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What changed in AETHLON MEDICAL INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AETHLON MEDICAL INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+388 added−365 removedSource: 10-K (2023-06-28) vs 10-K (2022-06-28)

Top changes in AETHLON MEDICAL INC's 2023 10-K

388 paragraphs added · 365 removed · 262 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

67 edited+27 added−19 removed86 unchanged
Biggest changePatents The following table lists our issued patents and patent applications, including their ownership status: Patents Issued in the United States PATENT # PATENT NAME ISSUANCE DATE OWNED OR LICENSED EXPIRATION DATE 9,707,333 Extracorporeal removal of microvesicular particles 7/18/17 Owned 1/6/29 9,364,601 Extracorporeal removal of microvesicular particles 6/14/16 Owned 10/2/29 8,288,172 Extracorporeal removal of microvesicular particles 10/16/12 Owned 3/30/29 7,226,429 Method for removal of viruses from blood by lectin affinity hemodialysis 6/5/07 Owned 1/20/24 10,022,483 Method for removal of viruses from blood by lectin affinity hemodialysis 7/17/18 Owned 1/20/24 Patent Applications Pending in the United States APPLICATION # APPLICATION NAME FILING DATE OWNED OR LICENSED 16/415,713 Affinity capture of circulating biomarkers 5/17/19 Owned 17/455,289 Brain specific exosome based diagnostics and extracorporeal therapies 11/17/21 Owned 17/301,666 Method for removal of viruses from blood by lectin affinity hemodialysis 4/09/21 Owned 16/459,220 Methods and compositions for quantifying exosomes 7/01/19 Owned 16/883,624 Plasma exosomal tau as a biomarker for chronic traumatic encephalopathy 5/26/20 Owned 7 Foreign Patents PATENT # PATENT NAME ISSUANCE DATE OWNED OR LICENSED EXPIRATION DATE 3110977 Brain specific exosome based diagnostics and extracorporeal therapies (Denmark) 5/16/18 Owned 9/12/36 3110977 Brain specific exosome based diagnostics and extracorporeal therapies (France) 5/16/18 Owned 9/12/36 3110977 Brain specific exosome based diagnostics and extracorporeal therapies (Germany) 5/16/18 Owned 9/12/36 3110977 Brain specific exosome based diagnostics and extracorporeal therapies (Ireland) 5/16/18 Owned 9/12/36 3110977 Brain specific exosome based diagnostics and extracorporeal therapies (Great Britain) 5/16/18 Owned 9/12/36 3110977 Brain specific exosome based diagnostics and extracorporeal therapies (Sweden) 5/16/18 Owned 9/12/36 3110977 Brain specific exosome based diagnostics and extracorporeal therapies (Netherlands) 5/16/18 Owned 9/12/36 3110977 Brain specific exosome based diagnostics and extracorporeal therapies (Switzerland) 5/16/18 Owned 9/12/36 2353399 Method for removal of viruses from blood by lectin affinity hemodialysis (Russia) 4/27/09 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (Belgium) 7/17/13 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (Ireland) 7/17/13 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (Italy) 7/17/13 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (Great Britain) 7/17/13 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (France) 7/17/13 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (Germany) 7/17/13 Owned 1/20/24 2516403 Method for removal of viruses from blood by lectin affinity hemodialysis (Canada) 8/12/14 Owned 1/20/24 2591359 Methods for quantifying exosomes (Germany) 3/01/17 Owned 7/07/31 2591359 Methods for quantifying exosomes (France) 3/01/17 Owned 7/07/31 2591359 Methods for quantifying exosomes (Great Britain) 3/01/17 Owned 7/07/31 2591359 Methods for quantifying exosomes (Spain) 3/01/17 Owned 7/07/31 2644855 Extracorporeal removal of microvesicular particles (Canada) 11/19/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Germany) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Switzerland) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Spain) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (France) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Great Britain) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Italy) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Netherlands) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Sweden) 4/24/19 Owned 1/20/24 1126138 Extracorporeal removal of microvesicular particles (Hong Kong) 6/19/20 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Switzerland) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Germany) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Denmark) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Spain) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (France) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Great Britain) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Ireland) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Netherlands) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Sweden) 4/21/21 Owned 1/20/24 3366784 Brain specific exosome based diagnostics and extracorporeal therapies (Great Britain) 11/13/19 Owned 9/12/36 3366784 Brain specific exosome based diagnostics and extracorporeal therapies (France) 11/13/19 Owned 9/12/36 3366784 Brain specific exosome based diagnostics and extracorporeal therapies (Germany) 11/13/19 Owned 9/12/36 3366784 Brain specific exosome based diagnostics and extracorporeal therapies (Netherlands) 11/13/19 Owned 9/12/36 8 Pending Foreign Patent Applications APPLICATION # APPLICATION NAME FILING DATE OWNED OR LICENSED 8139/DELNP/2008 Extracorporeal removal of microvesicular particles (exosomes) (India) 3/9/07 Owned 3061952 Extracorporeal removal of microvesicular particles (Canada) 11/18/19 Owned 2939652 Brain specific exosome based diagnostics and extracorporeal therapies (Canada) 8/12/06 Owned Pending International Patent Applications APPLICATION # APPLICATION NAME FILING DATE OWNED OR LICENSED PCT/US2021/026377 Devices and methods for treating a coronavirus infection and symptoms thereof 4/08/21 Owned Trademarks APPLICATION NAME FILING DATE OWNED OR LICENSED TAUSOME 7/24/2015 Owned by ESI SANSAGITTA 7/8/2021 Owned by Aethlon HEMOSAGITTA 1/13/2021 Owned by Aethlon Trademarks In addition to the Tausome, Sansagitta and Hemosagitta trademarks noted in the above table, we also have trademark registrations in the U.S. for Hemopurifier, Aethlon Medical, Inc., and the Exosome Sciences Logo and obtained a trademark registration in India for Hemopurifier.
Biggest changePatents The following table lists our issued patents and patent applications, including their ownership status: Patents Issued in the United States PATENT # PATENT NAME ISSUANCE DATE OWNED OR LICENSED EXPIRATION DATE 9,707,333 Extracorporeal removal of microvesicular particles 7/18/17 Owned 1/6/29 9,364,601 Extracorporeal removal of microvesicular particles 6/14/16 Owned 10/2/29 8,288,172 Extracorporeal removal of microvesicular particles 10/16/12 Owned 3/30/29 7,226,429 Method for removal of viruses from blood by lectin affinity hemodialysis 6/5/07 Owned 1/20/24 10,022,483 Method for removal of viruses from blood by lectin affinity hemodialysis 7/17/18 Owned 1/20/24 7 Patent Applications Pending in the United States APPLICATION # APPLICATION NAME FILING DATE OWNED OR LICENSED 16/415,713 Affinity capture of circulating biomarkers 5/17/19 Owned 17/301,666 Method for removal of viruses from blood by lectin affinity hemodialysis 4/09/21 Owned 16/459,220 Methods and compositions for quantifying exosomes 7/01/19 Owned 17/918,085 Devices and methods for treating a coronavirus infection and symptoms thereof 10/10/22 Owned Foreign Patents PATENT # PATENT NAME ISSUANCE DATE OWNED OR LICENSED EXPIRATION DATE 2353399 Method for removal of viruses from blood by lectin affinity hemodialysis (Russia) 4/27/09 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (Belgium) 7/17/13 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (Ireland) 7/17/13 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (Italy) 7/17/13 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (Great Britain) 7/17/13 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (France) 7/17/13 Owned 1/20/24 1624785 Method for removal of viruses from blood by lectin affinity hemodialysis (Germany) 7/17/13 Owned 1/20/24 2516403 Method for removal of viruses from blood by lectin affinity hemodialysis (Canada) 8/12/14 Owned 1/20/24 2591359 Methods for quantifying exosomes (Germany) 3/01/17 Owned 7/07/31 2591359 Methods for quantifying exosomes (France) 3/01/17 Owned 7/07/31 2591359 Methods for quantifying exosomes (Great Britain) 3/01/17 Owned 7/07/31 2591359 Methods for quantifying exosomes (Spain) 3/01/17 Owned 7/07/31 2644855 Extracorporeal removal of microvesicular particles (Canada) 11/19/19 Owned 1/20/24 3061952 Extracorporeal removal of microvesicular particles (Canada) 7/19/22 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Germany) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Switzerland) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Spain) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (France) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Great Britain) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Italy) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Netherlands) 4/24/19 Owned 1/20/24 1993600 Extracorporeal removal of microvesicular particles (Sweden) 4/24/19 Owned 1/20/24 1126138 Extracorporeal removal of microvesicular particles (Hong Kong) 6/19/20 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Switzerland) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Germany) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Denmark) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Spain) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (France) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Great Britain) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Ireland) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Netherlands) 4/21/21 Owned 1/20/24 3517151 Extracorporeal removal of microvesicular particles (Sweden) 4/21/21 Owned 1/20/24 8 Pending Foreign Patent Applications APPLICATION # APPLICATION NAME FILING DATE OWNED OR LICENSED 8139/DELNP/2008 Extracorporeal removal of microvesicular particles (exosomes) (India) 3/9/07 Owned 2939652 Brain specific exosome based diagnostics and extracorporeal therapies (Canada) 8/12/06 Owned 2021256402 Devices and methods for treating a coronavirus infection and symptoms thereof (Australia) 10/16/22 Owned 3178687 Devices and methods for treating a coronavirus infection and symptoms thereof (Canada) 9/29/22 Owned 21788894.0 Devices and methods for treating a coronavirus infection and symptoms thereof (Europe) 10/26/22 Owned 297109 Devices and methods for treating a coronavirus infection and symptoms thereof (Israel) 10/26/22 Owned 2023-505809 Devices and methods for treating a coronavirus infection and symptoms thereof (Japan) 10/12/22 Owned 11202253625T Devices and methods for treating a coronavirus infection and symptoms thereof (Singapore) 9/29/22 Owned Pending International Patent Applications APPLICATION # APPLICATION NAME FILING DATE OWNED OR LICENSED PCT/US2022/077885 Devices and methods for treating a viral infection and symptoms thereof 10/11/22 Owned Trademarks APPLICATION NAME FILING DATE OWNED OR LICENSED TAUSOME 7/24/2015 Owned SANSAGITTA 7/8/2021 Owned HEMOSAGITTA 1/13/2021 Owned Trademarks In addition to the Tausome, Sansagitta and Hemosagitta trademarks noted in the above table, we also have trademark registrations in the United States for Hemopurifier and Aethlon Medical, Inc., and obtained a trademark registration in India for Hemopurifier.
The Aethlon Hemopurifier®, or Hemopurifier, is a clinical-stage immunotherapeutic device designed to combat cancer and life-threatening viral infections. In cancer, the Hemopurifier is designed to deplete the presence of circulating tumor-derived exosomes that promote immune suppression, seed the spread of metastasis and inhibit the benefit of leading cancer therapies. The U.S.
The Aethlon Hemopurifier is a clinical-stage immunotherapeutic device designed to combat cancer and life-threatening viral infections. In cancer, the Hemopurifier is designed to deplete the presence of circulating tumor-derived exosomes that promote immune suppression, seed the spread of metastasis and inhibit the benefit of leading cancer therapies. The U.S.
For example, in the U.S., the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, ACA, among other things, reduced and/or limited Medicare reimbursement to certain providers and imposed an annual excise tax of 2.3% on any entity that manufactures or imports medical devices offered for sale in the United States, with limited exceptions.
For example, in the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, ACA, among other things, reduced and/or limited Medicare reimbursement to certain providers and imposed an annual excise tax of 2.3% on any entity that manufactures or imports medical devices offered for sale in the United States, with limited exceptions.
This could result in substantial costs, divert our efforts and attention from other aspects of our business, and could have a material adverse effect on our results of operations and financial condition. Outside of the United States, we currently have pending patent applications or issued patents in Europe, India, Russia, Canada and Hong Kong.
This could result in substantial costs, divert our efforts and attention from other aspects of our business, and could have a material adverse effect on our results of operations and financial condition. Outside of the United States, we currently have pending patent applications or issued patents in Europe, India, Russia, Canada, Japan, Singapore and Hong Kong.
In several cases, these validations were conducted in collaboration with leading government or non-government research institutes. On June 17, 2020, the FDA approved a supplement to our open IDE for the Hemopurifier in viral disease to allow for the testing of the Hemopurifier in patients with SARS-CoV-2/COVID-19 in a New Feasibility Study.
In several cases, these studies were conducted in collaboration with leading government or non-government research institutes. On June 17, 2020, the FDA approved a supplement to our open IDE for the Hemopurifier in viral disease to allow for the testing of the Hemopurifier in patients with SARS-CoV-2/COVID-19, or COVID-19, in a New Feasibility Study.
Successful outcomes of human trials will also be required by the regulatory agencies of certain foreign countries where we plan to sell the Hemopurifier. Some of our patents may expire before FDA approval or approval in a foreign country, if any, is obtained.
Successful outcomes of human trials will also be required by the regulatory agencies of certain foreign countries where we plan to market and sell the Hemopurifier. Some of our patents may expire before FDA approval or approval in a foreign country, if any, is obtained.
To protect our proprietary medical technologies, including the Hemopurifier product platform and other scientific discoveries, we have a portfolio of over 50 issued patents and pending applications worldwide. We currently have five issued U.S. patents and 43 issued patents in countries outside of the United States.
To protect our proprietary medical technologies, including the Hemopurifier product platform and other scientific discoveries, we have a portfolio of over 50 issued patents and pending applications worldwide. We currently have five issued U.S. patents and 32 issued patents in countries outside of the United States.
Recently, however, our primary focus has been on the evaluation of the Hemopurifier in cancer, where we have previously shown in non-clinical studies and in a recent COVID-19 emergency use patient that it is capable of clearing exosomes, which are subcellular particles that are secreted by both normal and malignant cells.
The Hemopurifier in Cancer Our primary focus in recent years has been on the evaluation of the Hemopurifier in cancer, where we have previously shown in non-clinical studies and in a COVID-19 emergency use patient that it is capable of clearing exosomes, which are subcellular particles that are secreted by both normal and malignant cells.
The invention provides for the "Extracorporeal removal of microvesicular particles" for which the U.S. Patent and Trademark Office granted a patent (Patent No.8,288,172) in the U.S. as of October 2012.
The invention provides for the "Extracorporeal removal of microvesicular particles" for which the U.S. Patent and Trademark Office granted a patent (Patent No.8,288,172) in the United States as of October 2012.
The cost of research and development, all of which has been charged to operations, amounted to approximately $2,341,000 and $2,072,000 in the fiscal years ended March 31, 2022 and 2021, respectively. Intellectual Property We currently own or have license rights to a number of U.S. and foreign patents and patent applications and endeavor to continually improve our intellectual property position.
The cost of research and development, all of which has been charged to operations, amounted to approximately $2,745,000 and $2,341,000 in the fiscal years ended March 31, 2023 and 2022, respectively. Intellectual Property We currently own or have license rights to a number of U.S. and foreign patents and patent applications and endeavor to continually improve our intellectual property position.
Subaward with University of Pittsburgh In 2020, we entered into a cost reimbursable subaward arrangement with the University of Pittsburgh in connection with an NIH contract entitled “Depleting Exosomes to Improve Responses to Immune Therapy in HNNCC.” Our share of the award is $256,750.
Subaward with University of Pittsburgh In December 2020, we entered into a cost reimbursable subaward arrangement with the University of Pittsburgh in connection with an NIH contract entitled “Depleting Exosomes to Improve Responses to Immune Therapy in HNNCC.” Our share of the award was $256,750.
