AIM ImmunoTech Inc. 10-K

ITEM 9A. Controls and Procedures. Effectiveness of Control Procedures As of December 31, 2022, 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, 2022, 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. 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, 2022. 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, 2021. 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, 2022, based on the criteria set forth in “Internal Control—Integrated Framework” issued by the COSO. ITEM 9B. Other Information. On March 28, 2023, our Board approved an amendment and restatement of the our bylaws (as amended and restated, the “Restated and Amended Bylaws”), effective as of such date. The amendments set forth in the Restated and Amended Bylaws, among other things: (a) revise procedures and disclosure requirements for stockholders to provide notice of nominations of directors and the submission of proposals for consideration at meetings of our stockholders including, among other things, disclosure of specified information about the noticing stockholder(s), any nominees, and persons acting in concert with them, and information about agreements, arrangements, and understandings between the noticing stockholder(s) and others (including any nominees) relating to AIM or the proposal or nominations; (b) clarify the powers of the Board and the chair of a stockholder meeting to establish rules for the conduct of any meeting of stockholders, as well as the chair’s power to convene, recess, or adjourn the meeting; (c) revise procedures related to stockholder and Board actions taken by written consent to more closely reflect delivery mechanisms contemplated by the General Corporation Law of the State of Delaware (the “DGCL”); (d) adopt a forum selection bylaw to provide that the state and federal courts of the State of Delaware shall be the exclusive forum for litigating derivative actions, claims arising under the DGCL, the certificate of incorporation, or the bylaws, breach of fiduciary duty claims against AIM, its directors or officers, or claims relating to AIM’s internal affairs, and that the federal courts shall be the exclusive forum for the resolution of claims under the Securities Act of 1933, as amended; and (e) make certain administrative, modernizing, clarifying, and conforming changes, including making updates to reflect recent amendments to the DGCL. The foregoing summary of the Restated and Amended Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Restated and Amended Bylaws, which is attached hereto as Exhibit 3.7(ii) and incorporated herein by reference. In addition, the Board increased its size to four and appointed Nancy Bryan to fill the new slot, appointed her to a number of Board committees and reduced compensation to directors. Please see “ Item 10. Directors and Executive Officers and Corporate Governance” and “ Item 11. Executive Compensation .” ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. None. 40 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 70 Chief Executive Officer, President, and Director Peter W. Rodino III 71 Chief Operating Officer, General Counsel & Secretary William M. Mitchell, M.D., Ph.D. 88 Chairman of the Board and Director Stewart L. Appelrouth 69 Director Nancy Bryan 65 Director Robert Dickey IV 66 Chief Financial Officer Each Director has been elected to serve until the next annual meeting of stockholders, or until their 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 Master of Science Degree from Troy University. Mr. Equels began his professional career as a military pilot. Equels is a member of the Board of Directors of BioFlorida Inc., an life science industry organization representing 6,700 establishments and research organizations in the biopharmaceutical, medical technology, and bioagriculture sectors that collectively employ 94,000 Floridians. 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. 41 THOMAS K. EQUELS – Director Qualifications: ● Leadership Experience – Military; Owner and former President; Managing Director of Equels Law Firm, Court-appointed receiver in numerous industries; ● Industry Experience –legal counsel, General Counsel, CFO and CEO of the company; 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. The Board has determined Dr. Mitchell 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. WILLIAM M. MITCHELL, M.D., Ph.D. – Director Qualifications: ● Leadership Experience – Professor at Vanderbilt University School of Medicine. He was a member of the Board of Directors of Chronix Biomedical, a company involved in next generation DNA sequencing for medical diagnostics, until its recent acquisition/merger by the public company, Oncocyte, and was the former 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 Experience – Well published medical researcher with extensive investigative experience on virus and immunology issues relevant to our scientific business; 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. and, since March 2022, a partner at Citrin Cooperman Advisors, LLP, both Certified Public Accountants. 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, FINRA Arbitrator, 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. 42 NANCY K. BRYAN was appointed as a director in March 2023. Ms. Bryan is the President and CEO of BioFlorida. In this role, she leads the development and execution of strategies to strengthen Florida’s life sciences industry and advance innovative products and technologies that improve lives. She has 25 years of experience in the life sciences in commercial positions of increasing responsibility involving primary care, biologics and specialty markets. Her experience began with major pharmaceutical companies (MERCK, GlaxoSmithKline) and progressed to executive leadership positions in specialty pharmaceuticals and smaller, start-up biotech companies (Indevus Pharmaceuticals, NPS Pharmaceuticals). She has served on executive leadership teams and played a key role in companies’ successes including marketing, sales, business development, financing initiatives and investor and PR communications. Throughout her career, Ms. Bryan has developed, launched and commercialized many products including: blockbusters (Zantac, Levitra), major biologics (Tysabri) and orphan drugs for rare diseases (Valstar for bladder cancer, Supprelin LA for central precocious puberty) and has established franchises in a wide variety of therapeutic areas including: Oncology, Anti-infectives, GI and Autoimmune (MS,CD). Ms. Bryan earned a BA in Economics from the University of Virginia and an MBA from Columbia University. Academic honors include Phi Beta Kappa and Beta Gamma Sigma. The Board has determined Ms. Bryan 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. NANCY K. BRYAN – Director Qualifications: ● Leadership Experience – President and CEO of BioFlorida; served on executive leadership teams and played a key role in companies’ successes including marketing, sales, business development, financing initiatives and investor and PR communications; and ● Scientific, Legal or Regulatory Experience – 25 years of experience in the life sciences in commercial positions of increasing responsibility involving primary care, biologics and specialty markets; throughout her career, she has developed, launched and commercialized many products, major biologics and orphan drugs for rare diseases and has established franchises in a wide variety of therapeutic areas including: Oncology, Anti-infectives, GI and Autoimmune (MS,CD). Information about our Executive Officers In addition to Mr. Equels (discussed above), the following are (or were) our Executive Officers during fiscal 2022: PETER W. RODINO III was a Director from July 2013 until September 30, 2016, at which time he 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. ROBERT DICKEY IV, has been our Chief Financial Officer since April 4, 2022. Mr. Dickey has more than 25 years of experience of C-suite financial leadership for life science and medical device companies, both private and public, ranging from preclinical development to commercial operations and across a variety of disease areas and medical technologies. Earlier in his career, Mr. Dickey spent 18 years in investment banking, primarily at Lehman Brothers, with a background split between mergers and acquisitions and capital markets transactions. Mr. Dickey was a senior vice president of the Company from 2008 until 2013. Throughout his career he has demonstrated C-level (CFO, COO and CEO) and Board level experience in public, private, revenue stage and development stage life sciences and medical device companies, and has played a leading role in two start-ups. His prior career as an investment banker included 14 years at Lehman Brothers. Mr. Dickey is experienced in all stages of the business lifecycle, including start-up, high-growth and turnarounds, and in building businesses and achieving an exit. He also has international experience and has expertise in public and private financings, M&A, partnering/licensing transactions, project management and Chapter 11 reorganizations, as well as interacting with Boards, VCs, shareholders and Wall Street. Mr. Dickey has an MBA from The Wharton School and an AB from Princeton University. 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. 43 Audit Committee and Audit Committee Expert The Audit Committee of our Board consists of Stewart L. Appelrouth (Chair) and Dr. Mitchell, both determined by the Board 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. On March 28, 2023, Ms. Bryan was appointed as an additional member of the Audit Committee. 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 (1) 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; (2) select the independent registered public accounting firm, oversee the work of the independent registered public accounting firm, pre-approve all auditing services of the independent registered public accounting firm and evaluate the independent registered public accounting firm’s qualifications, independence and performance; (3) prepare the reports or statements as may be required by NYSE American or the securities laws; (4) 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; (5) discuss the financial statements and reports with management and the independent registered public accounting firm, including critical accounting policies and practices, our disclosures in our Annual Report and any significant financial reporting that arose in the preparation of the audited financial statements; and (6) oversee the Disclosure Control Committee. The Audit Committee is authorized to engage independent counsel and other advisors as it deems necessary. This Audit Committee formally met six times in 2022 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: http://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 did not meet in 2022, Disclosure Controls Committee The Disclosure Controls Committee (“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. The DCC is responsible for (1) implementing, monitoring and evaluating our disclosure controls and procedures; (2) reviewing and evaluating our interactions with the FDA and other similar regulatory bodies; and (3) reviewing with the Audit Committee our earnings and other press releases and periodic reports and proxy statements that are to be filed with the SEC. Robert Dickey, our CFO, is the DCC’s Investor Relations Coordinator and Chair. The other members of the DCC are Peter Rodino, our COO and General Counsel, William Mitchell, one of our Independent Directors, Dr. David Strayer, Chief Scientific Officer, Diane Young, our Clinical Project Manager, Jodie Pelz, our Director of Finance, 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 2021. The DCC actively met on numerous occasions in 2022. 