What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-27 compared with 2024-04-01 · 172 added, 140 removed, 74 unchanged (81% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations.

Discussion and Analysis of Financial Condition and Results of Operations.

following discussion and analysis is related to our financial condition and results of operations for the two years ended December 31,

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Please also see “Special Note Regarding Forward Looking Statements and Summary Risk Factors” in ITEM

have issued warrants (the “Warrants”) in February 2017, June 2017, August 2017, April 2018, and March 2019 that are single

compound derivatives containing both an embedded right to obtain stock upon exercise (a “Call”) and a series of embedded

rights to settle the Warrants for cash upon the occurrence of certain events (each, a “Put”).

Generally, the Put provisions

allow the Warrant Holders liquidity protection;

the right to receive cash in certain situations where the Holders would not have a means

of readily selling the shares issuable upon exercise of the Warrants (e.g., where there would no longer be a significant public market

for our common stock).

However, because the contractual formula used to determine the cash settlement value of the embedded Put requires

use of certain assumptions, the cash settlement value of the embedded Put can differ from the fair value of the unexercised embedded

Call option at the time the embedded Put option is exercised.

recompute the fair value of the Warrants at the end of each quarterly reporting period.

Such value computation includes subjective input

assumptions that are consistently applied each period.

If we were to alter our assumptions or the numbers input based on such assumptions,

the resulting fair value could be materially different.

OF OPERATIONS

ended December 31, 2024 versus year ended December 31, 2023

net loss was approximately $28,962,000 and $19,445,000 for the years ended December 31, 2023 and 2022, respectively, representing an

increase in net loss of approximately $9,517,000 or (49%) when compared to the same period in 2022.

This increase in net loss for the

net loss was approximately $17,320,000 and $28,962,000 for the years ended December 31, 2024 and 2023, respectively, representing a

decrease in net loss of approximately $11,642,000 or 40% when compared to the same period in 2023.

This decrease in net loss for the

year ended December 31, 2024, was primarily due to the following:

increase in general and administrative expenses of $8,063,000;

increase in research and development expenses of $3,949,000;

increase in production costs of $42,000;

increase in revenue of $61,000;

increase on income from investments of $1,879,000;

decrease in general and administrative expenses of $7,423,000;

decrease in research and development expenses of $4,742,000;

increase in interest/other income of $4,123,000;

increase in gain from sale of Income tax operating losses of $177,000;

increase on the gain from sale of fixed assets of $15,000;

decrease of the quarterly revaluation of certain redeemable warrants of $35,000.

decrease in production costs of $11,000;

decrease in gain from sale of income tax operating losses of $3,271,000;

increase on loss from investments of $293,000;

increase in interest expense of $585,000;

increase in warrant valuation of $458,000;

decrease on the gain from sale of fixed assets of $18,000;

decrease in revenue of $32,000.

loss per share was $ (0.31) and $ (0.60) for the years ended December 31, 2024 and 2023, respectively.

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from our Ampligen® Cost Recovery Program were $170,000 and $202,000 for the years ended December 31, 2024 and 2023, representing

an increase of $61,000 which is primarily related to the fluctuation of patient participation.

a decrease of $32,000 which is primarily related to the fluctuation of patient participation.

the years ended December 31, 2024 and 2023, we had no Alferon N Injection® Finished Good product to commercially sell and all revenue

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

costs were approximately $42,000 and $0, respectively, for the years ended December 31, 2023 and 2022, representing an increase of $42,000

in production costs in the current period.

The increase was due to the cost incurred for production of Ampligen that occurred in the

last quarter of 2023.

the years ended December 31,2024 and 2023, production costs were approximately $31,000 and $42,000, respectively, reflecting a decrease

of $11,000 in the current period.

This reduction was primarily due to production costs incurred for of the manufacturing of Ampligen

in the last quarter of 2023, which did not recur in 2024.

and Development Costs

Research and Development (“R&D”) costs for the year ended December 31, 2023, were approximately $10,939,000 as compared

to $6,990,000 a year ago, reflecting an increase of approximately $3,949,000.