Should our Hemopurifier or any other products under development be approved for commercialization by the FDA, any such products may not be considered cost-effective, reimbursement may not be available in the U.S. or other countries, if approved, and reimbursement may not be sufficient to allow sales of our future products on a profitable basis.
Should our Hemopurifier or any other products under development be approved for commercialization by the FDA, any such products may not be considered cost-effective, reimbursement may not be available in the United States or other countries, if approved, and reimbursement may not be sufficient to allow sales of our future products on a profitable basis.
If approved for use in the U.S., we expect that any products that we develop, including the Hemopurifier, will be purchased primarily by medical institutions, which will in turn bill various third-party payors for the health care services provided to patients at their facility.
If approved for use in the United States, we expect that any products that we develop, including the Hemopurifier, will be purchased primarily by medical institutions, which will in turn bill various third-party payors for the health care services provided to patients at their facility.
It is possible that our pending patent applications may not result in issued patents, that we will not develop additional proprietary products that are patentable, that any patents issued to us may not provide us with competitive advantages or will be challenged by third parties and that the patents of others may prevent the commercialization of products incorporating our technology.
We are seeking additional patents on our scientific discoveries. 6 It is possible that our pending patent applications may not result in issued patents, that we will not develop additional proprietary products that are patentable, that any patents issued to us may not provide us with competitive advantages or will be challenged by third parties and that the patents of others may prevent the commercialization of products incorporating our technology.
In non-clinical bench experiments using a laboratory version of the Hemopurifier, performed in Company labs as well as multiple other outside labs including the Centers for Disease Control, or CDC, the United States Army Medical Research Institute of Infectious Diseases, or USAMRIID, Battelle Memorial Research Institute and others, we have demonstrated that the a miniature version of the Hemopurifier can bind and clear multiple different glycosylated, or containing sugar molecules on their membranes, viruses.
In non-clinical bench experiments using a laboratory version of the Hemopurifier, performed in Company labs as well as in multiple other outside labs, including the Centers for Disease Control, or CDC, the United States Army Medical Research Institute of Infectious Diseases, or USAMRIID, Battelle Memorial Research Institute and others, we have demonstrated that a miniature version of the Hemopurifier can bind and clear multiple different glycosylated viruses.
However, the 2020 federal spending package permanently eliminated, effective January 1, 2020, this ACA-mandated medical device tax. On June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Thus, the ACA will remain in effect in its current form.
However, the 2020 federal spending package permanently eliminated, effective January 1, 2020, this ACA-mandated medical device tax. On June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.
The Company recently published a manuscript reviewing case studies covering those treatments entitled “Removal of COVID-19 Spike Protein, Whole Virus, Exosomes and Exosomal microRNAs by the Hemopurifier® Lectin-Affinity Cartridge in Critically Ill Patients with COVID-19 Infection.” The manuscript described the use of the Hemopurifier for a total of nine sessions in two critically ill COVID-19 patients.
We published a manuscript reviewing case studies covering those two Single Patient Emergency Use treatments entitled “Removal of COVID-19 Spike Protein, Whole Virus, Exosomes and Exosomal microRNAs by the Hemopurifier® Lectin-Affinity Cartridge in Critically Ill Patients with COVID-19 Infection.” The manuscript described the use of the Hemopurifier for a total of nine sessions in two critically ill COVID-19 patients.
These viruses include HIV, HCV, Dengue, West Nile, multiple strains of influenza, Ebola, Chikungunya, smallpox, monkeypox, multiple herpes viruses, a MERS-CoV related pseudovirus and others. Initial clinical trials on the Hemopurifier were conducted overseas on dialysis patients with HCV, with a subsequent EFS conducted in the U.S. under an FDA approved Investigational Device Exemption, or IDE.
These viruses include HIV, HCV, Dengue, West Nile, multiple strains of influenza, Ebola, Chikungunya, smallpox, monkeypox, multiple herpes viruses, a MERS-CoV related pseudovirus and others. Initial clinical trials on the Hemopurifier were conducted overseas on dialysis patients with HCV, with a subsequent EFS conducted in the United States under an FDA approved IDE.
Sales and Marketing We do not currently have any sales and marketing capability. With respect to commercialization efforts in the future, we intend to build or contract for distribution, sales and marketing capabilities for any product candidate that is approved.
With respect to commercialization efforts in the future, we intend to build or contract for distribution, sales and marketing capabilities for any product candidate that is approved.
That study is designed to enroll up to 40 subjects at up to 20 centers in the U.S. Subjects will have established laboratory diagnosis of COVID-19, be admitted to an intensive care unit, or ICU, and will have acute lung injury and/or severe or life threatening disease, among other criteria.
That study was designed to enroll up to 40 subjects at up to 20 centers in the United States. Subjects had to have an established laboratory diagnosis of COVID-19, be admitted to an intensive care unit, or ICU, and have acute lung injury and/or severe or life-threatening disease, among other criteria.
Many private payors use coverage decisions and payment amounts determined by CMS as guidelines in setting their coverage and reimbursement policies and amounts. However, no uniform policy for coverage and reimbursement for medical devices exists among third-party payors in the United States. Therefore, coverage and reimbursement can differ significantly from payor to payor.
Many private payors use coverage decisions and payment amounts determined by CMS as guidelines in setting their coverage and reimbursement policies and amounts. However, no uniform policy for coverage and reimbursement for medical devices exists among third-party payors in the United States.
ITEM 1. BUSINESS Unless otherwise indicated or the context otherwise requires, references to the “Company”, “Aethlon”, “we”, “us” and “our” refer to Aethlon Medical, Inc. Overview and Corporate History We are a medical technology company focused on developing products to diagnose and treat life and organ threatening diseases.
ITEM 1. BUSINESS Unless otherwise indicated or the context otherwise requires, references to the “Company”, “Aethlon”, “we”, “us” and “our” refer to Aethlon Medical, Inc. Overview and Corporate History Aethlon Medical, Inc., or Aethlon, the Company, we or us, is a medical therapeutic company focused on developing products to treat cancer and life-threatening infectious diseases.
We believe the Hemopurifier can be a substantial advance in the treatment of patients with advanced and metastatic cancer through the clearance of exosomes that promote the growth and spread of tumors through multiple mechanisms. We are currently conducting a clinical trial in patients with advanced and metastatic head and neck cancer.
We believe the Hemopurifier can be a substantial advance in the treatment of patients with advanced and metastatic cancer through the clearance of exosomes that promote the growth and spread of tumors through multiple mechanisms.
This patient received eight Hemopurifier treatments without complications and eventually was weaned from a ventilator and was discharged from the hospital. 3 The second patient case study demonstrated in vivo removal of SARS-CoV-2 virus from the blood stream of an infected patient. This patient completed a six-hour Hemopurifier treatment without complications and subsequently was placed on CRRT.
This patient received eight Hemopurifier treatments without complications and eventually was weaned from a ventilator and was discharged from the hospital. The second patient case study demonstrated in vivo removal of SARS-CoV-2 virus from the blood stream of an infected patient.
At the American Society of Nephrology Annual Meeting, Dr. Helmut Geiger, Chief of Nephrology at Frankfurt University Hospital reported that the patient received a single 6.5 hour Hemopurifier treatment. Prior to treatment, viral load was measured at 400,000 copies/ml. Post-treatment viral load reported to be at 1,000 copies/ml. Dr.
The physician was comatose with multiple organ failure at the time of treatment with the Hemopurifier. At the American Society of Nephrology Annual Meeting, Dr. Helmut Geiger, Chief of Nephrology at Frankfurt University Hospital reported that the patient received a single 6.5 hour Hemopurifier treatment. Prior to treatment, viral load was measured at 400,000 copies/ml.
Endpoints for this study, in addition to safety, include reduction in circulating virus, as well as clinical outcomes (NCT # 04595903). In June 2022, the first patient in this study was enrolled and has completed the Hemopurifier treatment phase of the protocol.
Endpoints for this study, in addition to safety, include reduction in circulating virus, as well as clinical outcomes (NCT # 04595903). In June 2022, the Company completed the treatment protocol for its first patient in this study.
The full extent to which the COVID-19 pandemic will impact our business, results of operations, financial condition, clinical trials, and preclinical research will depend on future developments that are highly uncertain, as well as the economic impact on national and international markets. We were formed on March 10, 1999.
The full extent to which inflation, recent bank failures and the war in Ukraine will impact our business, results of operations, financial condition, clinical trials and preclinical research will depend on future developments, as well as the economic impact on national and international markets that are highly uncertain. We incorporated in Nevada on March 10, 1999.
Based on these observations and data, in November 2019 the FDA granted us a second Breakthrough Designation “…for the treatment of individuals with advanced or metastatic cancer who are either unresponsive to or intolerant of standard of care therapy, and with cancer types in which exosomes have been shown to participate in the development or severity of the disease.” On October 4, 2019, the FDA approved our IDE application to initiate an EFS of the Hemopurifier in patients with head and neck cancer in combination with standard of care pembrolizumab (Keytruda).
Based on these observations and data, in November 2019 the FDA granted us a second Breakthrough Designation “…for the treatment of individuals with advanced or metastatic cancer who are either unresponsive to or intolerant of standard of care therapy, and with cancer types in which exosomes have been shown to participate in the development or severity of the disease.” U.S.
Both genotype-3 patients achieved a sustained virologic response, while six of the eight genotype-1 patients achieved a sustained virologic response, which defines a cure of the infection. 4 Hemopurifier - Human Immunodeficiency Virus (HIV) In addition to treating Ebola and HCV-infected individuals, we also conducted a single proof-of-principle treatment study at the Sigma New Life Hospital in an AIDS patient who was not being administered HIV antiviral drugs.
Hemopurifier - Human Immunodeficiency Virus (HIV) In addition to treating Ebola and HCV-infected individuals, we also conducted a single proof-of-principle treatment study at the Sigma New Life Hospital in an AIDS patient who was not being administered HIV antiviral drugs.
Moreover, a product recall could generate substantial negative publicity about our products and business and inhibit or prevent commercialization of other future product candidates. Employees We have 14 full-time employees. All of our employees are located in the United States. We do intend to hire additional employees. We utilize, whenever appropriate, consultants in order to conserve cash and resources.
Moreover, a product recall could generate substantial negative publicity about our products and business and inhibit or prevent commercialization of other future product candidates. Employees As of June 26, 2023, we had 15 full-time employees and no part-time employees. All of our employees are located in the United States. We do intend to hire additional employees.
The primary endpoint for the EFS, which is designed to enroll 10 to 12 subjects at a single center, is safety, with secondary endpoints including measures of exosome clearance and characterization, as well as response and survival rates.
The primary endpoint for the EFS, designed to enroll 10 to 12 subjects at a single center, is safety, with secondary endpoints including measures of exosome clearance and characterization, as well as response and survival rates. This clinical trial, initially conducted at the UPMC Hillman Cancer Center in Pittsburgh, PA, or UPMC, treated two patients.
It is possible that the ACA will be subject to judicial or Congressional challenges in the future. 13 Other legislative changes have been proposed and adopted since the ACA was enacted. The Budget Control Act of 2011, as amended by subsequent legislation, further reduces Medicare’s payments to providers by two percent through fiscal year 2030.
It is unclear how such challenges and any additional healthcare reform measures will impact the ACA. 13 Other legislative changes have been proposed and adopted since the ACA was enacted. The Budget Control Act of 2011, as amended by subsequent legislation, further reduces Medicare’s payments to providers by two percent through fiscal year 2032.
We currently purchase the diatomaceous earth from Janus Scientific, Inc., as the distributor; however, the product is manufactured by Imerys Minerals Ltd. There potentially are other suppliers of this product, but as with the cartridges, qualifying and obtaining required regulatory approvals takes time and resources.
Although there are other suppliers, the process of qualifying a new supplier takes time and regulatory approvals must be obtained. We currently purchase the diatomaceous earth from Janus Scientific, Inc., as the distributor; however, the product is manufactured by Imerys Minerals Ltd.
We believe our employee relations are good. None of our employees are represented by a labor union or are subject to collective-bargaining agreements.
We utilize, whenever appropriate, consultants in order to conserve cash and resources. We believe our employee relations are good. None of our employees are represented by a labor union or are subject to collective-bargaining agreements. 15
In addition, we have nine patent applications pending worldwide related to our Hemopurifier product platform and other technologies. We are seeking additional patents on our scientific discoveries.
In addition, we have thirteen patent applications pending worldwide related to our Hemopurifier product platform and other technologies.
We also reported that an average capture of 154 million copies of HCV (in International Units, I.U.) within the Hemopurifier during four-hour treatments. Prior to this approval, we collected supporting Hemopurifier data through investigational human studies conducted overseas.
We also reported that an average capture of 154 million copies of HCV (in International Units, I.U.) within the Hemopurifier during four-hour treatments.
The Hemopurifier – Clinical Trials Conducted Overseas in Viral Infections EBOLA Virus In December of 2014, Time Magazine named the Hemopurifier a “Top 25 Invention” as the result of treating an Ebola-infected physician at Frankfurt University Hospital in Germany. The physician was comatose with multiple organ failure at the time of treatment with the Hemopurifier.
The studies were conducted in triplicate and data verification was provided by real-time polymerase chain reaction. 4 The Hemopurifier – Clinical Trials Conducted Overseas in Viral Infections EBOLA Virus In December of 2014, Time Magazine named the Hemopurifier a “Top 25 Invention” as the result of treating an Ebola-infected physician at Frankfurt University Hospital in Germany.
We are in the site activation process with additional U.S. medical centers. We also obtained ethics review board approval and entered into a clinical trial agreement with Medanta Medicity Hospital, a multi-specialty hospital in Delhi NCR, India, for a COVID-19 clinical trial at that location.
We also obtained Ethics Review Board, or ERB, approval and entered into a clinical trial agreement with Medanta Medicity Hospital, a multi-specialty hospital in Delhi NCR, India, for a COVID-19 clinical trial at that location. One patient has completed participation in the Indian COVID-19 study.
Additionally, in-vitro , the Hemopurifier has been demonstrated to capture Zika virus, Lassa virus, MERS-CoV, cytomegalovirus, Epstein-Barr virus, Herpes simplex virus, Chikungunya virus, Dengue virus, West Nile virus, smallpox virus, monkeypox virus, H1N1 swine flu virus, H5N1 bird flu virus, and the reconstructed Spanish flu virus of 1918.
In small-scale or early feasibility human studies, the Hemopurifier has been used in the past to treat individuals infected with human immunodeficiency virus, or HIV, hepatitis-C and Ebola. 1 Additionally, in vitro, the Hemopurifier has been demonstrated to capture Zika virus, Lassa virus, MERS-CoV, cytomegalovirus, Epstein-Barr virus, Herpes simplex virus, Chikungunya virus, Dengue virus, West Nile virus, smallpox-related viruses, H1N1 swine flu virus, H5N1 bird flu virus, Monkeypox virus and the reconstructed Spanish flu virus of 1918.
Incorporated within the Hemopurifier is a protein called a lectin that binds to a glycosylated, or sugar substituted, membrane, which exosomes and most infectious viruses share. 2 The Hemopurifier - Clinical Trials In Viral Infections The initial development of the Hemopurifier was focused on viral infections.
Incorporated within the Hemopurifier is a protein called a lectin, that aids in binding exosomes and viruses. The Hemopurifier - Clinical Trials In Viral Infections The initial development of the Hemopurifier was focused on viral infections.