44 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 chair of the Committee, and is a member 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 2022. On March 28, 2023, Ms. Bryan was appointed as an additional member of this committee. Corporate Governance and Nomination Committee The Corporate Governance and Nomination Committee consists of Dr. William M. Mitchell (Chair) and Director, and Mr. Stewart L. Appelrouth, Director. In 2022, the Corporate Governance and Nomination Committee met three times. All committee members were in attendance for the meetings. On March 28, 2023, Ms. Bryan was appointed as an additional member of this committee. All of the members of the Committee meet the independence standards contained within the NYSE American Company Guide and AIM’s Corporate Governance Guidelines. The full text of the Corporate Governance and Nomination Committee Charter as well as the Corporate Governance Guidelines, are available on our website: https://aimimmuno.com/corporate-governance/. The Corporate Governance and Nomination Committee is responsible for (1) assisting the Board in identifying, recommending, assessing, recruiting and selecting candidates to serve as members of the Board, including in connection with filling vacancies; (2) assisting the Board in developing criteria for identifying and selecting individuals for nomination to the Board; (3) advising the Board with respect to the Board’s composition, procedures and committees; (4) reviewing, assessing and recommending appropriate Corporate Governance Guidelines; (5) reviewing the charter of each committee of the Board and recommending to the Board the number, identity and responsibilities of each committee; (6) reviewing our business practices as they relate to preserving our good reputation; (7) developing and recommending to the Board procedures for succession planning for our executives and continuity of the Board; and (8) assessing the effectiveness of the Board in meeting the long-terms interest of the stockholders. The Committee is authorized to retain search firms and other consultants to assist it in identifying candidates and fulfilling its other duties. Stockholders who wish to suggest qualified candidates should write to the Corporate Secretary, AIM ImmunoTech Inc., 2117 SW Highway 484, Ocala, Florida 34473, stating in detail the qualifications of such persons for consideration by the Committee. Director candidates should demonstrate the qualifications, experience and skills for Board members which are important to AIM’s business and its future, as outlined in Proposal 1 below. We aspire to the highest standards of ethical conduct; reporting results with accuracy and transparency; and maintaining full compliance with the laws, rules and regulations that govern our business. AIM’s Corporate Governance Guidelines embody many of our policies and procedures which are at the foundation of our commitment to best practices. The guidelines are reviewed annually and revised if deemed necessary, to continue to reflect best practices. 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 website 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; ● Robert Dickey IV, Chief Financial Officer (“CFO”); and ● Peter Rodino, Chief Operating Officer (“COO”), General Counsel and Company Secretary (“CS”). 45 In November 2020, we entered into an employment agreement with Thomas Equels, the agreement runs for five years with a base salary of $850,000. Mr. Equels will be awarded a year end target bonus of $350,000. In March 2021, subsequent to the fiscal year ended December 31, 2020, we entered into employment agreements with Peter Rodino. The agreement runs for three years, respectively. Compensation is divided into both short- and long-term compensation. Short term (cash) compensation will consist of a base salary of $425,000. Mr. Rodino 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. Equels and Mr. Rodino will be be entitled to awards (“Event Awards”) equal to 3% for Mr. Equels and 1% for Mr. Rodino of the “Gross Proceeds” from specific events such as Acquisitions, 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. Equels and Mr. Rodino also will each be entitled to an award (an “Acquisition Award”) equal to 3% for Mr. Equels and 1% for Mr. Rodino 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. On March 2022, the Company entered into a consulting agreement with Foresite Advisors, LLC, a company wholly-owned by Robert Dickey IV, for $375 an hour pursuant to which Mr. Dickey will serve as our new Chief Financial Officer effective April 4, 2022. 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”): William Mitchell, M.D., Ph.D. (Chair) and Stewart L. Appelrouth. On March 28, 2023, Ms. Bryan was appointed as an additional member of this committee. The Compensation Committee oversees implementation and administration of our compensation and employee benefits programs with the goal of attracting, retaining and motivating executives and officers, as well as other employees, to improve their performance and our financial performance. In that regard, the Compensation Committee (1) reviews and approves corporate goals and objectives relevant to compensation; (2) evaluates the performance and compensation of our officers and executives and reviews the compensation of all other non-officer executives that are considered highly paid; (3) reviews and approves employment agreements, severance agreements, change of control agreements, deferred compensation agreements, perquisites and similar compensation arrangements of our executive officers; (4) makes recommendations to the Board on the compensation of non-employee members of the Board; (5) administers our incentive and equity-based compensation plans, including, approving the grant of equity awards under such plans, reviewing such plans and making recommendations to the Board regarding the adoption, amendment or termination of such plans; (6) selects and determines the fees and scope of work of its compensation consultants; and (7) reviews our compensation strategy to assure that it continues to advance our objectives and promote stockholder value. 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 four times in 2022 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 November 2022 Annual Meeting of Stockholders, the Stockholders did not approve 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, 2022 and 2021 of Thomas Equels, our Chief Executive Officer, Peter Rodino our Chief Operating Officer, General Counsel and Secretary, Robert Dickey IV our Chief Financial Officer and Ellen Lintal, our former Chief Financial Officer. 46 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 2022 850,000 300,000 — 111,556 — — 90,472 1,352,028 CEO & President (2)3 2021 850,000 352,500 — 473,038 — — 86,106 1,761,644 Ellen Lintal 2022 90,417 — — 32,110 — — 18,699 141,226 Former CFO (4)(7) 2021 350,000 102,500 — 132,346 — — 49,893 634,739 Robert Dickey IV 2022 37,815 $ 10,000 — — — — — 47,815 CFO (5) 2021 — — — — — — — — Peter Rodino COO, General Counsel 2022 425,000 150,000 — 69,295 — — 55,003 699,298 & Secretary (6) 2021 425,000 102,500 — 132,346 — — 57,949 717,795 Notes: (1) All option awards were valued using the Black-Scholes method. (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 2022 and 2021 as well as reported separately in the “Compensation of Directors” section (see below) for calendar year 2022. 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 2022 and 2021. (3) Mr. Equels’ All Other Compensations consists of: 2022 2021 Life & Disability Insurance $ 31,375 $ 22,037 Healthcare Insurance 26,764 26,479 Car Expenses/Allowance 18,000 18,000 401(k) Matching Funds 14,333 19,500 Total $ 90,472 $ 86,016 (4) Ms. Lintal’s All Other Compensations consists of: 2022 2021 Life & Disability Insurance $ 803 $ 3,014 Healthcare Insurance 12,146 12,978 Car Expenses/Allowance 3,600 14,400 401(k) Matching Funds 2,150 19,500 Total $ 18,699 $ 49,892 (5) Mr. Dickey’s All Other Compensations consists of: 2022 2021 Life & Disability Insurance $ — $ — Healthcare Insurance — — Car Expenses/Allowance — — 401(k) Matching Funds — — Total $ — $ — (6) Mr. Rodino’s All Other Compensations consists of: 2022 2021 Life & Disability Insurance $ 2,450 $ 2,521 Healthcare Insurance 23,820 21,528 Car Expenses/Allowance 14,400 14,400 401(k) Matching Funds 14,333 19,500 Total $ 55,003 $ 57,949 47 (7) On April 4, 2022, the Company entered into a consulting agreement with Ms. Lintal, who stepped down as the Company’s Chief Financial Officer on April 4, 2022. 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 568 — — 163.68 6/6/2023 — — — — President and Chief 284 — — 132.00 8/2/2023 — — — — Executive Officer 568 — — 190.08 6/6/2024 — — — — 568 — — 132.00 6/8/2025 — — — — 568 — — 73.92 6/8/2026 — — — — 6,818 — — 24.64 6/8/2027 — — — — 323 — — 21.56 6/15/2027 — — — — 323 — — 21.56 6/30/2027 — — — — 412 — — 21.12 7/15/2027 — — — — 472 — — 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 — — — — 6,818 — — 13.20 5/16/2028 — — — — 5,682 — — 13.20 5/16/2028 — — — — 3,666 — — 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 — — — — — 300,000 1.71 11/11/2031 — — — — Total 955,563 300,000 — — — — — Ellen Lintal 23 — — 9.68 11/14/2029 — — — — Former Chief Financial Officer 75,000 75,000 — 1.85 12/9/2030 — — — — 100,000 — 1.44 11/30/2031 — — — — 50,000 — — 0.70 3/3/2023 — — — — — 50,000 — — — — — Total 225,023 50,000 — — — — — Robert Dickey IV 50,000 — — 0.70 03/03/2032 — — — — Chief financial Officer Total 50,000 — — — — — — 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 — — — — 192 — — 21.12 7/15/2027 — — — — 220 — — 18.48 7/31/2027 — — — — 226 — — 18.04 8/15/2027 — — — — 259 — — 15.84 8/31/2027 — — — — 3,941 — — 16.28 2/13/2028 — — — — 2,273 — — 16.72 4/12/2028 — — — — 2,652 — — 13.20 5/16/2028 — — — — 1,711 — — 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 — — — — 100,000 — — 1.44 11/30/2031 — — — — 50,000 — — 0.70 03/03/2032 — — — — — 100,000 0.41 11/30/2032 — — — — Total 244,902 100,000 — — — — — 48 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 2022, 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 2022, Mr. Equels is entitled to receive total death benefit coverage of $3,000,000 pursuant to his employment agreement and payable by us. Estimated Payments Following Severance — Named Executive Officers (NEO) Pursuant to his employment agreement, Mr. Equels is entitled to severance benefits on certain types of employment terminations not related to a change in control or termination not for cause. Mr. Rodino and Mr. Dickey are not covered by an employment severance agreement and therefore would only receive severance as determined by the Compensation Committee in its discretion. The dollar amounts below assume that the termination occurred on January 1, 2023. The actual dollar amounts to be paid can only be determined at the time of the NEO’s separation from us based on their prevailing compensation and employment agreements along with any determination by the Compensation Committee in its discretion. Name Event Cash Severance ($) Value of Stock Awards That Will Become Vested (1) ($) Continuation of Medical Benefits ($) Additional Life Insurance ($) Total ($) Thomas K. Equels, Involuntary (no cause) $ 3,654,000 $ 111,556 — — $ 3,765,556 CEO & President Termination (for cause) — — — — — Death or disability $ 868,000 $ 111,556 — — $ 979,556 Termination by employee or retirement — $ 111,556 — — $ 111,556 Robert Dickey IV Involuntary (no cause) — — — — — CFO Termination (for cause) — — — — — Death or disability — — — — — Termination by employee or retirement — — — — — Peter Rodino Involuntary (no cause) $ 647,280 $ 69,295 — — $ 716,575 COO, General Counsel and Termination (for cause) — — — — — Secretary Death or disability $ 439,400 $ 69,295 — — $ 508,695 Termination by employee or retirement — $ 69,295 — — $ 69,295 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). 49 The dollar amounts in the chart below assume that change in control termination occurred on January 1, 2023, 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, 2022 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, 2022. The amounts assume a January 3, 2023, termination date regarding base pay and use of the opening price of $0.32 on the NYSE American for our common stock at that date. Name Aggregate Severance Pay ($) 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 $ 5,208,000 (1) — — — $ 576,000 (4) — — — $ 5,784,000 Robert Dickey IV — — — — — — — — — 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. (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 3, 2023 ($0.32 per share) minus the weighted average per share exercise price of $0.43 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 3, 2023 of $0.32 was used with an estimated exercise price of $0.32 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. Equels’ 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. 50 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. 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 2021 or 2022. 