The primary reason for the increase in research and development

costs was due to the increases in Company sponsored clinical trials expenses of approximately $2,162,000 and an increase in outside consultant

costs of approximately $1,787,000.

the year ended December 31, 2024, research and development (“R&D”) expenses totaled approximately $6,197,000, compared

to $10,939,000 in the prior year, representing a decrease of approximately $4,742,000.

This reduction was primarily driven by a $3,216,000

decrease in company sponsored clinical trial expenses and a $1,622,000 reduction in outside consultant costs.

and Administrative Expenses

and Administrative (“G&A”) expenses for the years ended December 31, 2023 and 2022, were approximately $21,137,000 and

$13,074,000, respectively, reflecting an increase of approximately $8,063,000.

The increase in G&A expenses during the current period

was largely due to increases in legal fees of approximately $6,500,000 primarily related to responding to an attempt by a group of shareholders

to bypass our bylaws and nominating procedures, and financial consultant fees of $2,407,000 offset by a decrease in stock compensation

We are in the process of submitting an insurance claim and hopes to recover a portion of the legal expenses related to the

shareholder action, but recovery, if any, at this time cannot be determined.

For the years ended December 31, 2024 and 2023, general and administrative

(“G&A”) expenses were approximately $13,714,000 and $21,137,000, respectively, reflecting a decrease of approximately

This reduction was primarily driven by a $7,211,000 decrease in legal, financial and consulting fees, which were higher in

the prior year due to expenses incurred in response to stockholder nomination litigation issues in 2023.

(loss) on Investments

(loss) on investments for the years ended December 31, 2023 and 2022 was approximately $200,000 and ($1,679,000), respectively, reflecting

an increased gain on investments of approximately $1,879,000.

The gain was due to the change in the fair value of equity investments.

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

There was no change

for the twelve months ended December 31, 2023, compared with a gain of $35,000 for the twelve months ended December 31, 2022 (see “Financial

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

from sale of income tax operating losses

December 2023, we effectively sold $14,156,000 of our New Jersey state net operating loss carryforward and $38,600 in R&D credits

for the year 2022 for approximately $1,313,000.

Additionally, we recorded a deferred tax asset in the amount of approximately $1,604,000

for the current year 2023 operating losses to be sold in 2024.

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

the years ended December 31, 2024, and 2023, gain (loss) on investments was approximately ($93,000) and $200,000, respectively, reflecting

an increase in investment losses of approximately $293,000.

This loss was primarily driven by changes in the fair value of equity investments.

(loss) from sale of income tax operating losses

2024, we recognized a ($1,604,000) impact related to the sale of our net operating losses (NOLs) under the New Jersey Technology Business

Tax Certificate Transfer Program, compared to a $1,667,000 benefit in 2023.

This decline was primarily due to our company reaching the

program’s lifetime cap of $20,000,000 in cumulative NOL sales.

and Capital Resources

used in operating activities for the year ended December 31, 2024, was approximately $14,888,000 compared to approximately $21,267,000

for the same period in 2022, an increase of $5,159,000.

The primary reasons for this increase in cash used in operations in 2023 was

an increased net loss during the year of $9,517,000 and a gain on investments of $1,879,000, a decrease in stock compensation of $711,000 which was partially offset by an increase in accounts payable of

$5,887,000 an increase in accrued expenses of $812,000.

used in investing activities for the year ended December 31, 2023, was approximately ($832,000) compared to cash provided by investing

activities in 2022 of approximately $10,988,000, representing a change of $11,820,000.

The primary reason for the change during the

current period is the net purchase and sale of marketable investments activity of ($294,000) compared to the $7,359,000 for

the same period in 2022, and by the proceeds from the sale of property and equipment of $47,000 in 2023, compared with $3,900,000 in

provided by financing activities for the year ended December 31, 2023, was approximately $485,000 compared to approximately $80,000 for

the same period in 2022, an increase of $405,000.