The Award Contract amount is $1,860,561 and, as amended, runs for the period from September 16, 2019 through September 15, 2022. The work performed pursuant to this Award Contract focused on melanoma exosomes. This work follows from our completion of a Phase I contract for the Topic 359 solicitation that ran from September 2017 through June 2018.
The Award Contract amount was $1,860,561 and, as amended, ran for the period from September 16, 2019 through September 15, 2022. 5 The work performed pursuant to this Award Contract was focused on melanoma exosomes.
In June 2022, the Company completed the treatment protocol for its first patient in this study. In September 2021, we entered into an agreement with PPD, Inc., or PPD, a leading global contract research organization, or CRO, to oversee our U.S. clinical studies investigating the Hemopurifier for critically ill COVID-19 patients.
In September 2021, we entered into an agreement with a leading global CRO to oversee our U.S. clinical studies investigating the Hemopurifier for critically ill COVID-19 patients. Due to lack of COVID-19 patients in the ICUs of our trial sites, we terminated this study in 2022.
Manufacturing Manufacturing of our Hemopurifier occurs in collaboration with a contract manufacturer based in California under current Good Manufacturing Practice, or cGMP, regulations promulgated by the FDA. Our contract manufacturer is registered with the FDA. To date, our manufacture of the Hemopurifier has been limited to quantities necessary to support our clinical studies.
Therefore, coverage and reimbursement can differ significantly from payor to payor. 14 Manufacturing To date, manufacturing of our Hemopurifier occurs in collaboration with a contract manufacturer based in California under current Good Manufacturing Practice, or cGMP, regulations promulgated by the FDA. Our contract manufacturer is registered with the FDA.
On June 17, 2020, the FDA approved a supplement to our open IDE for the Hemopurifier in viral disease to allow for the testing of the Hemopurifier in patients with SARS-CoV-2/COVID-19 in a New Feasibility Study. That study is designed to enroll up to 40 subjects at up to 20 centers in the U.S.
This suggests that the Hemopurifier could potentially clear it from biologic fluids, including blood. On June 17, 2020, the FDA approved a supplement to our open IDE for the Hemopurifier in viral disease to allow for the testing of the Hemopurifier in patients with SARS-CoV-2/COVID-19 in a New Feasibility Study.
Our costs of compliance with federal, state and local environmental laws have been immaterial to date. 14 Sources and Availability of Raw Materials and the Names of Principal Suppliers Our Hemopurifiers are currently assembled by Aethlon personnel in a cGMP manufacturing facility provided by Life Science Outsourcing, Inc, or LSO.
Sources and Availability of Raw Materials and the Names of Principal Suppliers Our Hemopurifiers were previously assembled by Aethlon personnel in a cGMP manufacturing facility provided by Life Science Outsourcing, Inc, or LSO. Currently, we are in the process of bringing our manufacturing operations in-house.
The patient ultimately expired three hours after being placed on CRRT because of the advanced stage of the patient’s disease. In May 2022, we announced the publication of a pre-print manuscript featuring data that demonstrated Aethlon's proprietary GNA affinity resin was able to bind seven clinically relevant SARS-CoV-2 variants in vitro, including the Delta and Omicron variants.
In May 2022, we announced the publication of a pre-print manuscript featuring data that demonstrated Aethlon's proprietary GNA affinity resin was able to bind seven clinically relevant SARS-CoV-2 variants in vitro, including the Delta and Omicron variants. Viral capture efficiency with the GNA affinity resin ranged from 53% to 89% for all variants tested.
However, we believe that certain patent applications and/or other patents issued more recently will help protect the proprietary nature of the Hemopurifier treatment technology.
However, we believe that certain patent applications and/or other patents issued more recently will help protect the proprietary nature of the Hemopurifier treatment technology. In addition to the foregoing, we are monitoring closely the impact of inflation, recent bank failures and the war in Ukraine on our business.
Given the level of uncertainty regarding the duration and impact of the COVID-19 pandemic and inflationary environment on capital markets and the U.S. economy, we are unable to assess the impact of the worldwide spread of SARS-CoV-2 and the resulting COVID-19 pandemic, political change, and general economic uncertainty, on our timelines and future access to capital.
Given the level of uncertainty regarding the duration and impact of these events on capital markets and the U.S. economy, we are unable to assess the impact on our timelines and future access to capital.
We also believe the Hemopurifier can be part of the broad-spectrum treatment of life-threatening highly glycosylated, or carbohydrate coated, viruses that are not addressed with an already approved treatment. In small-scale or early feasibility human studies, the Hemopurifier has been used in the past to treat individuals infected with human immunodeficiency virus, or HIV, hepatitis C, or HCV, and Ebola.
We also believe the Hemopurifier can be part of the broad-spectrum treatment of life-threatening highly glycosylated, or carbohydrate coated, viruses that are not addressed with an already approved treatment.
Viral capture efficiency with the GNA affinity resin ranged from 53% to 89% for all variants tested. The GNA affinity resin is a key component of the Aethlon Hemopurifier®. The manuscript is titled "Removal of Clinically Relevant SARS-CoV-2 Variants by An Affinity Resin Containing Galanthus nivalis Agglutinin" and was published in bioRxiv.
The GNA affinity resin is a key component of the Aethlon Hemopurifier®. The manuscript is titled "Removal of Clinically Relevant SARS-CoV-2 Variants by An Affinity Resin Containing Galanthus nivalis Agglutinin" and was published in bioRxiv. We previously commissioned Battelle Memorial Institute in 2008 to run a monkeypox virus, or MPV, in vitro study using a mini-Hemopurifier.
U.S. patent applications are not immediately made public, so it is possible that a third party may obtain a patent on a technology we are actively using. 6 There is a risk that any patent applications that we file and any patents that we hold or later obtain could be challenged by third parties and declared invalid or unenforceable.
There is a risk that any patent applications that we file and any patents that we hold or later obtain could be challenged by third parties and declared invalid or unenforceable. For many of our pending applications, patent interference proceedings may be instituted with the U.S.
For many of our pending applications, patent interference proceedings may be instituted with the U.S. Patent and Trademark Office, or the USPTO, when more than one person files a patent application covering the same technology, or if someone wishes to challenge the validity of an issued patent.
Patent and Trademark Office, or the USPTO, when more than one person files a patent application covering the same technology, or if someone wishes to challenge the validity of an issued patent. At the completion of the interference proceeding, the USPTO will determine which competing applicant is entitled to the patent, or whether an issued patent is valid.
In the future, we plan to bring our manufacturing operations in-house. Aethlon personnel assemble the various components of the Hemopurifier with materials from our various suppliers, which are purchased and released by Aethlon and stored at LSO prior to use in manufacturing. Specifically, the Hemopurifier contains three critical components with limited available suppliers.
Aethlon personnel assemble the various components of the Hemopurifier with materials from our various suppliers, which are purchased and released by Aethlon. Specifically, the Hemopurifier contains three critical components with limited available suppliers. The GNA lectin is sourced from Vector Laboratories Inc. and also is available from other suppliers.
No legislation or administrative actions have been finalized to implement these principles. In addition, Congress is considering drug pricing as part of other reform initiatives. Legislation could be adopted in the future that limits payments for our products from governmental payors. It is possible that additional governmental action will be taken to address the COVID-19 pandemic.
It is unclear whether the models will be utilized in any health reform measures in the future. Legislation could be adopted in the future that limits payments for our products from governmental payors. It is possible that additional governmental action will be taken to address the COVID-19 pandemic.
SARS-CoV-2/COVID-19 SARS-COV-2, the causative agent of COVID-19 is a member of the coronavirus family, which includes the original SARS virus, SARS-CoV, and the MERS virus. SARS-CoV-2, like all coronaviruses, is glycosylated. This suggests that the Hemopurifier could potentially clear it from biologic fluids, including blood.
Prior to this approval, we collected supporting Hemopurifier data through investigational human studies conducted overseas. 3 SARS-CoV-2/COVID-19 SARS-COV-2, the causative agent of COVID-19 is a member of the coronavirus family, which includes the original SARS virus, SARS-CoV, and the MERS virus. SARS-CoV-2, like all coronaviruses, is glycosylated.
At the completion of the interference proceeding, the USPTO will determine which competing applicant is entitled to the patent, or whether an issued patent is valid. Patent interference proceedings are complex, highly contested legal proceedings, and the USPTO’s decision is subject to appeal.
Patent interference proceedings are complex, highly contested legal proceedings, and the USPTO’s decision is subject to appeal.
Geiger also reported that 242 million copies of Ebola virus were captured within the Hemopurifier during treatment. The patient ultimately made a full recovery. Based on this experience, the Company filed an Expanded Access protocol with the FDA to treat Ebola virus infected patients in up to ten centers in the U.S. and a corresponding protocol was approved by HealthCanada.
Based on this experience, the Company filed an Expanded Access protocol with the FDA to treat Ebola virus infected patients in up to ten centers in the United States and a corresponding protocol was approved by HealthCanada. These protocols remain open allowing Hemopurifier treatment to be offered to patients presenting for care in both countries.
Furthermore, the healthcare industry in the U.S. has experienced a trend toward cost containment as government and private insurers seek to control healthcare costs by imposing lower payment rates and negotiating reduced contract rates with service providers. In July 2021, the Biden Administration released an executive order, “Promoting Competition in the American Economy,” which contained provisions relating to prescription drugs.
These reductions may reduce providers’ revenues or profits, which could affect their ability to purchase new technologies. Furthermore, the healthcare industry in the United States has experienced a trend toward cost containment as government and private insurers seek to control healthcare costs by imposing lower payment rates and negotiating reduced contract rates with service providers.
Subjects will have established laboratory diagnosis of COVID-19, be admitted to an intensive care unit, or ICU, and will have acute lung injury and/or severe or life threatening disease, among other criteria. Endpoints for this study, in addition to safety, include reduction in circulating virus, as well as clinical outcomes (NCT # 04595903).
That study was designed to enroll up to 40 subjects at up to 20 centers in the United States. Subjects had to have an established laboratory diagnosis of COVID-19, be admitted to an ICU, and have acute lung injury and/or severe or life threatening disease, among other criteria.
We previously commissioned Battelle Memorial Institute in 2008 to run a monkeypox virus, or MPV, in vitro study using a mini-Hemopurifier. This study demonstrated that high concentrations of MPV (approximately 35 thousand cpu/ml) were rapidly depleted from cell culture fluids when circulated through the Hemopurifier.
This study demonstrated that high concentrations of MPV (approximately 35 thousand cpu/ml) were rapidly depleted from cell culture fluids when circulated through the Hemopurifier. The study data indicated that the Hemopurifier removed 44 percent of infectious MPV in the first hour of testing, 82 percent after six hours, and 98 percent after 20 hours.
On September 9, 2021, in response to this executive order, the U.S.
In July 2021, the Biden Administration released an executive order, “Promoting Competition in the American Economy,” which contained provisions relating to prescription drugs. On September 9, 2021, in response to this executive order, the U.S.
We are in the site activation process with additional U.S. medical centers. Under Single Patient Emergency Use regulations, the Company has also treated three patients with COVID-19 with the Hemopurifier.
Under Single Patient Emergency Use regulations, the Company has treated two patients with COVID-19 with the Hemopurifier, in addition to the COVID-19 patient treated with our Hemopurifier in our COVID-19 clinical trial discussed above.
Following on the Phase I work, the deliverables in the Phase II program involved the design and testing of a pre-commercial prototype of a more advanced version of the exosome isolation platform. During the fiscal year ended March 31, 2022, we recorded $229,698 of government contract revenue on the Award Contract.
This work followed from our completion of a Phase I contract for the Topic 359 solicitation that ran from September 2017 through June 2018, as described below. Following on the Phase I work, the deliverables in the Phase II program involved the design and testing of a pre-commercial prototype of a more advanced version of the exosome isolation platform.
The base cartridge on which the Hemopurifier is constructed is sourced from Medica S.p.A and we are dependent on the continued availability of these cartridges. Although there are other suppliers, the process of qualifying a new supplier takes time and regulatory approvals must be obtained.
Our intended transition to a new supplier for GNA is delayed as we work with the FDA for approval of our supplement to our IDE, which is required to make this manufacturing change. The base cartridge on which the Hemopurifier is constructed is sourced from Medica S.p.A and we are dependent on the continued availability of these cartridges.
We recorded $64,467 and $34,233 of revenue related to this subaward in the fiscal years ended March 31, 2022 and March 31. 2021, respectively. Research and Development Costs A substantial portion of our operating budget is used for research and development activities.
There are no provisions in the subaward arrangement requiring repayment of cash received for work completed through November 10, 2022. Research and Development Costs A substantial portion of our operating budget is used for research and development activities.
Furthermore, others may independently develop similar products, duplicate our products or design around our patents.
Furthermore, others may independently develop similar products, duplicate our products or design around our patents. U.S. patent applications are not immediately made public, so it is possible that a third party may obtain a patent on a technology we are actively using.
Under Single Patient Emergency Use regulations, the Company has also treated three patients with COVID-19 with the Hemopurifier. 1 In September 2021, we entered into an agreement with PPD, Inc., or PPD, a leading global contract research organization, or CRO, to oversee our U.S. clinical studies investigating the Hemopurifier for critically ill COVID-19 patients.
Under Single Patient Emergency Use regulations, we have also treated two patients with COVID-19 with the Hemopurifier, in addition to the COVID-19 patient treated with our Hemopurifier in our COVID-19 clinical trial discussed above.
Removed
We are initially focused on the treatment of solid tumors that are being treated with immune checkpoint inhibitors. As we advance our clinical trials, we are in close contact with our clinical sites to navigate and assess the impact of the global COVID-19 pandemic on our clinical trials and current timelines.
Added
We are currently working with our new contract research organization, or CRO, on preparations to conduct a clinical trial in Australia in patients with solid tumors, including head and neck cancer, gastrointestinal cancers and other cancers.
Removed
This study, which is being conducted at the UPMC Hillman Cancer Center in Pittsburgh, Pennsylvania, has treated two patients and is in the process of recruiting additional patients. We are also in the process of designing other clinical trials in oncology.
Added
Due to lack of further patient enrollment, we and UPMC terminated this trial. In January 2023, we entered into an agreement with North American Science Associates, LLC, or NAMSA, a world leading MedTech CRO offering global end-to-end development services, to oversee our clinical trials investigating the Hemopurifier for oncology indications.
Removed
We now have nine fully activated hospitals for patient enrollment and they are actively screening patients for the trial. These hospitals include LSU Shreveport, Valley Baptist Medical Center in Texas, Loma Linda Medical Center, Hoag Irvine and Newport Beach in Southern California, University of California Davis, University of Miami Medical Center, Cooper Medical and Thomas Jefferson Medical Center.
Added
Pursuant to the agreement, NAMSA will manage our clinical trials of the Hemopurifier for patients in the United States and Australia with various types of cancer tumors. We anticipate that the initial clinical trials will begin in Australia.
Removed
We have completed all site initiation activities at Medanta Medicity Hospital and this site is now open for enrollment and is actively screening patients. One patient recently has completed participation in the study. We are also the majority owner of Exosome Sciences, Inc., or ESI. We consolidate ESI in our consolidated financial statements.
Added
Endpoints for this study, in addition to safety, included reduction in circulating virus as well as clinical outcomes (NCT # 04595903). In June 2022, the first patient in this study was enrolled and completed the Hemopurifier treatment phase of the protocol. Due to lack of COVID-19 patients in the ICUs of our trial sites, we terminated this study in 2022.