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 – 2022 & 2021 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 2022 — — — — — — — Executive Vice Chairman 2021 — — — — — — — W. Mitchell 2022 182,462 — 50,703 — — — 233,165 Chairman of the Board 2021 182,462 — 78,673 — — — 261,135 S. Appelrouth 2022 182,462 — 50,703 — — — 233,165 Director 2021 182,462 — 78,673 — — — 261,135 In March 2023, the Board reduced annual cash compensation from $182,462 to $125,000 to make room for more Board members. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth as of March 25, 2023, 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 24, 2023 was ~48,407,326. 51 Name and Address of Shares Beneficially % Of Shares Beneficially Beneficial Owner Owned Owned Thomas K. Equels, Executive Vice Chairman, Chief Executive Officer, President* 1,499,558 (1 ) **0.03 % Peter W. Rodino III, Chief Operating Officer, General Counsel, Secretary* 388,741 (2 ) ** % William M. Mitchell, M.D., Chairman of the Board of Directors* 256,286 (3 ) ** % Stewart L. Appelrouth, Director* 238,454 (4 ) ** % Robert Dickey IV, Chief Financial Officer* 50,000 (5 ) ** % All directors and executive officers as a group (5 persons) 2,433,039 0. 05 % ** Less than 1% (1) For Mr. Equels, shares beneficially owned include 955,563 shares issuable upon exercise of options and excludes 300,000 shares issuable upon exercise of options not vested or not exercisable within the next 60 days. (2) For Mr. Rodino, shares beneficially owned include 244,902 shares issuable upon exercise of options and excludes 100,000 shares issuable upon exercise of options not vested or not exercisable within the next 60 days. (3) For Dr. Mitchell, shares beneficially owned include 179,874 shares issuable upon exercise of options and excludes 50,000 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 190 shares owned by family trusts. (4) For Mr. Appelrouth, shares beneficially owned include 89,599 shares issuable upon exercise of options and excludes 50,000 shares issuable upon exercise of options not vested or not exercisable within the next 60 days. (5) For Mr. Dickey IV, shares beneficially owned include 50,000 shares issuable upon exercise of options. 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, 2021: 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: 2,599,370 $ 4.03 466,120 Equity compensation plans not approved by security holders: 288,077 $ 9.10 — Total 2,887,447 $ 4.54 466,120 52 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”) for 2022 were $517,000 and total 2021 were $485,000. Amount ($) 2022 2021 Description of Fees: Audit Fees $ 503,000 $ 370,000 Audit-Related Fees - 42,000 Tax Fees 14,000 73,000 Total $ 517,000 $ 485,000 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 2022 and 2021. 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. 53 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 (incorporated by reference to exhibits of the Company’s Registration Statement on Form S-1 (No. 33-93314) filed November 2, 1995). 3.2(i) Amendment to Certificate of Incorporation (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A (No. 001-13441) filed September 16, 2011). 3.3(i) Amendment to Certificate of Incorporation(incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A (No. 000-27072) filed June 27, 2016). 3.4(i) Amendment to Certificate of Incorporation(incorporated by reference to exhibit 3.11 to the Company’s Current report on Form 8-K (No. 001-27072) filed June 5, 2019). 3.5(i) Amendment to Certificate of Incorporation (incorporated by reference to exhibit 3.11 to the Company’s Current report on Form 8-K (No. 001-27072) filed August 23, 2019). 3.6(i) Certificate of Designation of Preference, Rights and Limitations of Series B Convertible Preferred Stock (incorporated by reference to exhibit 3.5 to the Amendment to the Company’s Registration Statement on Form S-1/A (No. 333-229051) filed February 6, 2019). 3.7(ii) Amended and Restated By-Laws of Registrant.* 4.1 Specimen certificate representing our Common Stock (incorporated by reference to exhibits of the Company’s Registration Statement on Form S-1 (No. 33-93314) filed November 2, 1995). 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 (incorporated by reference to exhibit 1 to the Company’s Registration Statement on Form 8-A12B (No. 001-27072) filed November 14, 2017). 4.3 Amended and Restated Rights Agreement, dated as of November 9, 2022, between the Company and American Stock Transfer & Trust Company LLC. (incorporated by reference to exhibit 4.4 to the Company’s Registration Statement on Form 8-A12B (No. 001-27072) filed November 14 2022 ) 4.4 Amended and Restated Rights Agreement, dated as of February 9, 2023, between the Company and American Stock Transfer & Trust Company LLC. (incorporated by reference to exhibit 1 to the Company’s Registration Statement on Form 8-A12B (No. 001-27072) filed February 10, 2023) 4.5 Form of Indenture filed with Form S-3 Universal Shelf Registration Statement (incorporated by reference to exhibit 4.4 to the Company’s Form S-3 Registration Statement (No. 333- 262280) filed January 21, 2022). 4.6 Form of Warrant pursuant to August 30, 2016 Securities Purchase Agreement (incorporated by reference to exhibit 4.1 to the Company’s Current report on Form 8-K (No. 000-270720 filed September 1, 2016). 54 4.7 Form of Warrant pursuant to February 1, 2017 Securities Purchase Agreement (incorporated by reference to exhibit 4.1 to the Company’s Current report on Form 8-K (No. 000-27072) filed February 3, 2017). 4.8 Form of Series A Warrant-June 2017 (incorporated by reference to exhibit 4.1 to the Company’s Current report on Form 8-K (No. 000-27072) filed June 1, 2017). 4.9 Form of Series B Warrant-June 2017(incorporated by reference to exhibit 4.2 to the Company’s Current report on Form 8-K (No. 000-27072) filed June 1, 2017). 4.10 Form of New Series A Warrant-August 2017 (incorporated by reference to exhibit 4.1 the Company’s Current report on Form 8-K (No. 000-27072) filed August 23, 2017). 4.11 Form of New Series B Warrant-August 2017 (incorporated by reference to exhibit 4.2 the Company’s Current report on Form 8-K (No. 000-27072) filed August 23, 2017). 4.12 Form of Warrant issued to Purchaser of facility (incorporated by reference to exhibit 4.8 to the Company’s Annual report on Form 10-K (No. 000-27072) for the year ended December 31, 2017). 4.13 Form of Class A Warrant- April 2018 (incorporated by reference to exhibit 4.1 to the Company’s Current report on Form 8-K (No. 001-27072) filed April 20, 2018). 4.14 Form of Class B Warrant- April 2018 (incorporated by reference to exhibit 4.2 to the Company’s Current report on Form 8-K (No. 001-27072) filed April 20, 2018). 4.15 September 28, 2018 Secured Convertible Promissory Note from the Company to Iliad Research and Trading, L.P. (incorporated by reference to exhibit 10.2 to the Company’s Current report on Form 8-K (No. 001-27072) filed October 4, 2018). 4.16 Rights Offering Form of Non-Transferable Subscription Rights Certificate (incorporated by reference to exhibit 4.14 to the Company’s Registration Statement on Form S-1/A (No. 333-229051) filed February 6, 2019). 4.17 Rights Offering Form of Warrant Agreement (incorporated by reference to exhibit 4.1 to the Company’s Current report on Form 8-K filed February 27, 2019 and is hereby incorporated by reference). 4.18 Rights Offering Form of Warrant Certificate (incorporated by reference to exhibit 4.15 to the Company’s Registration Statement on Form S-1/A (No. 333-229051) filed February 6, 2019). 4.19 Rights Offering Warrant Agency Agreement with American Stock Transfer & Trust (incorporated by reference to exhibit 4.1 to the Company’s Current report on Form 8-K (No.001-27072) filed March 8, 2019). 4.20 AGP Offering-Form of Pre-Funded Warrant (incorporated by reference to exhibit 4.1 to the Company’s Current report on Form 8-K (No. 001-27072) filed September 27, 2019). 4.21 AGP Offering-Form of Warrant (incorporated by reference to exhibit 4.2 to the Company’s Current report on Form 8-K (No. 001-27072) filed September 27, 2019). 4.22 AGP Offering-Form of Representative’s Warrant (incorporated by reference to exhibit 4.20 to the Company’s Registration Statement on Form S-1/A (No. 333-233657) filed September 24, 2019). 4.23 March 2019 Amendment to September 28, 2018 Secured Convertible Promissory Note from the Company to Iliad Research and Trading, L.P. (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 001-27072) filed March 15, 2019). 4.24 December 5, 2019 Secured Promissory Note with Atlas Sciences, LLC (incorporated by reference to exhibit 10.2 to the Company’s Current report on Form 8-K (No.001-27072) filed December 11, 2019). 4.25 Description of Common Stock.* 10.1 Form of Confidentiality, Invention and Non-Compete Agreement (incorporated by reference to exhibits of the Company’s Registration Statement on Form S-1 (No. 33-93314) filed November 2, 1995). 55 10.2 Form of Clinical Research Agreement (incorporated by reference to exhibits of the Company’s Registration Statement on Form S-1 (No. 33-93314) filed November 2, 1995. 10.3 Supply Agreement with HollisterStier Laboratories LLC dated December 5, 2005 (incorporated by reference to exhibit 10.46 to the Company’s Annual report on Form 10-K (No. 001-13441) for the year ended December 31, 2005). 10.4 Amendment to Supply Agreement with HollisterStier Laboratories LLC dated February 25, 2010 (incorporated by reference to exhibit 10.68 to the Company’s Annual report on Form 10-K (No. 001-13441) for the year ended December 31, 2009). 10.5 Vendor Agreement with Armada Healthcare, LLC dated August 15, 2011 (incorporated by reference exhibit 10.2 to the Company’s Quarterly report on Form 10-Q (No. 001-131) for the period ended September 30, 2011). 10.6 Amendment to Supply Agreement with HollisterStier Laboratories LLC executed September 9, 2011 (incorporated by reference to exhibit 10.22 to the Company’s Annual report on Form 10-K (No. 001-13441) for the year ended December 31, 2011). 10.7 Vendor Agreement extension with Armada Healthcare, LLC dated August 14, 2012 (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 000-27072) filed August 15, 2012). 10.8 Vendor Agreement extension with Armada Healthcare, LLC dated July 19, 2013 (incorporated by reference to exhibit 10.22 to the Company’s Annual report on Form 10-K (No. 000-27072) for the year ended December 31, 2013). 10.9 Vendor Agreement extension with Bio Ridge Pharma, LLC and Armada Healthcare, LLC dated August 8, 2014. (incorporated by reference to exhibit 10.24 to the Company’s Annual report on Form 10-K (No. 000-27072) for the year ended December 31, 2014). 10.10 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) (incorporated by reference to exhibit 10.25 to the Company’s Annual report on Form 10-K (No. 000-27072) for the year ended December 31, 2014). 10.11 Vendor Agreement extension with Armada Healthcare, LLC dated July 29, 2015 (incorporated by reference to exhibit 10.1 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2015). 10.12 Early Access Agreement with Impatients N.V. dated August 3, 2015.(Confidential Treatment granted with respect to portions of the Agreement) (incorporated by reference to exhibit 10.1 to the Company’s Quarterly report on Form 10-Q (No. 001-13441) for the period ended September 30, 2015). 10.13 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) (incorporated by reference to exhibit 10.4 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2015). 10.14 Addendum to Early Access Agreement with Impatients N.V. dated October 16, 2015. (Confidential Treatment granted with respect to portions of the Agreement) (incorporated by reference to exhibit 10.2 to the Company’s Quarterly report on Form 10-Q (No. 001-13441) for the period ended September 30, 2015). 10.15 2016 Senior Executive Deferred Cash Performance Award Plan (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 000-27072) filed February 4, 2016). 10.16 2016 Voluntary Incentive Stock Award Plan (incorporated by reference to exhibit 10.2 to the Company’s Current report on Form 8-K (No. 000-27072) filed February 4, 2016). 10.17 Amended and Restated 2016 Senior Executive Deferred Cash Performance Award Plan (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 000-27072) filed March 1, 2016). 10.18 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) (incorporated by reference to exhibit 10.1 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended March 31, 2016). 56 10.19 Agreement between Avrio Biopharmaceuticals (“Avrio”) and the Company dated July 20, 2016 (Confidential Treatment granted with respect to portions of the Agreement) (incorporated by reference to exhibit 10.1 to the Company’s Quarterly report on Form 10-Q (No.000-27072) for the period ended June 30, 2016). 