The primary reason for this increase was the receipt of $485,000 in net proceeds from

the sale of shares in 2023 compared to $80,000 from the proceeds from sale of stock, net of issuance costs in 2022.

As discussed below,

in April 2023 we entered into an Equity Distribution Agreement, which was the primary source of additional equity proceeds in 2023 compared

of December 31, 2023, we had approximately $13,070,000 in cash, cash equivalents and marketable investments, inclusive of approximately

$7,631,000 in marketable investments, representing a decrease of approximately $21,120,000 from December 31, 2022.

for the same period in 2023, a decrease of $6,379,000.

Net cash used in operating activities for the year ended December 31, 2024 was

impacted by a net loss of approximately $17,320,000, an improvement from approximately $28,962,000 in 2023.

However, since net loss includes

significant non-cash expenses, actual cash from operations was influenced by several adjustments.

Non-cash adjustments comparing 2024

to 2023 included a decrease of $2,000 in depreciation of property, plant, and equipment, an increase of $10,000 in amortization of patents

and trademarks, an increase of $301,000 in amortization of financial obligations.

Other significant non-cash expenses included $17,000

in non-cash lease expenses and $443,000 in equity-based compensation.

Additionally, we recognized a $293,000 loss on the sale of marketable

securities, a $458,000 loss related to the valuation of warrants, a $34,000 loss from patent abandonments.

Proceeds from the sale of fixed assets were $0 in 2024, compared to $18,000 in 2023, reflecting a decrease in asset

sales and related cash inflows year-over-year.

These were partially offset

by a $692,000 gain from funds received under the New Jersey NOL program and a $50,000 reduction in prepaid expenses.

Changes in working

capital also impacted operating cash flows, with a $6,126,000 decrease in accounts payable, a $2,378,000 decrease in accrued expenses,

a $1,062,000 increase in other assets, and a $35,000 decrease in lease liabilities.

Collectively, these factors contributed to the overall

cash flow from operating activities during the period.

provided by investing activities was $4,706,000 in 2024, a significant improvement from $(832,000) in 2023, reflecting a $5,538,000 year-over-year

The primary driver of this improvement was $5,623,000 in proceeds from the sale of marketable securities in 2024, compared

to $1,299,000 in 2023.

Additionally, purchases of marketable securities declined to $361,000 in 2024 from $1,593,000 in the prior year,

further contributing to the positive cash flow impact.

The Company continued investing in intellectual property, with $538,000 spent

on patents and trademarks in 2024, compared to $585,000 in 2023.

Capital expenditures included $18,000 in purchases of property, plant,

and equipment (PP&E) in 2024, whereas 2023 included $47,000 in proceeds from the sale of PP&E.

The overall increase in net investing

cash flow was primarily attributable to higher proceeds from marketable securities and lower investment purchases, improving the company’s

liquidity position.

provided by financing activities totaled $6,444,000 in 2024, a significant increase compared to $485,000 in 2023, reflecting a

$5,959,000 year-over-year improvement.

This increase was primarily driven by $892,000 in net proceeds from the sale of stock in

2024, up from $485,000 in 2023.

Additionally, the company secured $2,500,000 in proceeds from the issuance of notes payable,

compared to zero in the prior year.

Another key factor was a $3,303,000 non-cash warrant valuation adjustment in 2024, which had no

comparable entry in 2023.

In 2024, we repaid $251,000 in debt, whereas no debt repayments were made in 2023.

These financing

activities strengthened the company’s liquidity position and provided additional capital to support ongoing operations and

strategic initiatives.

principal source of liquidity is our cash and cash equivalents, marketable securities, and proceeds from financing activities to provide

the necessary funding to meet our obligations as they become due.

As noted above, as of December 31, 2024, we had approximately $3,977,000

in cash, cash equivalents and marketable securities, inclusive of approximately $2,276,000 in marketable securities, representing a decrease

of approximately $9,093,000 from December 31, 2023.

addition, we have suffered losses from operations as of December 31, 2024, and have a working capital deficit.