Removed
In addition to the foregoing, we are monitoring closely the impact of the COVID-19 global pandemic on our business and have taken steps designed to protect the health and safety of our employees, while continuing our operations.
Added
We currently are experiencing a disruption in our Hemopurifier supply, as our existing supply of Hemopurifiers expired on September 30, 2022, and as previously disclosed, we are dependent on FDA approval of qualified suppliers to manufacture our Hemopurifier.
Removed
We now have nine hospitals activated for patient enrollment and they are actively screening patients for the trial. These hospitals include LSU Shreveport, Valley Baptist Medical Center in Texas, Loma Linda Medical Center, Hoag, Irvine and Newport Beach in Southern California, University of California Davis, University of Miami Medical Center, and Thomas Jefferson Medical Center.
Added
Our intended transition to a new supplier for galanthus nivalis agglutinin, or GNA, a component of our Hemopurifier, is delayed as we work with the FDA for approval of our supplement to our IDE, which is required to make this manufacturing change.
Removed
The study data indicated that the Hemopurifier removed 44 percent of infectious MPV in the first hour of testing, 82 percent after six hours, and 98 percent after 20 hours. The studies were conducted in triplicate and data verification was provided by real-time polymerase chain reaction.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations including, as relevant, clinical trials; interruptions or stoppages of data collection needed to train our algorithms; inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or revision or restructuring of our operations.
Biggest changeAny of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations including, as relevant, clinical trials inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or revision or restructuring of our operations. 29 If our information technology systems or data, or those of third parties upon which we rely, are or were compromised we could experience adverse consequences resulting from such compromise, including but not limited to: regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
The manufacture of our products may be impacted by: · availability or contamination of raw materials and components used in the manufacturing process, particularly those for which we have no other source or supplier; · our ability to comply with new regulatory requirements, including our ability to comply with cGMP; · natural disasters; · changes in forecasts of future demand for product components; · potential facility contamination by microorganisms or viruses; · updating of manufacturing specifications; · product quality success rates and yields; and · global viruses and pandemics, including the current COVID-19 pandemic.
The manufacture of our products may also be impacted by: · availability or contamination of raw materials and components used in the manufacturing process, particularly those for which we have no other source or supplier; · our ability to comply with new regulatory requirements, including our ability to comply with cGMP; · natural disasters; · changes in forecasts of future demand for product components; · potential facility contamination by microorganisms or viruses; · updating of manufacturing specifications; · product quality success rates and yields; and · global viruses and pandemics, including the current COVID-19 pandemic.
The following factors also may add to the volatility in the price of our common stock: actual or anticipated variations in our quarterly or annual operating results; announcements regarding our clinical trials and the development of the Hemopurifier; acceptance of our proprietary technology as a viable method of augmenting the immune response of clearing viruses and toxins from human blood; government regulations, announcements of significant acquisitions, strategic partnerships or joint ventures; our capital commitments and additions or departures of our key personnel.
The following factors also may add to the volatility in the price of our common stock: actual or anticipated variations in our quarterly or annual operating results; announcements regarding our clinical trials and the development and manufacture of our Hemopurifier; acceptance of our proprietary technology as a viable method of augmenting the immune response of clearing viruses and toxins from human blood; government regulations, announcements of significant acquisitions, strategic partnerships or joint ventures; our capital commitments and additions or departures of our key personnel.
Our existing patents or our pending and proposed patent applications may not offer meaningful protection if a competitor develops a novel product based on a new technology. If we are unable to protect our proprietary technology and preserve our trade secrets, we will increase our vulnerability to competitors which could materially adversely impact our ability to remain in business.
Our existing patents or our pending and proposed patent applications may not offer meaningful protection if a competitor develops a novel product based on a new technology. 37 If we are unable to protect our proprietary technology and preserve our trade secrets, we will increase our vulnerability to competitors which could materially adversely impact our ability to remain in business.
Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. 42 Our common stock has had an unpredictable trading volume which means you may not be able to sell our shares at or near trading prices or at all.
Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Our common stock has had an unpredictable trading volume which means you may not be able to sell our shares at or near trading prices or at all.
Applicable Data Protection Obligations (as defined above) may require us to implement specific security measures or use industry-standard or reasonable measures to protect against Security Breaches. There can be no assurances that our security measures or those of third parties upon whom we rely will be effective in protecting against Security Incidents.
Applicable Data Protection Obligations (as defined above) may require us to implement specific security measures or use industry-standard or reasonable measures to protect against Security Breaches. There can be no assurances that our security measures, or those of third parties upon whom we rely, will be effective in protecting against Security Breaches.
In addition, any settlement or adverse determination of such lawsuits could subject us to significant liability. 41 If at any time our common stock is subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.
In addition, any settlement or adverse determination of such lawsuits could subject us to significant liability. If at any time our common stock is subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.
During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
However, these may not adequately protect our rights or permit us to gain or keep any competitive advantage. The issuance of a patent is not conclusive as to its scope, validity or enforceability. The scope, validity or enforceability of our issued patents can be challenged in litigation or proceedings before the U.S.
However, these may not adequately protect our rights or permit us to gain or keep any competitive advantage. 36 The issuance of a patent is not conclusive as to its scope, validity or enforceability. The scope, validity or enforceability of our issued patents can be challenged in litigation or proceedings before the U.S.
We did not make such an election in our original articles of incorporation and have not amended our articles of incorporation to so elect. 44 Nevada’s “acquisition of controlling interest” statutes (NRS 78.378 through 78.3793, inclusive) contain provisions governing the acquisition of a controlling interest in certain Nevada corporations.
We did not make such an election in our original articles of incorporation and have not amended our articles of incorporation to so elect. Nevada’s “acquisition of controlling interest” statutes (NRS 78.378 through 78.3793, inclusive) contain provisions governing the acquisition of a controlling interest in certain Nevada corporations.
A broader or more active public trading market for our common shares may not develop or be sustained, and current trading levels may decrease. The market price for our common stock is volatile; you may not be able to sell our common stock at or above the price you have paid for it, which may result in losses to you.
A broader or more active public trading market for our common shares may not develop or be sustained, and current trading levels may decrease. 43 The market price for our common stock is volatile; you may not be able to sell our common stock at or above the price you have paid for it, which may result in losses to you.
If we cannot attract and retain qualified staff and executives, we will be unable to develop our products and achieve regulatory clearance, and our business could fail. We plan to expand our operations, which may strain our resources; our inability to manage our growth could delay or derail implementation of our business objectives.
If we cannot attract and retain qualified staff and executives, we will be unable to develop our products and achieve regulatory clearance, and our business could fail. 19 We plan to expand our operations, which may strain our resources; our inability to manage our growth could delay or derail implementation of our business objectives.
The risk of product liability claims, product recalls and associated adverse publicity is inherent in the testing, manufacturing, marketing and sale of medical products. We have recently obtained general clinical trial liability insurance coverage. However, our insurance coverage may not be adequate or available.
The risk of product liability claims, product recalls and associated adverse publicity is inherent in the testing, manufacturing, marketing and sale of medical products. We have obtained general clinical trial liability insurance coverage. However, our insurance coverage may not be adequate or available.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results. 22 We outsource many of our operational and development activities, and if any party to which we have outsourced certain essential functions fails to perform its obligations under agreements with us, the development and commercialization of our lead product candidate and any future product candidates that we may develop could be delayed or terminated.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results. 23 We outsource many of our operational and development activities, and if any party to which we have outsourced certain essential functions fails to perform its obligations under agreements with us, the development and commercialization of our lead product candidate and any future product candidates that we may develop could be delayed or terminated.
The FDA can delay, limit or deny approval of a PMA application for many reasons, including: · our inability to demonstrate safety or effectiveness of the Hemopurifier, or any other product we develop, to the FDA’s satisfaction; · insufficient data from our preclinical studies and clinical trials, including for our Hemopurifier, to support approval; · failure of the facilities of our third-party manufacturer or suppliers to meet applicable requirements; · inadequate compliance with preclinical, clinical or other regulations; · our failure to meet the FDA’s statistical requirements for approval; and · changes in the FDA’s approval policies, or the adoption of new regulations that require additional data or additional clinical trials. 24 Modifications to products that are approved through a PMA application generally need FDA approval.
The FDA can delay, limit or deny approval of a PMA application for many reasons, including: · our inability to demonstrate safety or effectiveness of the Hemopurifier, or any other product we develop, to the FDA’s satisfaction; · insufficient data from our preclinical studies and clinical trials, including for our Hemopurifier, to support approval; · failure of the facilities of our third-party manufacturer or suppliers to meet applicable requirements; · inadequate compliance with preclinical, clinical or other regulations; · our failure to meet the FDA’s statistical requirements for approval; and · changes in the FDA’s approval policies, or the adoption of new regulations that require additional data or additional clinical trials. 25 Modifications to products that are approved through a PMA application generally need FDA approval.
If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to significant civil, criminal, and administrative penalties, including, without limitation, damages, fines, imprisonment, exclusion from participation in government healthcare programs, additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. 26 We are subject to stringent and changing U.S. and foreign laws, regulations and standards as well as policies, contracts and other obligations related to data privacy and security.
If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to significant civil, criminal, and administrative penalties, including, without limitation, damages, fines, imprisonment, exclusion from participation in government healthcare programs, additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. 27 We are subject to stringent and changing U.S. and foreign laws, rules, regulations and standards as well as policies, contracts and other obligations related to data privacy and security.
As a company with limited resources and potential exposures to management, we will have a more difficult time attracting and retaining management and outside independent directors than a more established public or private company due to these enhanced duties, obligations and potential liabilities. 18 If we fail to comply with extensive regulations of U.S. and foreign regulatory agencies, the commercialization of our products could be delayed or prevented entirely.
As a company with limited resources and potential exposures to management, we will have a more difficult time attracting and retaining management and outside independent directors than a more established public or private company due to these enhanced duties, obligations and potential liabilities. 20 If we fail to comply with extensive regulations of U.S. and foreign regulatory agencies, the commercialization of our products could be delayed or prevented entirely.
We cannot be sure that our insurance coverage, if any, will be adequate or otherwise protect us from or adequately mitigate liabilities or damages with respect to claims, costs, expenses, litigation, fines, penalties, business loss, data loss, regulatory actions or other material adverse impact on our business, results of operations and financial condition arising out of our Processing operations, privacy and security practices, or Security Breaches that we may experience.
We cannot be sure that our insurance coverage will be adequate or otherwise protect us from or adequately mitigate liabilities or damages with respect to claims, costs, expenses, litigation, fines, penalties, business loss, data loss, regulatory actions or other material adverse impact on our business, results of operations and financial condition arising out of our Processing operations, privacy and security practices, or Security Breaches that we may experience.
Failure to comply with these or other regulatory requirements of the FDA may subject us to administrative or judicially imposed sanctions, including: · warning letters; · civil penalties; · criminal penalties; · injunctions; · product seizure or detention; · product recalls; and · total or partial suspension of productions. 19 Delays in successfully completing our planned clinical trials could jeopardize our ability to obtain regulatory approval.
Failure to comply with these or other regulatory requirements of the FDA may subject us to administrative or judicially imposed sanctions, including: · warning letters; · civil penalties; · criminal penalties; · injunctions; · product seizure or detention; · product recalls; and · total or partial suspension of productions. 21 Delays in successfully completing our planned clinical trials could jeopardize our ability to obtain regulatory approval.
If these providers fail to perform adequately, our development of product candidates may be delayed and any delay in the development of our product candidates would have a material and adverse effect on our business prospects. 23 We are and will be exposed to product liability risks, and clinical and preclinical liability risks, which could place a substantial financial burden upon us should we be sued.
If these providers fail to perform adequately, our development of product candidates may be delayed and any delay in the development of our product candidates would have a material and adverse effect on our business prospects. 24 We are and will be exposed to product liability risks, and clinical and preclinical liability risks, which could place a substantial financial burden upon us should we be sued.
The trading price of our common stock has in the past and may in the future be subject to wide fluctuations in response to factors such as the following: · failure to raise additional funds when needed; · announcements regarding our ongoing development of the Hemopurifier; · results regarding the progress of our clinical trials with the Hemopurifier; · results reported from our clinical trials with the Hemopurifier; · failure to meet the continued listing requirements of and maintain our listing on Nasdaq; · results of operations or revenue in any quarter failing to meet the expectations, published or otherwise, of the investment community; · reduced investor confidence in equity markets; · speculation in the press or analyst community; · wide fluctuations in stock prices, particularly with respect to the stock prices for other medical device companies; · announcements of technological innovations by us or our competitors; 40 · new products or the acquisition of significant customers by us or our competitors; · changes in interest rates; · changes in investors’ beliefs as to the appropriate price-earnings ratios for us and our competitors; · changes in recommendations or financial estimates by securities analysts who track our common stock or the stock of other medical device companies; · changes in management; · sales of common stock by directors and executive officers; · rumors or dissemination of false or misleading information, particularly through Internet chat rooms, instant messaging, and other rapid-dissemination methods; · conditions and trends in the medical device industry generally; · the announcement of acquisitions or other significant transactions by us or our competitors; · adoption of new accounting standards affecting our industry; · changes in the structure of healthcare payment systems; · general market conditions; · domestic or international terrorism and other factors, including the effects of the ongoing COVID-19 pandemic; and · the other factors described in this section.
The trading price of our common stock has in the past and may in the future be subject to wide fluctuations in response to factors such as the following: · failure to raise additional funds when needed; · announcements regarding our ongoing development of the Hemopurifier; · results regarding the progress of our clinical trials with the Hemopurifier; · results reported from our clinical trials with the Hemopurifier; · failure to meet the continued listing requirements of and maintain our listing on Nasdaq; · results of operations or revenue in any quarter failing to meet the expectations, published or otherwise, of the investment community; · reduced investor confidence in equity markets; · speculation in the press or analyst community; · wide fluctuations in stock prices, particularly with respect to the stock prices for other medical device companies; · announcements of technological innovations by us or our competitors; · new products or the acquisition of significant customers by us or our competitors; · changes in interest rates; · changes in investors’ beliefs as to the appropriate price-earnings ratios for us and our competitors; · changes in recommendations or financial estimates by securities analysts who track our common stock or the stock of other medical device companies; · changes in management; · sales of common stock by directors and executive officers; 41 · rumors or dissemination of false or misleading information, particularly through Internet chat rooms, instant messaging, and other rapid-dissemination methods; · conditions and trends in the medical device industry generally; · the announcement of acquisitions or other significant transactions by us or our competitors; · adoption of new accounting standards affecting our industry; · changes in the structure of healthcare payment systems; · general market conditions; · domestic or international terrorism and other factors; and · the other factors described in this section.
These requirements, although customary in government contracts, impact our performance and compliance costs. In addition, current U.S. Government budgetary constraints could lead to changes in the procurement environment, including the Department of Defense’s recent initiative focused on efficiencies, affordability and cost growth and other changes to its procurement practices.
These requirements, although customary in government contracts, would impact our performance and compliance costs. In addition, current U.S. Government budgetary constraints could lead to changes in the procurement environment, including the Department of Defense’s initiative focused on efficiencies, affordability and cost growth and other changes to its procurement practices.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. 45 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 46
Our Hemopurifier product is subject to extensive government regulations related to development, testing, manufacturing and commercialization in the U.S. and other countries. The determination of when and whether a product is ready for large-scale purchase and potential use will be made by the U.S.
Our Hemopurifier product is subject to extensive government regulations related to development, testing, manufacturing and commercialization in the United States and other countries. The determination of when and whether a product is ready for large-scale purchase and potential use will be made by the U.S.