10.20 Licensing Agreement dated April 13, 2016 with Lonza Sales AG (Confidential Treatment granted with respect to portions of the Agreement) (incorporated by reference to exhibit 10.2 to the Company’s report Form 10-Q/A (No. 000-27072) for the period ended March 31, 2016). 10.21 Form of Securities Purchase Agreement entered into on August 30, 2016 (incorporated by reference to exhibit 10.1 to the Company’s Current report Form 8-K (No. 000-27072) filed September 1, 2016). 10.22 Amended and Restated Early Access Agreement with Impatients N.V. dated May 20, 2016. (Confidential Treatment granted with respect to portions of the Agreement) (incorporated by reference to exhibit 10.1 to the Company’s report Form 8-K/A (No. 000-27072) filed May 8, 2017). 10.23 December 13, 2016 Amendment No. 1 to Amended and Restated Early Access Agreement with Impatients N.V. (incorporated by reference to exhibit 10.45 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2017). 10.24 June 28, 2017 Amendment No. 2 to Amended and Restated Early Access Agreement with Impatients N.V. (incorporated by reference to exhibit 10.46 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2017). 10.25 February 14, 2018 Amendment No. 3 to Amended and Restated Early Access Agreement with Impatients N.V. (incorporated by reference to exhibit 10.47 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2017). 10.26 March 26, 2018 Amendment No. 4 to Amended and Restated Early Access Agreement with Impatients N.V. (incorporated by reference to exhibit 10.48 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2017). 10.27 Form of Securities Purchase Agreement entered into on February 1, 2017 (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 000-27072) filed February 3, 2017). 10.28 August 2017 Form of Employee Pay Reduction Plan (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 000-27072) filed August 29, 2017). 10.29 August 2017 Form of Executive Compensation Deferral Plan (incorporated by reference to exhibit 10.2 to the Company’s Current report on Form 8-K (No. 000-27072) filed August 29, 2017). 10.30 August 2017 Form of Directors’ Compensation Deferral Plan (incorporated by reference to exhibit 10.3 to the Company’s Current report on Form 8-K (No. 000-27072) filed August 29, 2017). 10.31 Form of August 2017 Agreement between the Company and the Warrant holders . (incorporated by reference to exhibit 10.1 the Company’s Current report on Form 8-K (No. 000-27072) filed August 23, 2017). 10.32 Form of June 2017 Agreement between the Company and the Warrant holders (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 000-27072) filed June 1, 2017). 10.33 Mortgage and Security Agreement with SW Partners LLC dated May 12, 2017 (incorporated by reference to exhibit 10.1 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended March 31, 2017). 10.34 Promissory Note with SW Partners LLC dated May 12, 2017 (incorporated by reference to exhibit 10.2 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended March 31, 2017). 10.35 September 11, 2017 Purchase and Sale Agreement- 5 Jules Lane (incorporated by reference to exhibit 10.57 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2017). 10.36 January 8, 2018 Purchase and Sale Agreement- 783 Jersey Lane (incorporated by reference to exhibit 10.58 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2017). 57 10.37 Lease Agreement for 783 Jersey Lane (incorporated by reference to exhibit 10.59 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2017). 10.38 Form of Stock Purchase Agreement entered into on March 21, 2018 (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 001-27072) filed March 22, 2018). 10.39 Form of Securities Purchase Agreement entered into on May 24, 2018 (incorporated by reference to exhibit 10.55 to the Company’s Registration Statement on Form S-1 (No. 333-226057) filed July 2, 2018). 10.40 2018 Equity Incentive Plan (filed with the Securities and Exchange Commission as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A (No. 001-27072) filed on August 3, 2018). 10.41 September 28, 2018 Securities Purchase Agreement with Iliad Research and Trading, L.P. (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 001-27072) filed October 4, 2018). 10.42 September 28, 2018 Security Agreement with Iliad Research and Trading, L.P. (incorporated by reference to exhibit 10.3 to the Company’s Current report on Form 8-K (No. 001-27072) filed October 4, 2018). 10.43 October 9, 2018, Clinical Trial Agreement with Roswell Park Comprehensive Cancer Center (incorporated by reference to exhibit 10.1 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended September 30, 2018). 10.44 October 8, 2018, Restated First Amendment to Purchase and Sale Agreement (incorporated by reference to exhibit 10.2 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended September 30, 2018). 10.45 October 9, 2018, Restated Bill of Sale for the Restated First Amendment and Sale Agreement (incorporated by reference to exhibit 10.3 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended September 30, 2018). 10.46 Form of Agreement between the Company and the Warrantholders.- May 2, 2019 (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 001-27072) filed May 2, 2019). 10.47 Note Purchase Agreement dated August 5, 2019 with Chicago Venture Partners, L.P. (incorporated by reference to exhibit 10.1 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended June 30, 2019). 10.48 Secured Promissory Note dated August 5, 2019 issued to Chicago Venture Partners, L.P. (incorporated by reference to exhibit 10.2 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended June 30, 2019). 10.49 Security Agreement dated August 5, 2019 with Chicago Venture Partners, L.P. (incorporated by reference to exhibit 10.3 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended June 30, 2019). 10.50 Salary Reduction and Restricted Stock Award Memo (August 2019) (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 001-27072) filed August 26, 2019). 10.51 Form of Restricted Stock Award (incorporated by reference to exhibit 10.2 to the Company’s Current report on Form 8-K (No. 001-27072) filed August 26, 2019). 10.52 December 5, 2019 Note Purchase Agreement with Atlas Sciences, LLC (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No.001-27072) filed December 11, 2019). 10.53 December 5, 2019 Security Agreement with Atlas Sciences, LLC (incorporated by reference to exhibit 10.2 to the Company’s Current report on Form 8-K (No.001-27072) filed December 11, 2019). 58 10.54 March 20, 2020 Amendment to 2017 Material Transfer and Research Agreement with Roswell Park Cancer Institute (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 001-27072) filed March 26, 2020). 10.55 April 1, 2020 Material Transfer and Research Agreement with Shenzhen Smoore Technology Limited (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. )001-27072) filed April 6, 2020). 10.56 April 21, 2020 Mutual Confidentiality Agreement with UMN Pharma Inc., National Institute of Infectious Diseases, and Shionogi & Co., Ltd (incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K (No. 001-27072) filed April 27, 2020). 10.57 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)) (incorporated by reference to exhibit 10.1 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2020). 10.58 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)) (incorporated by reference to exhibit 10.2 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2020). 10.59 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)) (incorporated by reference to exhibit 10.3 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2020). 10.60 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)) (incorporated by reference to exhibit 10.5 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2020). 10.61 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)) (incorporated by reference to exhibit 10.5 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2020). 10.62 November 10, 2020 employment agreement with Thomas K. Equels. (incorporated by reference to exhibit 10.1 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended September 30, 2020). 10.63 December 22, 2020 Master Service Agreement with Pharmaceutics International Inc. as a Fill & Finish provider for Ampligen (incorporated by reference to exhibit 10.75 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2020). 10.64 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)) (incorporated by reference to exhibit 10.76 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2020). 10.65 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)) (incorporated by reference to exhibit 10.77 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2020). 10.66 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)) (incorporated by reference to exhibit 10.78 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2020). 59 10.67 December 23, 2020 Amendment to Master Service Agreement with Pharmaceutics International Inc. as a Fill & Finish provider for Ampligen (incorporated by reference to exhibit 10.79 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2020). 10.68 March 24, 2021 employment agreement with Peter Rodino (incorporated by reference to exhibit 10.80 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2020). 10.69 March 24, 2021 employment agreement with Ellen Lintal (incorporated by reference to exhibit 10.81 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2020). 10.70 April 1, 2021 extension of April 1, 2020 Material Transfer and Research Agreement with Shenzhen Smoore Technology Limited. (incorporated by reference to exhibit 10.3 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended March 31, 2021). 10.71 Material Transfer And Research Agreement with the University of Cagliari Dipartimento di Scienze della Vita e dell’Ambiente executed on April 5, 2021 (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) (incorporated by reference to exhibit 10.4 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended March 31, 2021). 10.72 Material Transfer and Research agreement with Roswell Park Comprehensive Cancer Center executed on April 14, 2021 (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) (incorporated by reference to exhibit 10.2 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended March 31, 2021). 10.73 April 19, 2021 Purchase and Sale Agreement with Phoenix Equipment Corporation, Branford Auctions, LLC and Perry Videx LLC (incorporated by reference to exhibit 10.1 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended March 31, 2021). 10.74 May 12, 2021 Amendment to the Renewed Sales, Marketing, Distribution and Supply Agreement with GP Pharm. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) (incorporated by reference to exhibit 10.5 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended March 31, 2021). 10.75 May 21, 2021 extension of April 1, 2020 Material Transfer and Research Agreement with Shenzhen Smoore Technology Limited (incorporated by reference to exhibit 10.2 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended June 30, 2021). 10.76 July 8, 2021 Reservation and Start-Up Agreement with hVIVO Services Limited (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) (incorporated by reference to exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (No. 000-27072) for the period ended June 30, 2021 filed August 16, 2021) 10.77 September 27, 2021 Clinical Trial Agreement with hVIVO Services Limited (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) (incorporated by reference to exhibit 10.2 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended September 30, 2021) 10.78 March 1, 2022 Consulting Agreement with Foresite Advisors, LLC pursuant to which Robert Dickey IV will serve as the Company’s Chief Financial Officer (Portions of this agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) (incorporated by reference to exhibit 10.78 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2021). 60 10.79 March 24, 2022 Consulting Agreement with Ellen Lintal (Portions of this agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)). 10.80 March 1, 2022 Amendment to Clinical Trial Agreement with hVIVO Services Ltd dated September 27, 2021. (incorporated by reference to exhibit 10.80 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2021). 10.81 March 3, 2022 Agreement of Sale and Purchase with Acellories, Inc for sale of 783 Jersey Avenue, New Brunswick, NJ building. (incorporated by reference to exhibit 10.81 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2021). 