These conditions raise

substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of the issuance

of these consolidated financial statements.

See Note 1 to our audited Consolidated Financial Statements.

see “Risk Factors - We have a history of losses, expect to continue to incur losses in the near term and may not achieve or sustain

profitability in the future, and as a result, there is a substantial doubt about our ability to continue as a going concern.”

accompanying audited consolidated financial statements have been prepared assuming that we will continue as a going concern.

December 31, 2024, our current liabilities exceeded our current assets by $5,359,000 which raised doubt about our ability to

continue as a going concern.

Additionally, at December 31, 2024, our stockholders’ equity was below the minimum requirements

for continued listing on the NYSE American.

evaluated the conditions, and their significance of those conditions related to our ability to meet our obligations and determined that

the primary cause of the working capital deficit was related to an accounts payable balance of approximately $6,400,000.

includes approximately $4,900,000 of legal fees related to litigation.

We are currently negotiating with the law firm to reduce prior

These negotiations are ongoing and could, if resolved favorably to us, partially alleviate the working capital deficit.

September 6, 2024, an amendment to an agreement dated April 7, 2022, was executed by us and Amarex clarifying and changing the nature

of the remaining execution fee of $725,437.

The amendment allowed that the remainder would not be exclusive to the agreement dated on

April 7, 2022, that the nature of the payment changed from an execution fee to a fully refundable deposit, and that it could be applied

to any invoice upon mutual agreement of the parties, removed the threshold contingencies, and if such invoices were not sufficient to

exhaust the balance, that the refund would be refunded in cash.

Due to the changes brought about by the amendment, the nature of the

payment changed to deposit status.

At December 31, 2024, we had an outstanding deposit of $653,000 which may be used to offset future

clinical research expenditures.

This deposit is listed as a non-current asset on the balance sheet but could provide working capital

if the timing of expenditures are realized within the next 12 months.

a research and development company, we are conducting research necessary to bring our product, Ampligen, to market.

As such, we primarily

rely on financing activities to provide the necessary funding to meet our obligations as they become due.

AIM has a long and demonstrated

history of success in these efforts, however, there is no assurance that we will be successful in attaining the necessary funding in

Delisting from the NYSE American .

closing price of our common stock on the NYSE American on March 24, 2025 was $0.14 per share.

On December 11, 2024, we

received an official notice of noncompliance with the NYSE American’s continued listing requirements.

This includes the need

for us to have stockholders’ equity of $6.0 million or more.

The NYSE American’s review showed that we were not in

compliance with that requirement.

As required, we submitted a plan (the “Plan”) to the NYSE American illustrating how we

can regain compliance by June 11, 2026.

The Plan includes a number of ways to raise capital.

The NYSE American accepted our Plan on

February 26, 2025.

If we are not able to regain compliance by June 11, 2026, our common stock may be delisted from the NYSE

As of December 31, 2024, our stockholders’ deficit was ($1.3) million.

We must increase our

stockholders’ equity to be at least $6 million to regain compliance with this rule.

If we are not able to raise sufficient

capital as set forth in the Plan or by other means, we may be unable to regain compliance with the NYSE American’s listing

standards and our securities could be subject to delisting.

In the event that the price of our Common Stock drops to $0.10 per

share, our Common Stock will automatically be delisted from the NYSE American.

part of the Plan, we will be holding a special meeting of stockholders solely for the purpose of authorizing a reverse split of our outstanding

The proxy statement for that meeting has been filed with the SEC and is available on the SEC’s website.

We believe that

effecting a reverse split will assist us with raising capital we need to continue our business and avoiding an automatic delisting if

the stock price drops to $0.10 per share.

are committed to a focused business plan oriented toward finding senior co-development partners with the capital and expertise needed

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

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

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

and clinical trials that are necessary to bring pharmaceutical products to market.

We believe, based on our current financial condition,

that we do not have adequate funds to meet our anticipated operational cash needs and fund current clinical trials.

At present we do

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

We will need to obtain additional

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

changes and/or additional studies.