If any of our key officers were to leave us, it could make it impossible, if not cause substantial delays and costs, to implement our long-term business objectives and growth. 17 Our inability to attract and retain qualified personnel could impede our ability to achieve our business objectives. We have 14 full-time employees.
If any of our key officers were to leave us, it could make it impossible, if not cause substantial delays and costs, to implement our long-term business objectives and growth. Our inability to attract and retain qualified personnel could impede our ability to achieve our business objectives. We have 15 full-time employees.
In the ordinary course of business, we collect, receive, store, process, use, generate, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “Process” or “Processing”) personal information and other information, including proprietary and confidential business data, trade secrets, intellectual property, information we collect in connection with clinical trials, as necessary to operate our business, for legal and marketing purposes, and for other business-related purposes.
In the ordinary course of business, we collect, receive, store, process, use, generate, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “Process” or “Processing”) personal information and other Sensitive Information (as defined below), including proprietary and confidential business data, trade secrets, and intellectual property that we collect in connection with clinical trials, as necessary to operate our business, for legal and marketing purposes, and for other business-related purposes.
We continue to investigate the potential for the use of the Hemopurifier in viral diseases under an open IDE and our FDA Breakthrough Designation for “…the treatment of life-threatening glycosylated viruses that are not addressed with an approved therapy.” We currently have an open FDA approved Expanded Access Protocol for the treatment of Ebola infected patients in the U.S. and a corresponding HealthCanada approval in Canada.
We continue to investigate the potential for the use of the Hemopurifier in viral diseases under an open IDE and our FDA Breakthrough Designation for “…the treatment of life-threatening glycosylated viruses that are not addressed with an approved therapy.” We currently have an open FDA approved Expanded Access Protocol for the treatment of Ebola infected patients in the United States and a corresponding HealthCanada approval in Canada.
As a U.S. Government contractor, we are required to comply with applicable laws, regulations and standards relating to our accounting practices and would be subject to periodic audits and reviews. As part of any such audit or review, the U.S.
As a former and potential future U.S. Government contractor, we are required to comply with applicable laws, regulations and standards relating to our accounting practices and would be subject to periodic audits and reviews. As part of any such audit or review, the U.S.
For our facilities, our property policy provides $25,000 in coverage for contaminant clean-up or removal and $50,000 in coverage for damages to the premises resulting from contamination.
For our facilities, our property policy provides $25,000 in coverage for contaminant clean-up or removal and $100,000 in coverage for damages to the premises resulting from contamination.
Our issuance of additional shares of common stock or convertible securities, could be dilutive. We are entitled under our articles of incorporation to issue up to 30,000,000 shares of common stock.
Our issuance of additional shares of common stock or convertible securities, could be dilutive. We are entitled under our articles of incorporation to issue up to 60,000,000 shares of common stock.
Government purchasing regulations, some of our costs, including most financing costs, amortization of intangible assets, portions of our research and development costs, and some marketing expenses, would possibly not be reimbursable or allowed under such contracts. Further, as a U.S.
Government purchasing regulations, some of our costs, including most financing costs, amortization of intangible assets, portions of our research and development costs, and some marketing expenses, would possibly not be reimbursable or allowed under such contracts. Further, as a former and potential future U.S.
Any research and development, pre-clinical testing and clinical trial activities involving our Hemopurifier and any additional products that we may develop are subject to extensive regulation and review by numerous governmental authorities both in the U.S. and abroad. Clinical studies must be conducted in compliance with FDA regulations or the FDA may take enforcement action.
Any research and development, pre-clinical testing and clinical trial activities involving our Hemopurifier and any additional products that we may develop are subject to extensive regulation and review by numerous governmental authorities both in the United States and abroad. Clinical studies must be conducted in compliance with FDA regulations or the FDA may take enforcement action.
To achieve the levels of production necessary to commercialize our Hemopurifier and any other future products, we will need to secure large-scale manufacturing agreements with contract manufacturers which comply with good manufacturing practice standards and other standards prescribed by various federal, state and local regulatory agencies in the U.S. and any other country of use.
To achieve the levels of production necessary to commercialize our Hemopurifier and any other future products, we will need to secure large-scale manufacturing agreements with contract manufacturers which comply with good manufacturing practice standards and other standards prescribed by various federal, state and local regulatory agencies in the United States and any other country of use.
In the ordinary course of our business, we may process proprietary, confidential and sensitive information, including personal data, intellectual property, trade secrets, and proprietary business information owned or controlled by ourselves or other third parties, or collectively, Sensitive Information.
In the ordinary course of our business, we and third parties upon which we rely may process proprietary, confidential and sensitive information, including personal data, intellectual property, trade secrets, and proprietary business information owned or controlled by ourselves or other third parties, or collectively, Sensitive Information.
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, and consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act).
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).
If we, or our manufacturers, fail to adhere to QSR requirements in the U.S., this could delay production of our products and lead to fines, difficulties in obtaining regulatory clearances, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences, which could, in turn, have a material adverse effect on our financial condition or results of operations. 20 In addition, the FDA assesses compliance with the QSR through periodic announced and unannounced inspections of manufacturing and other facilities.
If we, or our manufacturers, fail to adhere to QSR requirements in the United States, this could delay production of our products and lead to fines, difficulties in obtaining regulatory clearances, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences, which could, in turn, have a material adverse effect on our financial condition or results of operations. 22 In addition, the FDA assesses compliance with the QSR through periodic announced and unannounced inspections of manufacturing and other facilities.
Before a new medical device can be marketed in the U.S., it must first receive a PMA or 510(k) clearance from the FDA, unless an exemption applies. A PMA submission, which is a higher standard than a 510(k) clearance, is used to demonstrate to the FDA that a new or modified device is safe and effective.
Before a new medical device can be marketed in the United States, it must first receive a PMA or 510(k) clearance from the FDA, unless an exemption applies. A PMA submission, which is a higher standard than a 510(k) clearance, is used to demonstrate to the FDA that a new or modified device is safe and effective.
Should our products under development be approved for commercialization by the FDA, any such products may not be considered cost-effective, reimbursement may not be available in the U.S. or other countries, if approved, and reimbursement may not be sufficient to allow sales of our future products, including the Hemopurifier, on a profitable basis.
Should our products under development be approved for commercialization by the FDA, any such products may not be considered cost-effective, reimbursement may not be available in the United States or other countries, if approved, and reimbursement may not be sufficient to allow sales of our future products, including the Hemopurifier, on a profitable basis.
The process of obtaining and complying with FDA and other governmental regulatory approvals and regulations in the U.S. and in foreign countries is costly, time consuming, uncertain and subject to unanticipated delays. Obtaining such regulatory approvals, if any, can take several years. Despite the time and expense exerted, regulatory approval is never guaranteed.
The process of obtaining and complying with FDA and other governmental regulatory approvals and regulations in the United States and in foreign countries is costly, time consuming, uncertain and subject to unanticipated delays. Obtaining such regulatory approvals, if any, can take several years. Despite the time and expense exerted, regulatory approval is never guaranteed.
While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
While we have implemented security measures designed to protect against Security Breaches, there can be no assurance that these measures will be effective.
If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences.
If we (or a third party upon whom we rely) experience a Security Breach or are perceived to have experienced a Security Breach, we may experience adverse consequences.
If approved for use in the U.S., we expect that any products that we develop, including the Hemopurifier, will be purchased primarily by medical institutions, which will in turn bill various third-party payors for the health care services provided to patients at their facility.
If approved for use in the United States, we expect that any products that we develop, including the Hemopurifier, will be purchased primarily by medical institutions, which will in turn bill various third-party payors for the health care services provided to patients at their facility.
Government contractor, we would be subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities. As a U.S. Government contractor, we are subject to a number of procurement rules and regulations. Government contractors must comply with specific procurement regulations and other requirements.
Government contractor, we would be subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities. 39 As a potential future U.S. Government contractor, we would be subject to a number of procurement rules and regulations. Government contractors must comply with specific procurement regulations and other requirements.
If we are unable to successfully compete against larger companies in the pharmaceutical industry, we may never generate significant revenue or be profitable. We have limited experience in identifying and working with large-scale contracts with medical device manufacturers; manufacture of our devices must comply with good manufacturing practices in the U.S.
If we are unable to successfully compete against larger companies in the pharmaceutical industry, we may never generate significant revenue or be profitable. 18 We have limited experience in identifying and working with large-scale contracts with medical device manufacturers; manufacture of our devices must comply with good manufacturing practices in the United States.
Our data processing activities may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, representations, certifications, standards, publications, frameworks, and contractual obligations to third parties related to privacy, information security and Processing (collectively, “Data Protection Obligations”).
Our data Processing activities may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, representations, certifications, standards, publications, frameworks, and contractual requirements and other obligations related to privacy, information security and Processing (collectively, “Data Protection Obligations”).
Any of our products considered to be a class III device, which are considered to pose the greatest risk and the approval of which is governed by the strictest guidelines, will require the submission and approval of a PMA in order for us to market it in the U.S.
Any of our products considered to be a class III device, which are considered to pose the greatest risk and the approval of which is governed by the strictest guidelines, will require the submission and approval of a PMA in order for us to market it in the United States.
Although we have received approval to proceed with clinical trials of the Hemopurifier in the U.S. under the investigational device exemption, the current approval from the FDA to proceed could be revoked, the study could be unsuccessful, or the FDA PMA approval may not be obtained or could be revoked.
Although we have received approval to proceed with clinical trials of the Hemopurifier in the United States under the investigational device exemption, the current approval from the FDA to proceed could be revoked, the study could be unsuccessful, or the FDA PMA approval may not be obtained or could be revoked.
Other states, including Colorado, Connecticut, Utah and Virginia, have enacted data privacy laws which become effective in 2023 and similar laws are being considered in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States.
Other states, including Colorado, Connecticut, Utah and Virginia, have enacted data privacy laws and similar laws are being considered in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States.
We currently have five issued U.S. patents and five pending U.S. patent applications. We also have 43 issued foreign patents and have applied for four additional foreign and international patents.
We currently have five issued U.S. patents and four pending U.S. patent applications. We also have 32 issued foreign patents and have applied for nine additional foreign and international patents.
We will require significant additional financing for our operations and for expected additional future clinical trials in the U.S., regulatory clearances, and continued research and development activities for the Hemopurifier and other future products. In addition, as we expand our activities, our overhead costs to support personnel, laboratory materials and infrastructure will increase.
We will require significant additional financing for our operations and for expected additional future clinical trials in the United States, India and Australia, regulatory clearances, and continued research and development activities for the Hemopurifier and other future products. In addition, as we expand our activities, our overhead costs to support personnel, laboratory materials and infrastructure will increase.
For example, the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), imposes specific requirements relating to the privacy, security, and transmission of individually identifiable health information.
For example, the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, imposes specific requirements relating to the privacy, security, and transmission of individually identifiable health information.
If we, our service providers, partners, or other relevant third parties have experienced, or in the future experience, any security incident(s) that result in any data loss; deletion or destruction; unauthorized access to; loss, unauthorized acquisition, disclosure, or exposure of, Sensitive Information, or compromise related to the security, confidentiality, integrity of our (or their) information technology, software, services, communications or data (any, a “Security Breach”), it may result in a material adverse impact on our business, results of operations and financial condition, including the diversion of funds to address the breach, and interruptions, delays, or outages in our operations and development programs. 28 Cyberattacks, malicious internet-based activity and online and offline fraud are prevalent and continue to increase.
If we, our service providers, partners, or other relevant third parties have experienced, or in the future experience, any security incident(s) that result in any data loss; deletion or destruction; unauthorized access to; loss, unauthorized acquisition, disclosure, or exposure of, Sensitive Information, or compromise related to the security, confidentiality, integrity of our (or their) information technology, software, services, communications or data (any, a “Security Breach”), it may result in a material adverse impact on our business, results of operations and financial condition, including the diversion of funds to address the breach, and interruptions, delays, or outages in our operations and development programs.
The loss of patent protection in one jurisdiction may influence our ability to maintain patent protection for the same technology in other jurisdictions. Risks Related to U.S. Government Contracts We may not obtain additional U.S. Government contracts to further develop our technology. We may not be successful in obtaining additional government grants or contracts.
The loss of patent protection in one jurisdiction may influence our ability to maintain patent protection for the same technology in other jurisdictions. 38 Risks Related to U.S. Government Contracts We may not obtain additional U.S. Government contracts to further develop our technology.
During the 52-week period ended March 31, 2022, the high and low closing sale prices for a share of our common stock were $10.79 and $1.16, respectively. The volatility in our share price is attributable to a number of factors. First, as noted above, trading in our common stock often has been thin.
During the 52-week period ended March 31, 2023, the high and low closing sale prices for a share of our common stock were $1.99 and $0.25, respectively. The volatility in our share price is attributable to a number of factors. First, as noted above, trading in our common stock often has been thin.
Some of our patents may expire before we receive FDA approval to market our products in the U.S. or we receive approval to market our products in a foreign country.
Some of our patents may expire before we receive FDA approval to market our products in the United States or we receive approval to market our products in a foreign country.
If and to the extent such changes occur, they could impact our results of operations and liquidity, and could affect whether and, if so, how we pursue certain opportunities and the terms under which we are able to do so.
If and to the extent such changes occur, they could affect whether and, if so, how we pursue certain opportunities and the terms under which we are able to do so.
Similarly, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems (including our services) or the third-party information technology systems that support us and our services Any of the previously identified or similar threats could cause a security incident or other interruption.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems (including our services) or the third-party information technology systems that support us and our services.
In the event of such an accident, we could be held liable for significant damages or fines. We currently carry a limited amount of insurance to protect us from damages arising from hazardous materials. Our product liability policy has a $5,000,000 limit of liability that would cover certain releases of hazardous substances away from our facilities.
In the event of such an accident, we could be held liable for significant damages or fines. We currently carry a limited amount of insurance to protect us from bodily injury or property damages arising from hazardous materials. Our product liability policy has a $5,000,000 limit of liability.
We have generated revenues during the fiscal years ended March 31, 2022 and March 31, 2021, in the amounts of $294,165, and $659,104, respectively, primarily from our contracts with the NIH. Our revenues, from research grants, continue to be insufficient to cover our cost of operations.
We have generated revenues during the fiscal years ended March 31, 2023 and March 31, 2022 in the amounts of $574,245 and $294,165, respectively, primarily from our contract with the NIH, which ended in September 2022. Our revenues, from research grants, continue to be insufficient to cover our cost of operations.
Frakes, our Chief Medical Officer, Steven LaRosa, M.D., and our Chief Business Officer, Guy Cipriani.
Frakes, our Chief Medical Officer, Steven LaRosa, M.D., our Chief Scientific Officer, Lee D. Arnold, Ph.D., and our Chief Business Officer, Guy Cipriani.
If we cannot manage our growth initiatives, including our expansion of our clinical trials in India and potentially in other countries, we will be unable to commercialize our products on a large-scale in a timely manner, if at all, and our business could fail.
If we cannot manage our growth initiatives, including our expansion of our clinical trials in India and potentially in other countries, we will be unable to commercialize our products on a large-scale in a timely manner, if at all, and our business could fail. We may enter new business areas, such as the organ transplant market or diagnostics.
Additionally, qualification for any expedited review procedure does not ensure that we will ultimately obtain regulatory approval for the product. 34 Our bylaws designate the Eighth Judicial District Court of Clark County, Nevada, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Our bylaws designate the Eighth Judicial District Court of Clark County, Nevada, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
These laws may have a chilling effect on certain transactions if our articles of incorporation or bylaws are not amended to provide that these provisions do not apply to us or to an acquisition of a controlling interest, or if our disinterested stockholders do not confer voting rights in the control shares.
These laws may have a chilling effect on certain transactions if our articles of incorporation or bylaws are not amended to provide that these provisions do not apply to us or to an acquisition of a controlling interest, or if our disinterested stockholders do not confer voting rights in the control shares. 45 Various provisions of our bylaws may delay, defer or prevent a tender offer or takeover attempt of us that a stockholder might consider in his or her best interest.
The enactment of such laws could have potentially conflicting requirements that would make compliance challenging and expose us to additional liability. Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.
While these states, like the CCPA, also exempt some data processing in the context of clinical trials, the enactment of such laws and others could have potentially conflicting requirements that would make compliance challenging and expose us to additional liability. Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.
As of March 31, 2022, we had not sold any shares under the 2022 ATM Agreement. 43 Our Board of Directors may generally issue shares of common stock, restricted stock units or stock options or warrants to purchase those shares, without further approval by our stockholders, based upon such factors as our Board of Directors may deem relevant at that time.
Our Board of Directors may generally issue shares of common stock, restricted stock units or stock options or warrants to purchase those shares, without further approval by our stockholders, based upon such factors as our Board of Directors may deem relevant at that time.
For any transaction involving a penny stock, unless exempt, the rules require: · that a broker or dealer approve a person’s account for transactions in penny stocks; · furnish the investor a disclosure document describing the risks of investing in penny stocks; · disclose to the investor the current market quotation, if any, for the penny stock; · disclose to the investor the amount of compensation the firm and its broker will receive for the trade; and · The broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
For any transaction involving a penny stock, unless exempt, the rules require: · that a broker or dealer approve a person’s account for transactions in penny stocks; · furnish the investor a disclosure document describing the risks of investing in penny stocks; · disclose to the investor the current market quotation, if any, for the penny stock; · disclose to the investor the amount of compensation the firm and its broker will receive for the trade; and · The broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. 42 In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: · obtain financial information and investment experience objectives of the person; and · make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
Our business prospects will depend on our ability to complete studies, clinical trials, including our ongoing Early Feasibility trial in 10 to 12 patients in head and neck cancer and our study in Covid-19 patients, obtain satisfactory results, obtain required regulatory approvals and successfully commercialize our Hemopurifier product candidate.
Our business prospects depend on our ability to complete studies, clinical trials, including our ongoing and planned studies in COVID-19 patients and solid tumors in cancer, obtain satisfactory results, obtain required regulatory approvals and successfully commercialize our Hemopurifier product candidate.
We currently outsource most of the manufacturing of our Hemopurifier. The manufacturing of our Hemopurifier is difficult and complex. To support our current clinical trial needs, we comply with and intend to continue to comply with cGMP in the manufacture of our product.
To support our current clinical trial needs, we comply with and intend to continue to comply with cGMP in the manufacture of our product.
Our commercial opportunities will be reduced or eliminated if our competitors develop and market products for any of the diseases we target that: · are more effective; · have fewer or less severe adverse side effects; · are better tolerated; · are more adaptable to various modes of dosing; · are easier to administer; or · are less expensive than the products or product candidates we are developing. 16 Even if we are successful in developing the Hemopurifier and potential diagnostic products, and obtain FDA and other regulatory approvals necessary for commercializing them, our products may not compete effectively with other successful products.
Our commercial opportunities will be reduced or eliminated if our competitors develop and market products for any of the diseases we target that: · are more effective; · have fewer or less severe adverse side effects; · are better tolerated; · are more adaptable to various modes of dosing; · are easier to administer; or · are less expensive than the products or product candidates we are developing.
Under current law, federal net operating losses incurred in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal net operating losses in tax years beginning after December 31, 2020, is limited to 80% of taxable income.
Our ability to use net operating loss carryforwards and certain other tax attributes to offset future taxable income or taxes may be limited. Under current law, federal net operating losses incurred in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal net operating losses is limited to 80% of taxable income.
The process of obtaining government contracts is lengthy with the uncertainty that we will be successful in obtaining announced grants or contracts for therapeutics as a medical device technology. Accordingly, although we have obtained government contracts in the past, we may not be awarded any additional U.S. Government grants or contracts utilizing our Hemopurifier platform technology. 38 U.S.
While we have previously had U.S. government contracts, we may not be successful in obtaining additional government grants or contracts. The process of obtaining government contracts is lengthy with the uncertainty that we will be successful in obtaining announced grants or contracts for therapeutics as a medical device technology.
It is possible that we may not be able to enter into future government contracts beyond our current contract with the NIH that ends in September 2022. Future profitability, if any, will require the successful commercialization of our Hemopurifier technology, other products that may emerge from our potential diagnostic products or from additional government contract or grant income.
It is possible that we may not be able to enter into future government contracts. Future profitability, if any, will require the successful commercialization of our Hemopurifier technology or any other product that we develop or from additional government contract or grant income we may obtain.
It is also likely that we will be required to issue a large amount of additional securities to directors, officers, employees and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants or under our stock plans.
It is also likely that we will be required to issue a large amount of additional securities to directors, officers, employees and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants or under our stock plans. 44 Our officers and directors are entitled to indemnification from us for liabilities under our articles of incorporation, which could be costly to us and may discourage the exercise of stockholder rights.
Thus, we may not be able to demonstrate the effectiveness of our treatment countermeasures through controlled human efficacy studies. Additionally, a change in government policies could impair our ability to obtain regulatory approval for the Hemopurifier. 25 The results of our clinical trials may not support our product candidate claims or may result in the discovery of adverse side effects.
Additionally, a change in government policies could impair our ability to obtain regulatory approval for the Hemopurifier. 26 The results of our clinical trials may not support our product candidate claims or may result in the discovery of adverse side effects.
Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Thus, the ACA will remain in effect in its current form. Further, prior to the U.S.
Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.
The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant civil, criminal and administrative penalties.
The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant civil, criminal and administrative penalties. Any of these sanctions could have a material adverse effect on our reputation, business, results of operations and financial condition.
Even though we have received breakthrough device designation for the Hemopurifier for two independent indications, this designation may not expedite the development or review of the Hemopurifier and does not provide assurance ultimately of PMA submission or approval by the FDA.
We are also required to follow detailed recordkeeping requirements for all firm-initiated medical device corrections and removals. 34 Even though we have received breakthrough device designation for the Hemopurifier for two independent indications, this designation may not expedite the development or review of the Hemopurifier and does not provide assurance ultimately of PMA submission or approval by the FDA.
Our competitors include fully integrated pharmaceutical companies and biotechnology companies as well as universities and public and private research institutions. Many of the organizations competing with us have substantially greater capital resources, larger research and development staffs and facilities, greater experience in product development and in obtaining regulatory approvals, and greater marketing capabilities than we do.
Many of the organizations competing with us have substantially greater capital resources, larger research and development staffs and facilities, greater experience in product development and in obtaining regulatory approvals, and greater marketing capabilities than we do.
GDPR litigation risk may increase as a result of a recent decision of the EU’s highest court finding that a consumer protection association may bring representative actions alleging violations of the GDPR even without a mandate to do so from any specific individuals and whether or not specific individuals’ data protection rights have been violated.
GDPR litigation risk may increase as a result of a recent decision of the EU’s highest court finding that a consumer protection association may bring representative actions alleging violations of the GDPR even without a mandate to do so from any specific individuals and whether or not specific individuals’ data protection rights have been violated. 28 In addition, we may be unable to transfer personal data from Europe and other jurisdictions to the United States or other countries due to data localization requirements or limitations on cross-border data flows.
Moreover, despite our efforts, our personnel or third parties upon whom we rely may fail to comply with such obligations, which could negatively impact our business operations and compliance posture.
Although we endeavor to comply with all applicable Data Protection Obligations, we may at times fail (or be perceived to have failed) to do so. Moreover, despite our efforts, our personnel or third parties upon whom we rely may fail to comply with such obligations, which could negatively impact our business operations and compliance posture.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeManufacturing Space Lease In October 2021, we entered into another lease for an initial period of 58 months for (i) approximately 22,260 square feet of space located at 11588 Sorrento Valley Road, San Diego, California 92121, or the Building, and (ii) 2,655 square feet of space located in the Building and commonly known as Suite 18, to house our manufacturing operations.
Biggest changeIn October 2021, we entered into another lease for approximately 2,655 square feet of space to house our manufacturing operations located at 11588 Sorrento Valley Road, San Diego, California 92121. The term is for 55 months and we took possession of the manufacturing space in August 2022.
The agreement carries a term of 63 months and we took possession of the office space effective October 1, 2021. We took possession of the lab space effective January 1, 2022.
The agreement carries a term of 63 months and we took possession of the office space effective October 1, 2021. We took possession of the laboratory space effective January 1, 2022.
ITEM 2. PROPERTIES Office and Lab Space Leases In December 2020, we entered into an agreement to lease approximately 2,823 square feet of office space and 1,807 square feet of laboratory space located at 11555 Sorrento Valley Road, Suite 203, San Diego, California 92121 and 11585 Sorrento Valley Road, Suite 109, San Diego, California 92121, respectively.
ITEM 2. PROPERTIES Office, Lab and Manufacturing Space Leases In December 2020, we entered into an agreement to lease approximately 2,823 square feet of office space and 1,807 square feet of laboratory space located at 11555 Sorrento Valley Road, Suite 203, San Diego, California 92121 and 11575 Sorrento Valley Road, Suite 200, San Diego, California 92121, respectively.
The mobile clean room is located on leased land near our office and lab and we pay $2,000 per month for the right to locate it there. We paid approximately $189,000 in rent expense to lease the mobile clean room located on this space during the fiscal year ended March 31, 2022.
The mobile clean room was located on leased land near our office and lab and we paid $2,000 per month for the right to locate it there. We paid approximately $168,171 in total rent expense to lease the mobile clean room located on this space during the fiscal year ended March 31, 2023.
During the three months ended March 31, 2022, we recorded a $400,797 right-of-use lease asset and associated lease liability related to the lab space component of the lease based on the present value of lease payments over the expected lease term of 63 months, discounted using our estimated incremental borrowing rate of 4.25%.
During the fiscal year ended March 31, 2023, we recorded a $625,471 right-of-use lease asset and associated lease liability related to the manufacturing space component of the lease based on the present value of lease payments over the expected lease term of 55 months, discounted using our estimated incremental borrowing rate of 4.25%.
The current monthly base rent under the office component of the lease is $6,121.
The current monthly base rent under the office and laboratory component of the lease is $13,772. The current monthly base rent under the manufacturing component of the lease is $12,080.
Removed
On October 1, 2021, we recorded a $343,633 right-of-use lease asset and associated lease liability related to the office space component of the lease based on the present value of lease payments over the expected lease term of 63 months, discounted using our estimated incremental borrowing rate of 4.25%.
Added
The office, lab and manufacturing leases are coterminous with a remaining term of 48 months. The weighted average discount rate is 4.25%. As of our March 31, 2023 balance sheet, we have a right-of-use lease asset of $1,151,909.
Removed
The initial monthly base rent under the lab component of the lease is $7,456.
Added
The following table presents a maturity analysis of expected undiscounted cash flows for operating leases on an annual basis for the next four fiscal years. All of our leases conterminously expire during the fiscal year ending March 31, 2027.
Removed
That manufacturing space is located at 11588 Sorrento Valley Road, San Diego, California 92121 and it is near our new lab and office locations. We anticipate that the landlord will complete construction on this new space in the third calendar quarter of 2022 and we will take occupancy at that time.
Added
Fiscal Year Ended March 31, 2024 $ 314,493 2025 323,812 2026 333,462 2027 343,351 Total minimum lease payments 1,315,118 Less amount representing imputed interest (106,090 ) Present value of minimum lease payments $ 1,209,028 Mobile Clean Room In addition, we rented a mobile clean room on a short term, month-to-month basis, where we housed our manufacturing operations until our permanent manufacturing space was completed.
Removed
The initial base rent for the manufacturing space will be $12,080 per month.
Added
The arrangement was terminated in September 2022 and the mobile clean room was returned to the vendor that leased it to us. Overall, our rent expense, which is included in general and administrative expenses, approximated $519,000 and $401,000 for the fiscal years ended March 31, 2023 and 2022, respectively.
Removed
Based on the assumptions that we used to calculate the right-of-use lease asset for the new office and lab spaces, we estimate that we will record a right- of- use lease asset of $614,240 and associated lease liability for the manufacturing space lease when we take possession of that space.
Removed
Mobile Clean Room In addition, we rent a mobile clean room on a short term, month-to-month basis, where we house our manufacturing operations until our permanent manufacturing space is completed. We also rent the land on which the mobile clean room is based on a month-to-month basis.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We may be involved from time to time in various claims, lawsuits, and/or disputes with third parties or breach of contract actions incidental to the normal course of our business operations. We are currently not involved in any litigation or any pending legal proceedings. ITEM 4.
Biggest changeITEM 3. LEGAL PROCEEDINGS We may be involved from time to time in various claims, lawsuits, and/or disputes with third parties or breach of contract actions incidental to the normal course of our business operations. We are currently not involved in any litigation or any pending legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 47 PART II
Removed
MINE SAFETY DISCLOSURES We have no disclosure applicable to this item. 46 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePreviously, our common stock was quoted on the OTCQB Marketplace under the trading symbol “AEMD.” Holders of Record There were approximately 67 record holders of our common stock at June 27, 2022. The number of registered stockholders includes any beneficial owners of common shares held in street name.
Biggest changePreviously, our common stock was quoted on the OTCQB Marketplace under the trading symbol “AEMD.” Holders of Record There were approximately 68 record holders of our common stock at June 26, 2023. The number of registered stockholders includes any beneficial owners of common shares held in street name.
Recent Sales of Unregistered Securities The Company did not have any sales of unregistered securities for the period covered by this Annual Report. Securities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report. ITEM 6. [RESERVED] 47
Recent Sales of Unregistered Securities The Company did not have any sales of unregistered securities for the period covered by this Annual Report. Securities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report. ITEM 6. [RESERVED] 48

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRSU Grants The Compensation Committee, or the Compensation Committee, of the Board of Directors of the Company, or Board, approved, effective as of April 1, 2022, pursuant to the terms of the Company’s Amended and Restated Non-Employee Directors Compensation Policy, which was most recently amended on February 10, 2022, or the Director Compensation Policy, the grant of the annual RSUs under the Director Compensation Policy to each of the two non-employee directors of the Company then serving on the Board and a new grant for the newly appointed director, with each such grant subject to stockholder approval of an increase of 1,800,000 shares of common stock in the number of authorized shares of common stock, or the 2022 Plan Increase, available for issuance under the Company’s 2020 Equity Incentive Plan, or the 2020 Plan, at the Company’s 2022 annual meeting of stockholders, or the 2022 Annual Meeting.
Biggest changeThe Compensation Committee of the Board of Directors of the Company, or Compensation Committee, approved, effective as of April 1, 2022, pursuant to the terms of the Company’s Amended and Restated Non-Employee Director Compensation Policy, or the Director Compensation Policy, the grant of the annual RSUs to each of the two non-employee directors of the Company then serving on the Board of Directors of the Company, or Board, and the grant of an RSU for the then newly appointed director.
The two then-current eligible directors each was granted a contingent RSU in the amount of 34,247 shares under the 2020 Plan and the newly appointed director received a contingent RSU grant for 51,370 shares under the 2020 Plan.
The two then-current eligible directors each was granted a contingent RSU in the amount of 34,247 shares under the 2020 Plan and the then newly appointed director received a contingent RSU grant for 51,370 shares under the 2020 Plan.
Under this policy, each new director receives either stock options or a grant of RSUs upon appointment/election, as well as an annual grant of stock options or of RSUs at the beginning of each fiscal year.
Under this policy, each new director receives either stock options or a grant of RSUs upon appointment/election, as well as either an annual grant of stock options or of RSUs at the beginning of each fiscal year.
Additionally, in-vitro , the Hemopurifier has been demonstrated to capture Zika virus, Lassa virus, MERS-CoV, cytomegalovirus, Epstein-Barr virus, Herpes simplex virus, Chikungunya virus, Dengue virus, West Nile virus, smallpox-related viruses, including Monkeypox virus, H1N1 swine flu virus, H5N1 bird flu virus, and the reconstructed Spanish flu virus of 1918.
Additionally, in vitro, the Hemopurifier has been demonstrated to capture Zika virus, Lassa virus, MERS-CoV, cytomegalovirus, Epstein-Barr virus, Herpes simplex virus, Chikungunya virus, Dengue virus, West Nile virus, smallpox-related viruses, H1N1 swine flu virus, H5N1 bird flu virus, Monkeypox virus and the reconstructed Spanish flu virus of 1918.
We record a valuation allowance for deferred tax assets when, based on our best estimate of taxable income (if any) in the foreseeable future, it is more likely than not that some portion of the deferred tax assets may not be realized. Convertible Notes Payable There were no convertible notes outstanding as of March 31, 2022 or 2021.
We record a valuation allowance for deferred tax assets when, based on our best estimate of taxable income (if any) in the foreseeable future, it is more likely than not that some portion of the deferred tax assets may not be realized. Convertible Notes Payable There were no convertible notes outstanding as of March 31, 2023 or 2022.
The Director Compensation Policy provides for a grant of stock options or $50,000 worth of RSUs at the beginning of each fiscal year for current directors then serving on the Board and for a grant of stock options or $75,000 worth of RSUs for a newly elected director, with the RSUs priced at the average for the closing prices for the five days preceding and including the date of grant, or $1.46 per share as of April 1, 2022.
The Director Compensation Policy provides for a grant of stock options or $50,000 worth of RSUs at the beginning of each fiscal year for current non-employee directors then serving on the Board and for a grant of stock options or $75,000 worth of RSUs for a newly elected director, with each RSU priced at the average for the closing prices for the five days preceding and including the date of grant, or $1.46 per share as of April 1, 2022.
In several cases, these validations were conducted in collaboration with leading government or non-government research institutes. On June 17, 2020, the FDA approved a supplement to our open IDE for the Hemopurifier in viral disease to allow for the testing of the Hemopurifier in patients with SARS-CoV-2/COVID-19 in a New Feasibility Study.
In several cases, these studies were conducted in collaboration with leading government or non-government research institutes. 49 On June 17, 2020, the FDA approved a supplement to our open IDE for the Hemopurifier in viral disease to allow for the testing of the Hemopurifier in patients with SARS-CoV-2/COVID-19, or COVID-19, in a New Feasibility Study.
We have no obligation to sell any of the shares, and, at any time, we could suspend offers under the 2021 ATM Agreement or terminate the agreement.
The 2021 ATM Agreement provided that we have no obligation under the 2021 ATM Agreement to sell any of the shares, and, at any time, we could suspend offers under the 2021 ATM Agreement or terminate the agreement.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the consolidated Financial Statements and Notes thereto appearing elsewhere in this Annual Report. Overview We are a medical technology company focused on developing products to diagnose and treat life and organ threatening diseases.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview The following discussion and analysis should be read in conjunction with the consolidated Financial Statements and Notes thereto appearing elsewhere in this Annual Report. We are a medical therapeutic company focused on developing products to treat cancer and life-threatening infectious diseases.
The offering was registered under the Securities Act pursuant to our shelf registration statement on S-3 (Registration Statement No. 333-259909), as previously filed with the SEC and declared effective on October 21, 2021.
The offering was registered under the Securities Act of 1933, as amended, or the Securities Act, pursuant to our shelf registration statement on Form S-3 (Registration Statement No. 333-259909), as previously filed with the SEC and declared effective on October 21, 2021.
We expect our rent expense to continue to increase for the foreseeable future. 53 Future capital requirements will depend upon many factors, including progress with pre-clinical testing and clinical trials, the number and breadth of our clinical programs, the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other proprietary rights, the time and costs involved in obtaining regulatory approvals, competing technological and market developments, as well as our ability to establish collaborative arrangements, effective commercialization, marketing activities and other arrangements.
Future capital requirements will depend upon many factors, including progress with pre-clinical testing and clinical trials, the number and breadth of our clinical programs, the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other proprietary rights, the time and costs involved in obtaining regulatory approvals, competing technological and market developments, as well as our ability to establish collaborative arrangements, effective commercialization, marketing activities and other arrangements.
We believe the Hemopurifier can be a substantial advance in the treatment of patients with advanced and metastatic cancer through the clearance of exosomes that promote the growth and spread of tumors through multiple mechanisms. We are currently conducting a clinical trial in patients with advanced and metastatic head and neck cancer.
We believe the Hemopurifier can be a substantial advance in the treatment of patients with advanced and metastatic cancer through the clearance of exosomes that promote the growth and spread of tumors through multiple mechanisms.
On October 4, 2019, the FDA approved our IDE application to initiate an EFS of the Hemopurifier in patients with head and neck cancer in combination with standard of care pembrolizumab (Keytruda).
On October 4, 2019, the FDA approved our Investigational Device Exemption, or IDE, application to initiate an Early Feasibility Study, or EFS, of the Hemopurifier in patients with head and neck cancer in combination with standard of care pembrolizumab (Keytruda).
In the fiscal year ended March 31, 2022, we raised approximately $17,456,000 from the issuance of common stock, which was partially offset by the use of approximately $88,000 to pay for the tax withholding on the issuance of restricted stock units, or RSUs.
In the fiscal year ended March 31, 2023, we raised approximately $8,927,000 from the issuance of common stock, which was partially offset by the use of approximately $12,000 to pay for the tax withholding on the issuance of restricted stock units, or RSUs.
During the fiscal years ended March 31, 2022 and 2021, we recognized revenues totaling $294,165 and $659,104, respectively, under such contracts.
During the fiscal years ended March 31, 2023 and 2022, we recognized revenues totaling $574,245 and $294,165, respectively, under such contracts.
That study’s plan is to enroll up to 40 subjects at up to 20 centers in the U.S. Subjects will have established laboratory diagnosis of COVID-19, be admitted to an intensive care unit, or ICU, and will have acute lung injury and/or severe or life threatening disease, among other criteria.
That study was designed to enroll up to 40 subjects at up to 20 centers in the United States. Subjects had to have an established laboratory diagnosis of COVID-19, be admitted to an intensive care unit, or ICU, and have acute lung injury and/or severe or life-threatening disease, among other criteria.
Cash Flows Cash flows from operating, investing and financing activities, as reflected in the accompanying Consolidated Statements of Cash Flows, are summarized as follows (in thousands): For the year ended March 31, 2022 March 31, 2021 Cash (used in) provided by: Operating activities $ (9,767 ) $ (6,765 ) Investing activities (349 ) (60 ) Financing activities 17,368 7,128 Net increase in cash $ 7,252 $ 303 Net Cash Used in Operating Activities We used cash in our operating activities due to our losses from operations.
Cash Flows Cash flows from operating, investing and financing activities, as reflected in the accompanying Consolidated Statements of Cash Flows, are summarized as follows (in thousands): For the year ended March 31, 2023 March 31, 2022 Cash (used in) provided by: Operating activities $ (10,505 ) $ (9,767 ) Investing activities (943 ) (349 ) Financing activities 8,915 17,368 Net (decrease) increase in cash $ (2,533 ) $ 7,252 Net Cash Used in Operating Activities We used cash in our operating activities due to our losses from operations.
Net Cash Used in Investing Activities During the fiscal years ended March 31, 2022 and 2021, we purchased approximately $349,000 and $60,000 of equipment, respectively. 54 Net Cash from Financing Activities Net cash generated from financing activities increased from approximately $7,128,000 in the fiscal year ended March 31, 2021 to approximately $17,368,000 in the fiscal year ended March 31, 2022.
Net Cash Used in Investing Activities During the fiscal years ended March 31, 2023 and 2022, we purchased approximately $943,000 and $349,000 of equipment, respectively. Net Cash from Financing Activities Net cash generated from financing activities decreased from approximately $17,368,000 in the fiscal year ended March 31, 2022 to approximately $8,915,000 in the fiscal year ended March 31, 2023.
This compares to a cash balance of $9,861,575 and working capital of $8,976,512 at March 31, 2021. We expect our existing cash as of March 31, 2022 to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of this Annual Report.
This compares to a cash balance of $17,072,419 and working capital of $16,332,958 at March 31, 2022. We expect our existing cash as of March 31, 2023 to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of this Annual Report.
Wainwright & Co., LLC 2021 ATM Agreement On March 22, 2021, we entered into the 2021 ATM Agreement with Wainwright as sales agent, pursuant to which we could offer and sell shares of our common stock, from time to time as set forth in the 2021 ATM Agreement.
Wainwright & Co., LLC On March 24, 2022, we entered into the 2022 ATM Agreement with Wainwright, which established an at-the-market equity program pursuant to which we may offer and sell shares of our common stock from time to time as set forth in the 2022 ATM Agreement.
The primary endpoint for the EFS, which is designed to enroll 10 to 12 subjects at a single center, is safety, with secondary endpoints including measures of exosome clearance and characterization, as well as response and survival rates.
The primary endpoint for the EFS, designed to enroll 10 to 12 subjects at a single center, is safety, with secondary endpoints including measures of exosome clearance and characterization, as well as response and survival rates. This clinical trial, initially conducted at the UPMC Hillman Cancer Center in Pittsburgh, PA, or UPMC, treated two patients.
Net cash used in operating activities was approximately $9,767,000 in fiscal 2022, compared to net cash used in operating activities of approximately $6,765,000 in fiscal 2021, an increase of approximately $3,002,000. The primary factors in this $3,002,000 increase in cash used in operations in fiscal 2022 was a $2,530,000 increase in our net loss.
Net cash used in operating activities was approximately $10,505,000 in fiscal 2023, compared to net cash used in operating activities of approximately $9,767,000 in fiscal 2022, an increase of approximately $738,000. The primary factors in this $738,000 increase in cash used in operations in fiscal 2023 was a $1,613,695 increase in our net loss.
The Director Compensation Policy provides for a grant of stock options or $50,000 worth of RSUs at the beginning of each fiscal year, with the RSUs priced at the average for the closing prices for the five days preceding and including the date of grant, or $2.06 per share as of April 1, 2021.
The Director Compensation Policy provides for a grant of stock options or $50,000 worth of RSUs at the beginning of each fiscal year for current directors then serving on the Board, and for a grant of stock options or $75,000 worth of RSUs for a newly elected director, with each RSU priced at the average for the closing prices for the five days preceding and including the date of grant, or $0.43 per share for the April 2023 RSU grants.
Income Taxes Deferred tax assets are recognized for the future tax consequences attributable to the difference between the consolidated financial statements and their respective tax basis.
We had no derivative instruments at March 31, 2023 or March 31, 2022. 56 Income Taxes Deferred tax assets are recognized for the future tax consequences attributable to the difference between the consolidated financial statements and their respective tax basis.
In addition, we have entered into leases for our new headquarters, laboratory and manufacturing facilities. As noted above in the results of operations, our rent expense increased by $209,082 in the fiscal year ended March 31, 2022.
Those increases in clinical trial expenses include the cost of manufacturing additional Hemopurifiers for the planned clinical trials. In addition, we have entered into leases for our new headquarters, laboratory and manufacturing facilities. As noted above in the results of operations, our rent expense increased by $117,772 in the fiscal year ended March 31, 2023.
As a result of the COVID-19 pandemic and actions taken to slow its spread, global events and political changes, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in inflation and uncertainty about economic stability.
We will continue to need to raise additional capital either through equity and/or debt financing for the foreseeable future. 54 As a result of the COVID-19 pandemic and actions taken to slow its spread, global events, political changes, bank failures, actual or perceived changes in interest rates and economic inflation, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in inflation and uncertainty about economic stability.
There is no limit on the number of times a contract may be reclassified. Instruments classified as derivative liabilities are remeasured each reporting period (or upon reclassification) and the change in fair value is recorded on our consolidated statement of operations in other expense (income). We had no derivative instruments at March 31, 2022 or March 31, 2021.
Instruments classified as derivative liabilities are remeasured each reporting period (or upon reclassification) and the change in fair value is recorded on our consolidated statement of operations in other expense (income).
The Award Contract amount is $1,860,561 and, as amended, runs for the period from September 16, 2019 through September 15, 2022. The work performed pursuant to this Award Contract focused on melanoma exosomes. This work follows from our completion of a Phase I contract for the Topic 359 solicitation that ran from September 2017 through June 2018.
The Award Contract amount was $1,860,561 and, as amended, ran for the period from September 16, 2019 through September 15, 2022. The work performed pursuant to this Award Contract was focused on melanoma exosomes.
Share-based Compensation We account for share-based compensation awards using the fair-value method and record such expense based on the grant date fair value in the consolidated financial statements over the requisite service period. 56 Derivative Instruments We evaluate free-standing derivative instruments (or embedded derivatives) to properly classify such instruments within equity or as liabilities in our financial statements.
We analyze such warrants for classification as either equity or derivative liabilities and value them based on binomial lattice models. Share-based Compensation We account for share-based compensation awards using the fair-value method and record such expense based on the grant date fair value in the consolidated financial statements over the requisite service period.
As a result of the above factors, our net loss before noncontrolling interests increased to $10,420,885 for the fiscal year ended March 31, 2022, from $7,891,499 for the fiscal year ended March 31, 2021. 51 Liquidity and Capital Resources At March 31, 2022, we had a cash balance of $17,072,419 and working capital of $16,332,958.
As a result of the above factors, our net loss before noncontrolling interests increased to $12,029,786 for the fiscal year ended March 31, 2023, from $10,420,885 for the fiscal year ended March 31, 2022. Liquidity and Capital Resources As of March 31, 2023, we had a cash balance of $14,532,943 and working capital of $13,585,477.
The $2,164,447 increase in the fiscal year ended March 31, 2022 was due to increases in payroll and related expenses of $1,170,861 and in general and administrative expense of $997,224, which were partially offset by a decrease of $3,638 in professional fees.
The $1,757,833 increase in the fiscal year ended March 31, 2023 was due to increases in general and administrative expense of $1,026,081 and professional fees of $914,002, which were partially offset by a decrease in payroll and related expenses of $182,250.
We filed a prospectus supplement, dated March 24, 2022, with the SEC in connection with the offer and sale of the shares of common stock, pursuant to which the Company may offer and sell shares of common stock having an aggregate offering price of up to $15,000,000 from time to time.
We filed a prospectus supplement, dated March 24, 2022, with the SEC that provides for the sale of shares of our common stock having an aggregate offering price of up to $15,000,000, or the 2022 ATM Shares.
We filed a prospectus supplement, dated March 22, 2021, with the SEC in connection with the offer and sale of the shares of common stock, pursuant to which we could offer and sell shares of common stock having an aggregate offering price of up to $5,080,000 from time to time.