10.82 March 8, 2022 Change order to Master Service Agreement with Pharmaceutics International Inc. as a Fill & Finish provider for Ampligen. (incorporated by reference to exhibit 10.82 to the Company’s Annual report on Form 10-K (No. 001-27072) for the year ended December 31, 2021). 10.83 April 7, 2022 Project Work Order with Amarex Clinical Research LLC.to manage Phase 2 clinical trial in advanced pancreatic cancer patients (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) (incorporated by reference to exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-27072) filed April 12, 2022). 10.84 June 13, 2022 Project Work Order with Amarex Clinical Research LLC. for a Randomized Double Blind, Placebo Controlled study to Evaluate the Efficacy and Safety of Ampligen in Patients with Post Covid Conditions (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) (incorporated by reference to exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-27072) filed June 17, 2022). 10.85 June 16, 2022 Lease agreement entered into with New Jersey Economic Development Authority for 5,210 square-foot R&D facility at the New Jersey Bioscience Center (incorporated by reference 10.1 to the Company’s Current Report on Form 8-K (No.001-27072) filed June 21, 2022). 10.86 June 27, 2022 First Amendment to Agreement of Sale and Purchase with Acellories, Inc. (incorporated by reference 10.86 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2022 filed August 15, 2022). 10.87 August 2, 2022 Second Amendment to Agreement of Sale and Purchase with Acellories, Inc. (incorporated by reference 10.87 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2022 filed August 15, 2022). 10.88 August 10, 2022 Termination agreement with Shenzhen Smoore Technology Limited (incorporated by reference 10.88 to the Company’s Quarterly report on Form 10-Q (No. 000-27072) for the period ended June 30, 2022 filed August 15, 2022). 10.89 October 5, 2022 Lease extension for Riverton office (incorporated by reference 10.4 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended September 30, 2022 filed November 14, 2022). 10.90 October 11, 2022 Material Transfer and Research Agreement with University of Pittsburgh (portions of this agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) (incorporated by reference 10.5 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended September 30, 2022 filed November 14, 2022). 10.91 October 21, 2022 Material Transfer and Research Agreement with University of Pittsburgh (portions of this agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) (incorporated by reference 10.6 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended September 30, 2022 filed November 14, 2022). 61 10.92 October 21, 2022 Fourth Amendment to Agreement of Sale and Purchase with Acellories, Inc )) (incorporated by reference 10.7 to the Company’s Quarterly report on Form 10-Q (No. 001-27072) for the period ended September 30, 2022 filed November 14, 2022). 10.93 December 5, 2022 Master Service Agreement between Sterling Pharma Solutions Limited and AIM ImmunoTech Inc*. 10.94 January 13, 2023 Study Support Agreement with Erasmus University Medical Center Rotterdam (portions of this agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)) * 10.95 January 13, 2023 Co-ordination Agreement with Erasmus University Medical Center Rotterdam and AstraZeneca BV (portions of this agreement have been redacted in compliance with Regulation S-K Item 601(b)(10))* 10.96 March 1, 2023 Extension Agreement with Foresite Advisors LLC* 21.1 List of Subsidiaries* 23.1 Consent of BDO USA, LLP.* 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. (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. 62 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 31, 2023 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 31, 2023 Thomas K. Equels Director of the Board /s/ William Mitchell Chairman of the Board March 31, 2023 William Mitchell, M.D., Ph.D. and Director /s/ Stewart L Appelrouth Director March 31, 2023 Stewart L. Appelrouth /s/ Robert Dickey IV Chief Financial Officer March 31, 2023 Robert Dickey IV 63 AIM IMMUNOTECH INC. AND SUBSIDIARIES Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (BDO USA, LLP; Miami, Florida; PCAOB ID # 243 ) F-2 Consolidated Balance Sheets at December 31, 2022 and 2021 F-3 Consolidated Statements of Comprehensive Loss for each of the years in the two-year period ended December 31, 2022 F-4 Consolidated Statements of Changes in Stockholders’ Equity for each of the years in the two-year period ended December 31, 2022 F-5 Consolidated Statements of Cash Flows for each of the years in the two-year period ended December 31, 2022 F-6 Notes to Consolidated Financial Statements F-7 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 sheets of AIM ImmunoTech Inc. (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022 , 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 audits. 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 audits 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 audits 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 audits 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 audits provide 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 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 separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Redeemable Warrants As discussed in Note 15 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 comprehensive loss. The estimated fair value of the redeemable warrants was approximately $0 as of December 31, 2022. 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: ● Evaluating management’s process for developing the fair value estimate by analyzing significant assumptions used in the calculation, including the probability of a Fundamental Transaction. ● 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, including independent development of the equity volatilities, considering the daily historical stock price volatility information. /s/ BDO USA, LLP We have served as the Company’s auditor since 2021. Miami, Florida March 31, 2023 F- 2 AIM IMMUNOTECH INC. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2022 and 2021 (in thousands, except for share and per share amounts) 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 27,053 $ 32,093 Marketable securities 7,137 16,175 Funds receivable from New Jersey net operating loss 1,676 1,641 Prepaid expenses and other current assets 455 304 Total current assets 36,321 50,213 Property and equipment, net 195 4,047 Right of use asset, net 829 149 Patent and trademark rights, net 1,941 1,974 Other assets 1,202 1,316 Total assets $ 40,488 $ 57,699 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 377 $ 198 Accrued expenses 806 438 Current portion of operating lease liability 178 37 Total current liabilities 1,361 673 Long-term liabilities: Operating lease liability 659 112 Redeemable warrants — 35 Commitments and contingencies (Notes 8, 10, 11, and 16) - - Stockholders’ equity: Series B Convertible Preferred Stock, stated value $ 1,000 per share, issued and outstanding 696 and 715 , respectively 696 715 Common Stock, par value $ 0.001 per share, authorized 350,000,000 shares; issued and outstanding 48,084,287 and 47,994,672 , respectively 48 48 Additional paid-in capital 418,270 417,217 Accumulated deficit ( 380,546 ) ( 361,101 ) Total stockholders’ equity 38,468 56,879 Total liabilities and stockholders’ equity $ 40,488 $ 57,699 See accompanying notes to consolidated financial statements. F- 3 AIM IMMUNOTECH INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Loss (in thousands, except share and per share data) Years ended December 31, 2022 2021 Revenues: Clinical treatment programs – US $ 141 $ 135 Total Revenues 141 135 Costs and Expenses: Production costs — 850 Research and development 6,990 7,672 General and administrative 13,074 8,672 Impairment of assets — 1,779 Total Costs and Expenses 20,064 18,973 Operating loss ( 19,923 ) ( 18,838 ) Loss on investments ( 1,679 ) ( 201 ) Interest expense and other finance costs — ( 67 ) Interest and other income 629 — Extinguishment of financing obligation — ( 2,701 ) Gain on sale of fixed assets 3 216 Redeemable warrants valuation adjustment 35 145 Gain from sale of income tax operating losses 1,490 2,319 Net Loss ( 19,445 ) ( 19,127 ) Other comprehensive loss Reclassification adjustment for realized investment loss — 376 Change in unrealized loss on marketable securities available for sale — ( 329 ) Net comprehensive loss $ ( 19,445 ) $ ( 19,080 ) Basic and diluted loss per share $ ( 0.40 ) $ ( 0.40 ) Weighted average shares outstanding basic and diluted 48,047,288 47,339,975 See accompanying notes to consolidated financial statements. F- 4 AIM IMMUNOTECH INC. AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders’ Equity (in thousands except share data) Accumulated Series B Common Common Additional other Total Preferred Stock Stock .001 Paid-in Comprehensive Accumulated Stockholders’ Shares Shares Par Value Capital Income (Loss) Deficit Equity Balance December 31, 2020 732 42,154,371 $ 42 $ 402,541 $ ( 47 ) $ ( 341,974 ) $ 61,294 Shares issued for: Common Stock issuance, net of costs — 5,790,301 6 13,036 — — 13,042 Shares issued to pay accounts payable — 50,000 — 55 — — 55 Series B preferred shares converted to Common shares ( 17 ) — — 17 — — — Net comprehensive loss — — — — 47 ( 19,127 ) ( 19,080 ) Balance December 31, 2021 715 47,994,672 48 417,217 — ( 361,101 ) 56,879 Balance 715 47,994,672 48 417,217 — ( 361,101 ) 56,879 Shares issued for: Common Stock issuance, net of costs — 88,977 — 80 — — 80 Warrant modification — 638 — — — — — Equity-based compensation — — — 954 — — 954 Series B preferred shares converted to Common shares ( 19 ) — — 19 — — — Net comprehensive loss — — — — — ( 19,445 ) ( 19,445 ) Balance December 31, 2022 696 48,084,287 $ 48 $ 418,270 $ — $ ( 380,546 ) $ 38,468 Balance 696 48,084,287 $ 48 $ 418,270 $ — $ ( 380,546 ) $ 38,468 See accompanying notes to consolidated financial statements. F- 5 AIM IMMUNOTECH INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) Years ended December 31, 2022 2021 Cash flows from operating activities: Net loss $ ( 19,445 ) $ ( 19,127 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation of property and equipment 38 659 Redeemable warrants valuation adjustment ( 35 ) ( 145 ) Gain on sale of fixed assets — ( 216 ) Extinguishment of financing obligation — 2,701 Amortization of patent, trademark rights 218 116 Changes in ROU assets ( 680 ) 30 Impairment of plant property equipment and other assets — 1,779 Loss (gain) from sale of income tax operating losses 197 ( 2,319 ) Equity-based compensation 954 1,568 Loss on sale of marketable securities 1,679 47 Amortization of finance and debt issuance costs — 47 Change in assets and liabilities: Accounts receivable — 34 Funds receivable from New Jersey operating loss sales ( 35 ) ( 551 ) Prepaid expenses and other current assets and other non current assets ( 151 ) 1,631 Lease liability 688 ( 30 ) Other Assets ( 83 ) — Accounts payable 179 ( 185 ) Accrued expenses 368 ( 4 ) Net cash used in operating activities ( 16,108 ) ( 13,965 ) Cash flows from investing activities: Proceeds from sale of marketable securities 10,083 22,292 Purchase of marketable securities ( 2,724 ) ( 22,535 ) Purchase of property and equipment ( 86 ) ( 41 ) Proceeds from sales of property and equipment 3,900 245 Purchase of patent and trademark rights ( 185 ) ( 592 ) Net cash provided by (used in) investing activities 10,988 ( 631 ) Cash flows from financing activities: Financing obligation payments — ( 122 ) Payoff of financing obligation — ( 4,732 ) Proceeds from sale of stock, net of issuance costs 80 13,042 Net cash provided by financing activities 80 8,188 Net decrease in cash and cash equivalents ( 5,040 ) ( 6,408 ) Cash and cash equivalents at beginning of period 32,093 38,501 Cash and cash equivalents at end of period $ 27,053 $ 32,093 Supplemental disclosures of non-cash investing and financing cash flow information: Stock issued to settle accounts payable $ — $ 55 Unrealized loss on marketable securities $ ( 928 ) $ ( 88 ) Conversion of Series B preferred $ 19 17 Operating Lease - Right of Use Assets $ 680 $ 18 See accompanying notes to consolidated financial statements. F- 6 AIM IMMUNOTECH INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Business AIM ImmunoTech Inc. and its subsidiaries (collectively, “AIM”, “Company”, “we” or “us”) are an immuno-pharma company headquartered in Ocala, Florida, and focused on the research and development of therapeutics