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

Our quest to prove

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immune system pathways that fight not just a particular virus or viral variant, but other similar viruses as well.

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

development, and clinical trials that are necessary to bring pharmaceutical products to market.

We believe, based on our current

financial condition, that we have adequate funds to meet our anticipated operational cash needs and fund current clinical trials

over approximately the next twenty-four months.

In this regard, in April, 2023, we entered into an Equity Distribution Agreement

(the “EDA”), with Maxim Group LLC (“Maxim”), pursuant to which we may sell from time to time, shares of our

common stock having an aggregate offering price of up to $8.5 million through Maxim, as agent.

During the year ended December 31,

2023, we sold 598,114 shares under the EDA for total gross proceeds of approximately $344,000, which includes a 3.0% fee to Maxim of

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

Pursuant to that

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

Subsequent to the end of 2023, we raised $2,500,000 in net proceeds from the sale of an unsecured Note and entered into an equity

line of credit (see exhibits 10.104 and 10.105).

No assurance can be given as to the amount of funds that could be raised or the

potential dilution to current stockholders.

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

We may need to

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

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

changes and/or additional studies.

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See Part I, Item 1A - “Risk

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

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

Relationships and Related Transactions

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Accounting Pronouncements

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

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

Accounting Estimates

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the rate of depreciation over the assets’ new, shorter useful lives.

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

options as Equity and/or Liability.

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

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

the concept of “Fair Value” from ASC 820-10-55-1 that states that any fair value measurement requires that the reporting

entity, to determine the valuation technique(s) appropriate for the measurement, consider the availability of data with which to develop

inputs that represent the assumptions that market participants would use in pricing the asset or liability and the level in the fair

value hierarchy within which the inputs fall.

recomputed the value of the redeemable warrants at the end of each quarterly period.

We use the Monte Carlo Simulation approach which

includes subjective input assumptions that are consistently applied each quarter.

If we were to alter our assumptions or the numbers

input based on such assumptions, the resulting fair value could be materially different.

As discussed in greater detail in “Fair

Value” at the beginning of this ITEM 7, the significant assumptions using this model are:

(i) Risk-Free Interest Rate;

(ii) Expected

Holding Period;

(iii) Expected Volatility;

(iv) Expected Dividend Yield;

(v) Expected Probability of a Fundamental Transaction;

Expected Timing of Announcement of a Fundamental Transaction;

(vii) Expected 100 Day Volatility at Announcement of a Fundamental Transaction;

(viii) Expected Risk-Free Interest Rate at Announcement of a Fundamental Transaction;

and (ix) Expected Time Between Announcement and

Consummation of a Fundamental Transaction.

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

degree of judgment.

Concentration

of Credit Risk

policy is to limit the amount of credit exposure to any one financial institution and place investments with financial institutions evaluated

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

We have bank deposits

and overnight repurchase agreements that exceed federally insured limits.

Concentration

of credit risk, with respect to receivables, is limited through our credit evaluation process.

We do not require collateral on our receivables.

Our receivables historically consisted principally of amounts due from wholesale drug companies.

Quantitative and Qualitative Disclosures About Market Risk.

Financial Statements and Supplementary Data.

& Development (R&D) Expenses

expense R&D costs as incurred.

However, we estimate and accrue costs related to clinical trials, third-party contract research organizations

(CRO’s), manufacturing development, and preclinical studies based on services performed.

Material changes in assumptions could

significantly impact R&D expenses in any given period.

grant stock options, the valuation of which requires significant judgement.

To estimate their fair value, we use the Black-Scholes model,

which involves assumptions about stock volatility, expected option life, and risk-free interest rates.

Changes in estimated volatility

or expected option life could have a material impact stock-based compensation expenses.

and Qualitative Disclosures About Market Risk.

Statements and Supplementary Data.

see the “Index to Financial Statements and Financial Statement Schedule” on page F-1.

Changes in and Disagreements with Accountants on Accounting

and Financial Disclosures.

in and Disagreements with Accountants on Accounting and Financial Disclosures.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis