacted, and additional financing may

There can be no assurances that, if needed, we will be able to raise adequate funds or enter into licensing, partnering

or other arrangements to advance our business goals.

We may seek to access the public equity market whenever conditions are favorable,

even if we do not have an immediate need for additional capital at that time.

We are unable to estimate the amount, timing or nature

of future sales of outstanding common stock or instruments convertible into or exercisable for our common stock.

Any additional funding

may result in significant dilution and could involve the issuance of securities with rights, which are senior to those of existing stockholders.

See Part I, Item 1A - “Risk Factors;

sixteen months.

In February 2022, the SEC declared our universal shelf registration statement on Form S-3 effective.

Pursuant to that

registration statement, we can sell up to $100 million of our securities and raise additional capital as needed in the future.

can be given as to the amount of funds that could be raised pursuant to this registration statement or the potential dilution to current

stockholders.

present we do not generate any material revenues from operations and we do not anticipate doing so in the near future.

We may need to

obtain additional funding in the future for new studies and/or if current studies do not yield positive results, require unanticipated

changes and/or additional studies.

If we are unable to commercialize and sell Ampligen and/or recommence material sales of Alferon N

Injection, our operations, financial position and liquidity may be adversely impacted, and additional financing may be required.

can be no assurances that, if needed, we will be able to raise adequate funds or enter into licensing, partnering or other arrangements

to advance our business goals.

We may seek to access the public equity market whenever conditions are favorable, even if we do not have

an immediate need for additional capital at that time.

We are unable to estimate the amount, timing or nature of future sales of outstanding

common stock or instruments convertible into or exercisable for our common stock.

Any additional funding may result in significant dilution

and could involve the issuance of securities with rights, which are senior to those of existing stockholders.

See Part I, Item 1A - “Risk

We may require additional financing which may not be available ”.

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to “Note 2(h) – Recent Accounting Standards and Pronouncements” under Notes to Consolidated Financial Statements.

Accounting Policies

Reporting Release No.

60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation

of financial statements.

Our significant accounting policies are described in the Notes to Consolidated Financial Statements.

The significant

accounting policies that we believe are most critical to aid in fully understanding our reported financial results are the following:

Accounting Estimates

Our significant accounting estimates are described in the Notes to Consolidated Financial Statements.

The significant accounting

estimates that we believe are most critical to aid in fully understanding our reported financial results are the

assess long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of the assets or the

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changes or planned changes in the use of the assets.

We measure the recoverability of assets that we will continue to use

in our 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.

In the event if the carrying

value exceeds the future undiscounted net cash flows, we would estimate the fair values using a combination of market and income approaches.

Under the market approach, fair values would be estimated using published market multiples for comparable companies.

Under the income

approach, a discounted cash flow methodology would be used, considering:

(i) management estimates, such as projections of revenue, operating

costs and cash flows, taking into consideration historical and anticipated financial results;

(ii) general economic and market conditions;

We measure the recoverability of assets that we will continue to use in our operations

by comparing the carrying value of the asset grouping to our estimate of the related total future undiscounted net cash flows.

asset grouping’s carrying value is not recoverable through the related undiscounted cash flows, the asset grouping is considered

to be impaired.

the event if the carrying value exceeds the future undiscounted net cash flows, we would estimate the fair values using a combination

of market and income approaches.

Under the market approach, fair values would be estimated using published market multiples for comparable

Under the income approach, a discounted cash flow methodology would be used, considering:

(i) management estimates, such as

projections of revenue, operating costs and cash flows, taking into consideration historical and anticipated financial results;

general economic and market conditions;

and (iii) the impact of planned business and operational strategies.

measure 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.

We make subjective judgments in determining

the independent cash flows that can be related to specific asset groupings.

In addition, as we review our manufacturing process and other

manufacturing planning decisions, we must make subjective judgments regarding the remaining useful lives of assets.

When we determine

that the useful lives of assets are shorter than originally estimated, we accelerate the rate of depreciation over the assets’

new, shorter useful lives.

We measure our

long-lived assets, in accordance to ASC 360 impairment (patents, trademarks, intangibles, fixed assets) 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.

We make subjective judgments in determining the independent

cash flows that can be related to specific asset groupings.

In addition, as we review our manufacturing process and other manufacturing

planning decisions, we must make subjective judgments regarding the remaining useful lives of assets.

When we determine that the useful

lives of assets are shorter than originally estimated, we accelerate the rate of depreciation over the assets’ new, shorter useful

At the end of fiscal year December 31, 2022, we engaged an outside third party to provide a valuation for the impairment of our

patents and trademarks.

The determination was, from a qualitative standpoint, it would appear highly unlikely that there would be any

impairment to the patnets.

(see Note 2 Summary of Significant Accounting Policies)

utilize the guidance contained in ASC 480 Distinguishing Liabilities from Equity in the determination of whether to record warrants

and options as Equity and/or Liability.

If the guidance of ASC 480 is deemed inconclusive, we continue our analysis utilizing ASC 815

Derivatives and Hedging.

utilize the guidance contained in ASC 480 Distinguishing Liabilities from Equity in the determination of whether to record warrants and

options as Equity and/or Liability.

If the guidance of ASC 480 is deemed inconclusive, we continue our analysis utilizing ASC 815 Derivatives

method of recording the related value is consistent with the standards as defined by the Financial Accounting Standards Board utilizing

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Consummation of a Fundamental Transaction.

The derivative is values using Level 3 inputs which are highly subjective and require a

high degree of judgment.

The derivative is values using Level 3 inputs which are highly subjective and require a high

degree of judgment.

Concentration

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as being credit worthy, or in short-term money markets, which are exposed to minimal interest rate and credit risks.

deposits and overnight repurchase agreements that exceed federally insured limits.

We have bank deposits

and overnight repurchase agreements that exceed federally insured limits.

Concentration

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

What changed 10-K

Item 7. Management’s Discussion and Analysis