to treat multiple types of cancers, viral diseases and immune-deficiency disorders. We have 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 are Ampligen (rintatolimod), a first-in-class drug of large macromolecular RNA (ribonucleic acid) molecules, and Alferon N Injection (Interferon Alfa-N3). Ampligen has not been approved by the FDA or marketed in the United States. Ampligen is approved for commercial sale in the Argentine Republic for the treatment of severe Chronic Fatigue Syndrome (“CFS”). The Company’s primary present business focus involves Ampligen. Ampligen is a double-stranded RNA (“dsRNA”) molecule being developed for globally important cancers, viral diseases and disorders of the immune system. AIM currently is proceeding primarily in three areas: ● Ampligen plus Standard of Care (“SOC”) to treat pancreatic cancer patients, and in other cancers, as a potential therapeutic that modifies the tumor microenvironment with the goal of increasing anti-tumor responses to check point inhibitors and with SOC. ● Exploring Ampligen’s antiviral activities and potential use as a prophylactic or treatment for existing viruses, mutations thereof or new viruses. ● Ampligen as a treatment for myalgic encephalomyelitis/chronic fatigue syndrome (“ME/CFS”) and what we refer to as Post-COVID-19 chronic fatigue-like conditions. Alferon N Injection is approved in Argentina for a category of sexually transmitted disease infections and patients that are not responsive or are intolerant to recombinant interferon. Alferon N Injection is the only natural-source, multi-species alpha interferon currently approved for sale in the United States for the intralesional treatment of refractory (i.e., resistant to other treatment) or recurring external condylomata acuminata/genital warts in patients 18 years of age or older. Certain types of human papilloma viruses cause genital warts. AIM also has approval from ANMAT for the treatment of refractory patients that failed or were intolerant to treatment with recombinant interferon in Argentina. The Company recently sold its 30,000 sq. ft. facility at 783 Jersey Ave, New Brunswick, N.J., where it conducted testing and had produced limited quantities of active pharmaceutical ingredients (“API”) for its products. While the Company believes it has sufficient API to meet its current needs, it is also continually exploring new opportunities to maximize its ability to fulfill future needs. AIM’s current and active production plan is to shift to the utilization of Contract Manufacturing Organizations (“CMO”), while maintaining on-site teams for Quality Control (QC), Quality Assurance (QA), Research & Development (R&D), bench and small-batch manufacturing. (See Note 2c Property and Equipment, net) (2) Summary of Significant Accounting Policies (a) Cash, Cash Equivalents and Marketable Securities Cash, Cash Equivalents and marketable securities total $ 34,190,000 and $ 48,268,000 at December 31, 2022 and 2021, respectively. Marketable securities consist of mutual funds. The Company’s securities are stated at fair value. F- 7 (b) Property and Equipment, net Schedule of Property and Equipment (in thousands) December 31, 2022 2021 Land, buildings and improvements $ — $ 3,900 Furniture, fixtures, and equipment 2,233 2,353 Total property and equipment 2,233 6,253 Less: accumulated depreciation and amortization ( 2,038 ) ( 2,206 ) Property and equipment, net $ 195 $ 4,047 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 ten years . Depreciation expense for the years ending December 31, 2022 and December 31, 2021 was $ 38,000 and $ 659,000 , respectively. The Company made a strategic shift on in-house manufacturing and recorded an impairment of the facility in the amount of $ 1,800,000 during the year ended December 31, 2021. During the period ending March 31, 2022, the Company reported assets held for sale related to the pending sale of the manufacturing facility located at 783 Jersey Avenue (See Note 15 Fair Value). The Company sold the manufacturing facility on November 1, 2022. (c) 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. (d) 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 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, and contingency accruals. F- 8 (e) Revenue The Company accounts for revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (“Topic 606”), 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. 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. (f) 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. 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. (g) Recent Accounting Standards and Pronouncements 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 have evaluated the impact of adoption of this ASU on our financial condition, results of operations and cash flows, and, as such, have determined that the adoption of the new standard is not applicable and has no impact on our financial statements. F- 9 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. (h) 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. (i) 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 2,966,538 and 2,150,163 of stock options and warrants, are excluded from the calculation of diluted net loss per share for the years ended December 31, 2022 and 2021, respectively, since their effect is antidilutive due to the net loss of the Company. (j) 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. F- 10 (3) Marketable Securities Marketable securities consist of mutual funds and debt securities. At December 31, 2022 and 2021, it was determined that none of the marketable securities had an other-than-temporary impairment. At December 31, 2022 and December 31, 2021, all securities were measured as Level 1 instruments of the fair value measurements standard (See Note 15: Fair Value). As of December 31, 2022, and December 31, 2021, the Company held $ 7,137,000 and $ 16,175,000 in mutual funds. Mutual Funds classified as available for sale consisted of: Schedule of Available of Sale December 31, 2022 (in thousands) Securities Fair Value Short-Term Investments Mutual Funds $ 7,137 $ 7,137 Totals $ 7,137 $ 7,137 Schedule of Equity Securities December 31, 2022 (in thousands) Securities Net losses recognized during the period on equity securities $ ( 1,679 ) Less: Net gains and losses recognized during the period on equity securities sold during the period ( 751 ) Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date $ ( 928 ) Mutual Funds classified as available for sale consisted of: December 31, 2021 (in thousands) Securities Fair Value Short-Term Investments Mutual Funds $ 16,175 $ 16,175 Totals $ 16,175 $ 16,175 December 31, 2021 (in thousands) Securities Net losses recognized during the period on equity securities $ ( 88 ) Less: Net gains and losses recognized during the period on equity securities sold during the period — Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date $ ( 88 ) F- 11 (4) Patents, and Trademark Rights, Net Schedule of Patents, Trademark Rights December 31, 2020 $ 1,498 Acquisitions 592 Amortization ( 116 ) December 31, 2021 $ 1,974 Acquisitions 375 Abandonments ( 190 ) Amortization ( 218 ) December 31, 2022 $ 1,941 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 . As described in Note 2, the Company reviews its patents and trademark rights periodically to determine whether they have continuing value, or their value has become impaired. Since the Company is a pre-revenue entity that is currently undergoing clinical trial for its products, it has current and historical operating and cash flow losses. The Company requires, and will continue to require, the commitment of substantial resources to develop its products, and, as of December 31, 2022, the Company’s accumulated deficit is approximately $ 380.6 million. ASC 360, Property, Plant and Equipment, specifies that a long-lived asset (or asset group) shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. A current period operating, or cash flow loss combined with a history of operating or cash flow losses associated with the use of a long-lived asset was identified by the Company as the triggering event to assess whether impairment indicators are present for the Company’s long-lived assets, including the patents and trademark rights. In connection therewith, the Company engaged an outside third party to provide a valuation for the impairment of the Company’s long-lived assets, including the patents and trademark rights. Based upon the analysis performed, there is no impairment to the Company’s long-lived assets as of December 31, 2022. Amortization of patents and trademarks for each of the next five years is as follows: Schedule of Amortization of Patents and Trademarks Year Ending December 31, 2023 $ 177 2024 166 2025 161 2026 159 2027 149 Thereafter 1,129 Total $ 1,941 (5) Accrued Expenses Accrued expenses at December 31, 2022 and 2021 consist of the following: Schedule of Accrued Expenses (in thousands) December 31, 2022 2021 Compensation $ 1 $ 1 Professional fees 492 169 Clinical trial expenses 110 61 Other expenses 203 207 Accrued expenses $ 806 $ 438 (6) 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. F- 12 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, 2022, and December 31, 2021, the Company had 696 and 715 shares of Series B Convertible Preferred Stock outstanding, respectively. Holders shall be entitled to receive, and the Company shall pay, dividends on shares of Series B Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividend actually paid on shares of Common Stock when as and if such dividends are paid on shares of the Common Stock. Each such Preferred Share is convertible into 114 shares of common stock. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the Holders shall be entitled to receive out of the assets, whether capital or surplus of the Company the same amount that a holder of Common Stock would receive if the Preferred Stock was fully converted. The Series B Convertible Preferred Stock have no voting Rights. 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, 2022, 19 shares of Series B Convertible Preferred Stock were converted into common stock. (b) Common Stock and Equity Finances 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. On July 7, 2020, the board of directors approved a plan pursuant to which all directors, officers, and employees could purchase from the Company up to an aggregate of $ 500,000 worth of shares at the market price. Pursuant to NYSE American rules, this plan was effective for a sixty-day period commencing upon the date that the NYSE American approved the Company’s Supplemental Listing Application. The Company created successive new plans following the expiration of the plan. From July 2020 through December 31, 2022 and during the fiscal years ended December 31, 2021 and 2022, the Company issued 132,238 and 86,817 shares of its common stock at prices ranging from $ 1.16 to $ 2.35 ; from $ 0.76 to $ 1.02 /per share under these plans. The latest plan was approved by the board of directors in January 2023. 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 8,873,960 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. As of December 31, 2022, there are 15,000 Warrants outstanding. On July 19, 2019, the Company entered into a new Equity Distribution Agreement (the “2019 EDA”) with Maxim Group LLC (“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 a prior 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 . During the period ended December 31, 2021, the Company sold 5,665,731 shares under the 2019 EDA for total gross proceeds of $ 13,301,526 , which includes a 3.5 % fee to Maxim of $ 465,533 . The 2019 EDA was terminated in early February 2021. F- 13 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 the fiscal year ending December 31, 2022, 850,000 options were issued to employees with an exercise price range of $ 0.31 to $ 1.71 for a period of ten years with a vesting period of one year. During fourth quarter of 2021, 613,512 options were issued to employees with an exercise price range of $ 1.11 to $ 1.71 for a period of ten years with a vesting period of one year. As of December 31, 2022, and 2021, there were 48,084,287 and 47,994,672 shares outstanding, respectively. (c) Common Stock Options and Warrants (i) Stock Options 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. The Equity Incentive Plans of 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. 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 granted were estimated based on the following weighted average assumptions: Schedule of Options and Equity Estimated Based on Weighted Average Assumptions Year Ended December 31, 2022 2021 Risk-free interest rate 1.74 % - 3.88 % 0.66 % - 1.23 % Expected dividend yield — — Expected life 10 years 5 years Expected volatility 98.43 % - 107.18 % 108.08 % - 108.46 % Weighted average grant date fair value for options issued $ 0.51 per option for 850,000 options $ 1.61 per option for 613,512 options F- 14 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: Schedule of Stock Option Activity 2022 2021 Shares Option Price Weighted Average Exercise Price Shares Option Price Weighted Average Exercise Price Outstanding, beginning of year 128,504 $ 13.20 – 2,127.84 $ 25.58 129,680 $ 13.20 – 2,127.84 $ 23.05 Granted — — — — Forfeited ( 4,105 ) 16.76 - 2,127.84 129.88 ( 1,176 ) 16.76 - 1056.00 289.62 Exercised — — — — — — Outstanding, end of year 124.399 $ 13.20 - 1,003.20 $ 22.23 128,504 $ 13.20 - 2,127.84 $ 25.58 Exercisable, end of year 124,399 $ 13.20 - 1,003.20 126,393 $ 13.20 - 2,127.84 Weighted average remaining contractual life (years) 5.98 years 5.9 years Information regarding the options approved by the Board of Directors under the Equity Plan of 2018 is summarized below: Schedule of Stock Option Activity 2022 2021 Shares Option Price Weighted Average Exercise Price Shares Option Price Weighted Average Exercise Price Outstanding, beginning of year 1,650,017 $ 1.11 - 9.68 $ 2.35 1,086,549 $ 1.85 – 9.68 $ 2.75 Granted 850,000 $ 0.31 - 1.71 $ 0.51 613,512 $ 1.11 – 1.71 $ 1.67 Forfeited ( 25,046 ) $ 1.85 – 9.68 $ 1.86 ( 50,044 ) $ 1.85 – 8.50 $ 1.86 Exercised — — — — — — Outstanding, end of year 2,474,971 $ 0.31 - 9.68 $ 1.72 1,650,017 $ 1.11 – 9.68 $ 2.35 Exercisable, end of year 1,916,637 $ 0.41 - 9.68 $ 2.22 1,141,798 $ 1.11 – 9.68 $ 2.35 Weighted average remaining contractual life (years) 9.65 years 9.12 years Available for future grants 466,120 344,322 F- 15 Stock option activity during the years ended December 31, 2022 and 2021 is as follows: Vested stock option activity for employees: Schedule of Vest Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contracted Term (Years) Aggregate Intrinsic Value Outstanding December 31, 2020 1,049,695 $ 5.38 9.28 — Granted 500,000 1.60 9.11 — Forfeited ( 50,897 ) 19.50 — — Expired — 348.48 — — Outstanding December 31, 2021 1,498,798 $ 4.22 9.11 — Granted 550,000 0.49 9.71 — Forfeited ( 28,584 ) 17.71 Expired — — — — Outstanding December 31, 2022 2,020,214 $ 3.01 8.86 — Vested and expected to vest at December 31, 2022 2,020,214 $ 3.01 8.86 — Exercisable at December 31, 2022 1,627,888 $ 2.36 6.54 — The weighted-average grant-date fair value of employee options granted during the year 2022 was $ 269,000 for 550,000 options at $ 0.49 per option and during year 2021 was $ 801,000 for 500,000 options at $ 1.60 per option. Unvested stock option activity for employees: Schedule of Unvested Stock Option Activity Number of Options Weighted Average Exercise Price Average Remaining Contracted Term (Years) Aggregate Intrinsic Value Unvested December 31, 2020 728,846 $ 3.71 9.61 — Granted 449,102 1.60 9.11 — Vested ( 765,448 ) 2.24 8.36 — Forfeited — — — — Unvested December 31, 2021 412,500 $ 4.15 5.85 — Granted 550,000 0.49 9.71 — Vested ( 541,590 ) 1.31 9.73 — Forfeited ( 28,584 ) 17.71 — — Unvested December 31, 2022 392,326 $ 0.80 8.86 — F- 16 Vested stock option activity for non-employees: Schedule of Vest Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contracted Term (Years) Aggregate Intrinsic Value Outstanding December 31, 2020 166,533 $ 11.03 6.88 — Granted 113,512 1.64 — — Exercised — — — — Forfeited ( 322 ) 965.93 — — Outstanding December 31, 2021 279,723 $ 6.12 7.93 — Granted 300,000 0.54 9.68 — Exercised — — — — Forfeited ( 568 ) 153.12 — — Outstanding December 31, 2022 579,155 $ 3.09 8.36 — Vested and expected to vest at December 31, 2022 579,155 $ 3.09 8.36 — Exercisable at December 31, 2022 412,487 $ 3.60 9.49 — The weighted-average grant-date fair value of non-employee options granted during year 2022 was $ 161,500 for 300,000 options at $ 0.54 per option and during the year 2021 was $ 181,161 for 109,154 options at $ 1.66 per option. Unvested stock option activity for non-employees: Schedule of Unvested Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contracted Term (Years) Aggregate Intrinsic Value Unvested December 31, 2020 66,202 $ 7.24 6.13 — Granted 113,512 1.64 9.92 — Vested ( 81,883 ) 3.48 — — Forfeited — — — — Unvested December 31, 2021 97,831 $ 3.89 7.82 — Granted 300,000 0.54 9.68 — Vested ( 229,053 ) 0.82 — — Forfeited — — — — Unvested December 31, 2022 168,778 $ 4.05 9.49 — Stock-based compensation expense was approximately $ 954,000 and $ 1,568,000 for the years ended December 31, 2022, and 2021 resulting in an increase in general and administrative expenses and loss per share of $ 0.02 and $ 0.03 , respectively. As of December 31, 2022, and 2021, there was $ 217,000 and $ 779,000 , 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. (ii) Stock Warrants Stock warrants are issued as needed by the Board of Directors and have no formal plan. F- 17 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 2022, 2021 or 2020. Information regarding warrants outstanding and exercisable into shares of common stock is summarized below: Schedule of Warrants Outstanding and Exercisable 2022 2021 Shares Warrant Price Weighted Average Exercise Price Shares Warrant Price Weighted Average Exercise Price Outstanding, beginning of year 294,939 $ 0.99 – 469.92 $ 15.19 375,100 $ 0.99 – 469.92 $ 116.38 Granted — — — — — — Expired ( 95 ) 469.92 469.92 ( 79,593 ) 17.16 – 84.48 20.85 Exercised ( 114 ) 8.80 8.80 ( 568 ) 8.80 8.80 Outstanding, end of year 288,077 $ 0.99 - 132.00 $ 9.10 294,939 $ 0.99 - 469.92 $ 15.19 Exercisable 288,077 $ 0.99 - 132.00 $ 9.10 294,939 $ 0.99 - 469.92 $ 15.19 Weighted average remaining contractual life .94 years 4.75 years Years exercisable 2023 - 2024 2022 - 2025 Stock warrants are issued at the discretion of the Board. In 2022 and 2021 there were no warrants issued and 114 warrants were exercised in 2022 and 568 were exercised in 2021. (7) 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, 2022, were earned in the United States. All assets are maintained in the United States of America. (8) 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 our exclusive service provider and distributor in the Territory, is performing EAP activities. The agreement was automatically extended for a period of 12 months on May 20, 2021; automatically extended again for an additional period of 12 months on May 20, 2022; and will be automatically extended again on May 20, 2023. 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. 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. In August 2020, we contracted Amarex Clinical Research LLC (“Amarex”) to act as our Clinical Research Organization and provide regulatory support with regard to a possible clinical trial testing Ampligen’s potential as a COVID-19 prophylaxis via intranasal delivery, and for the development of Ampligen as a therapy for pancreatic cancer. For the year ended December 31, 2022, and for the year ended December 31, 2021 the Company has incurred an expense and paid Amarex approximately $ 2,153,000 and $ 437,000 , respectively. F- 18 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. For the year ended December 31, 2022, the Company has incurred an expense and paid Pii approximately $ 278,000 . In January 2021, the Company entered into a Sponsor Agreement with the Centre for Human Drug Research (“CHDR”) for a Phase 1 clinical study to assess the safety, tolerability, and biological activity of Ampligen as a potential intranasal therapy. For the year ended December 31, 2022, the Company has incurred an expense and paid CHDR approximately $ 56,000 . In April 2021, the Company approved a proposal from Polysciences Inc. (“Polysciences”) for the manufacture of our Poly I and Poly C12U polynucleotides and associated test methods at Polysciences’ Warrington, PA location to enhance our capacity to produce the polymer precursors to the drug Ampligen. We are working with Polysciences to negotiate and finalize both a Service Agreement and a Quality Agreement. For the year ended December 31, 2022 the Company has incurred an expense and paid Polysciences approximately $ 103,000 . In July 2021, the Company executed a Reservation and Start-Up Agreement (the “Agreement”) with hVIVO Services Limited (“hVIVO”), and subsequently signed a clinical trial agreement (“CTA”) in September. For the year ended December 3, 2021, the Company had incurred an expense and paid hVIVO approximately $ 2,340,000 for services incurred in 2021. In March 2022, the Company announced that it had officially withdrawn its application from the Medicines and Healthcare Regulatory Agency and terminated its agreement with hVIVO and incurred a cancelation fee of $ 60,000 which was paid in the first quarter 2022. (9) 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 reinstated effective January 1, 2021. For the year ending December 31, 2022 the Company made $ 122,000 in contributions and for the year ending December 31, 2021 $ 139,000 in contributions were made (10) Employment Agreements The Company had contractual agreements with Named Executive Officers (“NEO”) in 2022, and 2021. The aggregate annual base compensation for these NEO under their respective contractual agreements for 2022 and 2021 was $ 1,275,000 and $ 1,625,000 , 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 2022 and 2021, Officers’ bonuses were $ 450,000 and $ 550,000 respectively. In 2022, 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 an exercise price of $ 0.41 per share to vest in a year to Thomas K. Equels, Chief Executive Officer. b. The Company granted 150,000 ten-year options to purchase common stock with an exercise price of $ 0.41 to $ 0.70 per share which vest in one year to Peter Rodino, Chief Operating Officer and General Counsel. c. The Company granted 50,000 ten-year options to purchase common stock with an exercise price of $ 0.70 per share which vest in one year to Ellen Lintal, former Chief Financial Officer. The Company recorded stock compensation expense of approximately $ 66,000 during the year ended December 31, 2022. With regard to these issuances to Officers Equels, Rodino, and former Officer Lintal. In 2021, equity was granted as a form of compensation to these Officers. d. The Company granted 300,000 ten-year options to purchase common stock with an exercise price of $ 1.71 per share to vest in a year to Thomas K. Equels, Chief Executive Officer. e. The Company granted 100,000 ten-year options to purchase common stock with exercise price of $ 1.44 per share which vest in one year to Peter Rodino, Chief Operating Officer and General Counsel. f. The Company granted 100,000 ten-year options to purchase common stock with exercise price of $ 1.44 per share which vest in one year to Ellen Lintal, Chief Financial Officer. The Company recorded stock compensation expense of approximately $ 105,000 during the year ended December 31, 2021. with regard to these issuances to Officer Equels, Officer Rodino, and former Officer Lintal. F- 19 (11) Leases The Company leases office and storage space, and other equipment under non-cancellable operating leases with initial terms typically ranging from 1 to 5 years. At contract inception, the Company reviews the facts and circumstances of the arrangement to determine if the contract is or contains a lease. The Company follows the guidance in Topic 842 “ Leases ” to evaluate whether the contract has an identified asset; if the Company has the right to obtain substantially all economic benefits from the asset; and if the Company has the right to direct the use of the underlying asset. When determining if a contract has an identified asset, the Company considers both explicit and implicit assets, and whether the supplier has the right to substitute the asset. When determining if the Company has the right to direct the use of an underlying asset, the Company considers if it has the right to direct how and for what purpose the asset is used throughout the period of use and if it controls the decision-making rights over the asset. The Company’s lease terms may include options to extend or terminate the lease. The Company exercises judgment to determine the term of those leases when extension or termination options are present and include such options in the calculation of the lease term when it is reasonably certain that it will exercise those options. The Company has elected to include both lease and non-lease components in the determination of lease payments. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments. At lease commencement, lease-related assets and liabilities are measured at the present value of future lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company exercises judgment in determining the incremental borrowing rate based on the information available when the lease commences to measure the present value of future payments. Operating leases are included in other assets, current operating lease obligations, and operating lease obligations (less current portion) on the Company’s consolidated balance sheet. Short term leases with an initial term of 12 months or less are not presented on the balance sheet with expense recognized as incurred. The Company entered into a Lease Agreement for a term of five years commencing on September 14, 2020 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 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 , 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. On October 4, 2021, the Company renewed the lease for a one-year term as defined in the Lease Agreement. On September 30, 2022, the Company renewed the lease for a one-year term as defined in the Lease Agreement. 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 4 months and 5 years. As of December 31, 2022, and 2021, the weighted-average remaining term is 2.35 and 2.72 years, respectively. The Company has determined that the incremental borrowing rate is 10 % as of December 31, 2022, and 2021, respectively, based upon the recently completed financing transaction in December 2022. Future minimum payments as of December 31, 2022, are as follows: Schedule of Operating lease Future Payments Year Ending December 31, (in thousands) 2023 $ 271 2024 243 2025 216 2026 200 2027 133 Thereafter — Less imputed interest ( 226 ) Total $ 837 As of December 31, 2022, and 2021, the balance of the right of use assets was $ 829,000 and $ 149,000 , respectively, and the corresponding lease liability balance was $ 837,000 and $ 149,000 , respectively. The total rent expense for the years ended December 31, 2022, and 2021 amounted to approximately $ 190,000 and $ 67,000 , respectively. Total rent expense for short term leases for the years ended December 31, 2022, and 2021 amounted to approximately $ 56,000 and 12,000 , respectively. (12) Income Taxes (FASB ASC 740 Income Taxes) 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 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. F- 20 As of December 31, 2022, the Company has approximately $ 250.5 million of Federal net operating loss carryforwards (expiring in the years 2023 through 2038), the use of which has been limited by Internal Revenue Code Section 382 and $ 53.6 million of Federal net operating loss with no expiration date available to offset future federal taxable income. The Company has approximately $ 19.6 million of New Jersey state net operating loss carryforwards ( expiring in 2042 ). The Company has approximately $ 58.4 million of Florida state net operating loss carryforwards with no expiration date to offset future Florida taxable income. The Company has approximately $ 3.6 million of Belgium net operating loss carryforwards with no expiration date to offset future taxable income. In December 2022, the Company effectively sold $ 20,500,000 of its New Jersey state net operating loss carryforward and $ 15,000 in R&D credits for the year 2021 for approximately $ 1,676,000 . 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. As noted above, due to the Company’s prior and current equity transactions, some of the Company’s net operating loss carryforwards are 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 value, 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, 2022 and 2021. The components of the net deferred tax assets and liabilities as of December 31, 2022 and 2021 consist of the following: Schedule of Components of Net Deferred Tax Assets and Liabilities 2022 2021 (in thousands) Deferred tax assets: December 31, 2022 2021 Net operating losses $ 19,674 $ 15,988 Research and Development costs 7,647 7,077 Amortization & depreciation 2,342 1,107 R&D credits 744 82 Other 77 54 ROU 2 — Stock compensation 63 708 Total deferred tax assets 30,549 25,016 Less: Valuation allowance ( 29,431 ) ( 23,711 ) Deferred tax assets, net $ 1,118 $ 1,305 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. The Company’s deferred tax asset estimates the projected sale of 2022 and 2021 New Jersey state operating losses to be sold in the subsequent year, respectively. Rate Reconciliation Reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows (in thousands): Schedule of Effective Tax Rate and Statutory Tax Rate Pre Tax Book Loss $ ( 19,498 ) Federal Rate ( 4,095 ) 21.0 % State Taxes ( 1,640 ) 8.4 % RTP ( 1,590 ) 8.2 % Other 1,606 - 8.2 % Valuation Allowance 5,719 - 29.4 % Total — 0.0 % (13) Certain Relationships and Related Transactions The Company has an employment agreement with its NEOs and has granted its NEOs and directors options to purchase its common stock. Please see details of these Employment Agreements in Note 10 - Employment Agreements. F- 21 (14) Concentrations of 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 2022 and 2021. There are a limited number of suppliers in the United States and abroad available to provide the raw and packaging materials/reagents for use in manufacturing Ampligen and Alferon N Injection. At present, we do not have any agreements with third parties for the supply of any of these materials or we are relying on a limited source of reagent suppliers necessary for the manufacture of Alferon N Injection. Jubilant HollisterStier LLC has manufactured batches of Ampligen for us pursuant to purchase orders. We anticipate that additional orders will be placed upon approved quotes and purchase orders provided by us to Jubilant. On December 22, 2020, we added Pharmaceutics International Inc. (“Pii”) as a “Fill & Finish” provider to enhance our capacity to produce the drug Ampligen. This addition amplifies our manufacturing capability by providing redundancy and cost savings. The contracts augment our existing fill and finish capacity. If we are unable to place adequate acceptable purchase orders with Jubilant or Pii in the future at acceptable prices upon acceptable terms, we will need to find another manufacturer. The costs and availability of products and materials we would need for the production of Ampligen are subject to fluctuation depending on a variety of factors beyond our control, including competitive factors, changes in technology, ownership of intellectual property, FDA and other governmental regulations. There can be no assurance that we will be able to obtain such products and materials on terms acceptable to us or at all. Currently, the Alferon N Injection manufacturing process is on hold and there is no definitive timetable to restart production. If we are unable to acquire FDA approvals related to the manufacturing process and/or final product of new Alferon N Injection inventory or contract with a CMO, our operations most likely will be materially and/or adversely affected. In light of these contingencies, there can be no assurances that the approved Alferon N Injection product will be returned to production on a timely basis, if at all, or that if and when it is again made commercially available, it will return to prior sales levels. (15) 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. 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, which is defined if the Company, directly or indirectly, in one or more related transactions, consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another person or group of persons, whereby such other person or group acquires more than 50% of the outstanding shares of common stock (not including any shares of common stock held by the other person or group of persons making or party to, or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other business combination). The fair value of the redeemable warrants (“Warrants”) related to the Company’s 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 April 2018 Warrants: Schedule of Assumptions to Estimate Fair Value of Warrants December 31, December 31, 2022 2021 Underlying price per share $ 0.31 $ 0.92 Exercise price per share $ 17.16 $ 17.16 Risk-free interest rate 4.74 % 0.67 % Expected holding period 0.81 1.81 Expected volatility 75 % 120 % Expected dividend yield — — F- 22 The Company utilized the following assumptions to estimate the fair value of the March 2019 Warrants: December 31, December 31, 2022 2021 Underlying price per share $ 0.31 $ 0.92 Exercise price per share $ 8.80 $ 8.80 Risk-free interest rate 4.67 % 0.78 % Expected holding period 1.19 2.19 Expected volatility 70 % 125 % 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. 3. Industry and market conditions continue to include uncertainty, 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: Schedule of Range of Probabilities 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. F- 23 (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 $ 0 and $ 35,000 at December 31, 2022 and 2021, 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: 1. 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. 2. 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. 3. 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 2022, the Company has classified the warrants with cash settlement features 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: Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis (in thousands) As of December 31, 2022 Total Level 1 Level 2 Level 3 Assets: Marketable securities $ 7,137 $ 7,137 $ — $ — Liabilities: Redeemable warrants $ — $ — $ — $ — F- 24 (in thousands) As of December 31, 2021 Total Level 1 Level 2 Level 3 Assets: Marketable securities $ 16,175 $ 16,175 $ — $ — Liabilities: Redeemable warrant $ 35 $ — $ — $ 35 The changes in Level 3 Liabilities measured at fair value on a recurring basis are summarized as follows (in thousands): Schedule of Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis Redeemable warrants: Balance at December 31, 2021 $ 35 Fair value adjustments ( 35 ) Balance at December 31, 2022 $ — The table below presents the balances of assets and liabilities measured at fair value on a nonrecurring basis by level within the hierarchy as: Schedule of Assets and Liabilities Measured at Fair Value on a Non Recurring Basis (in thousands) As of December 31, 2021 Total Level 1 Level 2 Level 3 Total Gains (Losses) Assets: Long lived assets held and used (a) $ 3,900 $ — $ — $ 3,900 $ 1,800 (a) In accordance with Subtopic 360-10, long-lived assets held and used with a carrying amount of $ 5,700,000 were written down to their fair value of $ 3,900,000 , resulting in an impairment charge of $ 1,800,000 , which is included in earnings for the period. (16) 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 . As part of the sale of this building, warrants were provided to the buyer for the purchase of up to 73,314 shares of Company common stock for a period of five years at an exercise price of $ 17.05 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 sale of the property includes an option to repurchase the property based on a contractual formula which does not permanently transfer all the risks and rewards of ownership to the buyer. 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 recorded the cash received and a financing obligation. The warrants cannot be exercised to the extent that any exercise would result in the purchaser owning in excess of 4.99% of our issued and outstanding shares of common stock. On May 13, 2021, the Company completed its repurchase of the property for cash of $ 4,732,637 . The repurchase resulted in the related liability recorded upon sale being extinguished on the date of the repurchase. A loss on the extinguishment was recorded based on the difference between the carrying value of the financing obligation including unamortized debt discount and the amount exchanged to extinguish the debt. For the period ended December 31, 2021, the loss on extinguishment was $ 2,701,460 . Interest expense relating to this financing agreement was $ 19,000 for the period ended December 31, 2021. (17) Subsequent Events On March 28, 2023, Nancy K. Bryan was appointed a Director to the Company’s Board of Directors. See “PART III ITEM 10. / Directors and Executive Officers and Corporate Governance” for biographical information. F- 25