We filed a prospectus supplement, dated March 22, 2021, with the SEC in connection with the offer and sale of the shares of common stock, pursuant to which we could offer and sell shares of common stock having an aggregate offering price of up to $5,080,000 from time to time. 53 Subject to the terms and conditions set forth in the 2021 ATM Agreement, Wainwright agreed to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares under the 2021 ATM Agreement from time to time, based upon our instructions.
Subaward with University of Pittsburgh In 2020, we entered into a cost reimbursable subaward arrangement with the University of Pittsburgh in connection with an NIH contract entitled “Depleting Exosomes to Improve Responses to Immune Therapy in HNNCC.” Our share of the award is $256,750.
As the NCI completed its close out review of the contract, we recognized as revenue the $574,245 previously recorded as deferred revenue on our December 31, 2022 balance sheet. 51 Subaward with University of Pittsburgh In December 2020, we entered into a cost reimbursable subaward arrangement with the University of Pittsburgh in connection with an NIH contract entitled “Depleting Exosomes to Improve Responses to Immune Therapy in HNNCC.” Our share of the award was $256,750.
We expect to continue to incur increasing negative cash flows and net losses for the foreseeable future. We will continue to need to raise additional capital either through equity and/or debt financing for the foreseeable future.
We expect to continue to incur increasing negative cash flows and net losses for the foreseeable future.
Material Cash Requirements As noted above in the results of operations, our clinical trial expense increased by $453,254 in the fiscal year ended March 31, 2022. We expect our clinical trial expenses to continue to increase for the foreseeable future. Those increases in clinical trial expenses include the cost of manufacturing additional Hemopurifiers for the clinical trials.
Material Cash Requirements As noted above in the results of operations, our clinical trial expense for the preparation for our planned oncology trial in Australia was $103,602 in the fiscal year ended March 31, 2023. We expect our clinical trial expenses to continue to increase for the foreseeable future.
We are in the site activation process with additional U.S. medical centers. 48 We also obtained ethics review board approval and entered into a clinical trial agreement with Medanta Medicity Hospital, a multi-specialty hospital in Delhi NCR, India, for a COVID-19 clinical trial at that location.
We also obtained ERB approval and entered into a clinical trial agreement with Medanta Medicity Hospital, a multi-specialty hospital in Delhi NCR, India, for a COVID-19 clinical trial at that location. One patient has completed participation in the Indian COVID-19 study.
This revenue resulted from work performed under our government contracts with the NIH and our subaward with the University of Pittsburgh as follows: Fiscal Year Ended 3/31/22 Fiscal Year Ended 3/31/21 Change in Dollars Phase 2 Melanoma Cancer Contract $ 229,698 $ 436,427 $ (206,729 ) Breast Cancer Grant – 188,444 188,444 Subaward with University of Pittsburgh 64,467 34,233 30,234 Total Government Contract and Grant Revenue $ 294,165 $ 659,104 $ (364,939 ) We have recognized revenue under the following contracts/grants: Phase 2 Melanoma Cancer Contract On September 12, 2019, the National Cancer Institute, or NCI, part of the NIH, awarded to us an SBIR Phase II Award Contract, for NIH/NCI Topic 359, entitled “A Device Prototype for Isolation of Melanoma Exosomes for Diagnostics and Treatment Monitoring”, or the Award Contract.
This revenue resulted from work performed under our government contracts with the NIH and our subaward with the University of Pittsburgh as follows: Fiscal Year Ended 3/31/23 Fiscal Year Ended 3/31/22 Change in Dollars Phase 2 Melanoma Cancer Contract $ 574,245 $ 229,698 $ 344,547 Subaward with University of Pittsburgh – 64,467 (64,467 ) Total Government Contract and Grant Revenue $ 574,245 $ 294,165 $ 280,080 We have recognized revenue under the following contracts/grants: Phase 2 Melanoma Cancer Contract On September 12, 2019, the NCI awarded to us the Award Contract.
In June 2022, we raised net proceeds of $448,760, net of $11,583 in commissions to Wainwright and $2,994 in other offering expense, through the sale of 411,055 shares of our common stock at an average price of $1.09 per share under the 2022 ATM Agreement.
In the fiscal year ended March 31, 2023, we raised net proceeds of $8,927,211, net of $229,610 in commissions to Wainwright and $27,153 in other offering expense, through the sale of 7,480,836 shares of our common stock at an average price of $1.19 per share under the 2022 ATM Agreement.
Each eligible director was granted an RSU in the amount of 24,295 shares under the 2020 Plan. The RSUs were subject to vesting in four equal quarterly installments on June 30, September 30, December 31, 2021, and March 31, 2022, subject to the recipient’s continued service with the Company on each such vesting date.
The RSUs were subject to vesting in three installments, 50% on September 30, 2022, and 25% on each of December 31, 2022, and March 31, 2023, subject to the recipient's continued service with the Company on each such vesting date.
Recent Events Sales Under 2022 ATM Agreement In June 2022, we raised net proceeds of $448,760 net of $11,583 in commissions to Wainwright and $2,994 in other offering expense, through the sale of 411,055 shares of our common stock at an average price of $1.09 per share under the 2022 ATM Agreement.
There were no vested RSUs outstanding as of March 31, 2023. 57 Recent Events Sales Under 2022 ATM Agreement Subsequent to March 31, 2023, we raised net proceeds of $1,086,119, net of $27,999 in commissions to Wainwright and $5,846 in other offering expense, through the sale of 1,778,901 shares of our common stock at an average price of $0.61 per share under the 2022 ATM Agreement.
Our policy is to settle instruments indexed to our common shares on a first-in-first-out basis. The classification of a derivative instrument is reassessed at each reporting date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification.
Derivative Instruments We evaluate free-standing derivative instruments (or embedded derivatives) to properly classify such instruments within equity or as liabilities in our financial statements. Our policy is to settle instruments indexed to our common shares on a first-in-first-out basis. The classification of a derivative instrument is reassessed at each reporting date.
On April 1, 2021, pursuant to the terms of the Director Compensation Policy, the Compensation Committee granted RSUs under the 2020 Plan, to each non-employee director of the Company.
RSU Grants In April 2023, the Compensation Committee approved, pursuant to the terms of the Director Compensation Policy, the grant of the annual RSUs under the Director Compensation Policy to each of the three non-employee directors of the Company then serving on the Board.
The primary sources of our increase in cash during the fiscal year ended March 31, 2022 resulted from our At The Market Offering Agreement with Wainwright dated March 22, 2021, or the 2021 ATM Agreement, and our registered direct financing through Maxim Group LLC. The cash raised from those activities is noted below: At The Market Offering Agreements with H.C.
The primary sources of our cash from financing activities during the fiscal years ended March 31, 2023 and 2022 were sales of our common stock, as follows: Financings During the fiscal year ended March 31, 2023: During the fiscal year ended March 31, 2023, we raised capital only through our At The Market Offering Agreement, or the 2022 ATM Agreement, with H.C.
The contingent RSUs are subject to vesting in three installments, 50% on September 30, 2022, and 25% on each of December 31, 2022, and March 31, 2023, subject to stockholder approval of the 2022 Plan Increase at the 2022 Annual Meeting and subject to the recipient's continued service with the Company on each such vesting date. 55 Critical Accounting Policies Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements.
In the fiscal year ended March 31, 2022, we raised approximately $17,456,000 from the issuance of common stock, which was partially offset by the use of approximately $88,000 to pay for the tax withholding on the issuance of RSUs. 55 Critical Accounting Policies and Significant Judgments and Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements.
Sales of the shares, under the 2022 ATM Agreement will be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act, including sales made by means of ordinary brokers’ transactions, including on the Nasdaq Capital Market, at market prices or as otherwise agreed with Wainwright.
Under the 2022 ATM Agreement, Wainwright may sell the 2022 ATM Shares by any method permitted by law and deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act, including sales made directly on the Nasdaq Capital Market, or on any other existing trading market for the 2022 ATM Shares.
However, we believe that certain patent applications and/or other patents issued more recently will help protect the proprietary nature of the Hemopurifier treatment technology. We were formed on March 10, 1999. Our executive offices are located at 11555 Sorrento Valley Road, Suite 203, San Diego, California 92121. Our telephone number is (619) 941-0360. Our website address is www.aethlonmedical.com.
Our executive offices are located at 11555 Sorrento Valley Road, Suite 203, San Diego, California 92121. Our telephone number is (619) 941-0360. Our website address is www.aethlonmedical.com.
No further sales may be made under the agreement. 52 2022 ATM Agreement On March 24, 2022, we entered into the 2022 ATM Agreement with Wainwright as sales agent, pursuant to which we may offer and sell shares of our common stock from time to time as set forth in the 2022 ATM Agreement.
Financings During the fiscal year ended March 31, 2022: During the fiscal year ended March 31, 2022, we raised capital through our 2021 ATM Agreement (as defined below) with Wainwright and in a registered direct financing through Maxim Group LLC. 2021 ATM Agreement On March 22, 2021, we entered into an At the Market Offering Agreement, or the 2021 ATM Agreement, with Wainwright, as sales agent, pursuant to which we could offer and sell shares of our common stock, from time to time as set forth in the 2021 ATM Agreement.
Endpoints for this study, in addition to safety, will include reduction in circulating virus as well as clinical outcomes (NCT # 04595903). Under Single Patient Emergency Use regulations, the Company has also treated three patients with COVID-19 with the Hemopurifier.
Under Single Patient Emergency Use regulations, the Company has treated two patients with COVID-19 with the Hemopurifier, in addition to the COVID-19 patient treated with our Hemopurifier in our COVID-19 clinical trial discussed above.
This study is being conducted at the UPMC Hillman Cancer Center in Pittsburgh, Pennsylvania, has treated two patients and is in the process of recruiting and treating patients. We also believe the Hemopurifier can be part of the broad-spectrum treatment of life-threatening highly glycosylated, or carbohydrate coated, viruses that are not addressed with an already approved treatment.
We also believe the Hemopurifier can be part of the broad-spectrum treatment of life-threatening highly glycosylated, or carbohydrate coated, viruses that are not addressed with an already approved treatment. In small-scale or early feasibility human studies, the Hemopurifier has been used in the past to treat individuals infected with human immunodeficiency virus, or HIV, hepatitis-C and Ebola.
Successful outcomes of human trials will also be required by the regulatory agencies of certain foreign countries where we plan to sell the Hemopurifier, if successfully developed. Some of our patents may expire before FDA approval or approval in a foreign country, if any, is obtained.
In September 2022, the Board of Directors of ESI and we, as the majority stockholder of ESI, approved the dissolution of ESI. 50 Successful outcomes of human trials will also be required by the regulatory agencies of certain foreign countries where we plan to market and sell the Hemopurifier.
Given the level of uncertainty regarding the duration and impact of the COVID-19 pandemic and inflationary environment on capital markets and the U.S. economy, we are unable to assess the impact of the worldwide spread of SARS-CoV-2 and the resulting COVID-19 pandemic, political change, and general economic uncertainty, on our future access to capital.
In addition to the foregoing, we are monitoring closely the impact of inflation, recent bank failures, and the war in Ukraine on our business. Given the level of uncertainty regarding the duration and impact of these events on capital markets and the U.S. economy, we are unable to assess the impact on our timelines and future access to capital.
Following on the Phase I work, the deliverables in the Phase II program involved the design and testing of a pre-commercial prototype of a more advanced version of the exosome isolation platform. During the fiscal year ended March 31, 2022, we recorded $229,698 of government contract revenue on the Phase 2 Melanoma Cancer Contract.
This work followed from our completion of a Phase I contract for the Topic 359 solicitation that ran from September 2017 through June 2018, as described below. Following on the Phase I work, the deliverables in the Phase II program involved the design and testing of a pre-commercial prototype of a more advanced version of the exosome isolation platform.
We have provided Wainwright with customary indemnification rights under the 2022 ATM Agreement, and Wainwright is entitled to a commission at a fixed rate equal to up to three percent of the gross proceeds per share sold. In addition, we agreed to reimburse Wainwright for certain specified expenses in connection with entering into the 2022 ATM Agreement.
We also agreed to reimburse Wainwright for certain specified expenses in connection with entering into the 2022 ATM Agreement.
We recorded $64,467 and $34,233 of revenue related to this subaward in the fiscal years ended March 31, 2022 and March 31. 2021, respectively. Operating Costs and Expenses Consolidated operating expenses were $10,715,050 for the fiscal year ended March 31, 2022, compared to $8,550,603 for the fiscal year ended March 31, 2021, an increase of $2,164,447.
We did not record revenue related to this subaward in the fiscal year ended March 31, 2023. We recorded $64,467 of revenue related to this subaward in the fiscal year ended March 31, 2022.
Given these uncertainties, we cannot reasonably estimate the related impact to our business, operating results and financial condition, if any. 49 Fiscal Years Ended March 31, 2022 and 2021 Results of Operations Government Contract Revenues We recorded government contract revenue in the fiscal years ended March 31, 2022 and 2021.
Our common stock is listed on the Nasdaq Capital Market under the symbol “AEMD.” Fiscal Years Ended March 31, 2023 and 2022 Results of Operations Government Contract Revenues We recorded government contract revenue in the fiscal years ended March 31, 2023 and 2022.
Removed
We are initially focused on the treatment of solid tumors that are being treated with checkpoint inhibitors. As we advance our clinical trials, we are in close contact with our clinical sites to navigate and assess the impact of the global COVID-19 pandemic on our clinical trials and current timelines.
Added
We are currently working with our new contract research organization, or CRO, on preparations to conduct a clinical trial in Australia in patients with solid tumors, including head and neck cancer, gastrointestinal cancers and other cancers.
Removed
In small-scale or early feasibility human studies, the Hemopurifier has been used to treat individuals infected with HIV, HCV, and Ebola.
Added
Due to lack of further patient enrollment, we and UPMC terminated this trial. In January 2023, we entered into an agreement with North American Science Associates, LLC, or NAMSA, a world leading MedTech CRO offering global end-to-end development services, to oversee our clinical trials investigating the Hemopurifier for oncology indications.
Removed
In September 2021, we entered into an agreement with PPD, a leading global CRO, to oversee our U.S. clinical studies investigating the Hemopurifier for critically ill COVID-19 patients. We now have nine hospitals fully activated for patient enrollment and they are actively screening patients for the trial.
Added
Pursuant to the agreement, NAMSA will manage our clinical trials of the Hemopurifier for patients in the United States and Australia with various types of cancer tumors. We anticipate that the initial clinical trials will begin in Australia.
Removed
These sites are LSU Shreveport, Hoag Irvine and Newport Beach, Valley Baptist Medical Center in Texas, University of California Davis, University of Miami Medical Center, Loma Linda Hospital in Loma Linda, CA, Thomas Jefferson Medical Center and Cooper Medical.
Added
Endpoints for this study, in addition to safety, included reduction in circulating virus as well as clinical outcomes (NCT # 04595903). In June 2022, the first patient in this study was enrolled and completed the Hemopurifier treatment phase of the protocol. Due to lack of COVID-19 patients in the ICUs of our trial sites, we terminated this study in 2022.
Removed
We have completed all site initiation activities at Medanta Medicity Hospital and this site is now open for enrollment and is actively screening patients. We are also the majority owner of ESI and we consolidate ESI in our consolidated financial statements.
Added
We currently are experiencing a disruption in our Hemopurifier supply, as our existing supply of Hemopurifiers expired on September 30, 2022, and as previously disclosed, we are dependent on FDA approval of qualified suppliers to manufacture our Hemopurifier.
Removed
Our common stock is listed on the Nasdaq Capital Market under the symbol “AEMD.” COVID-19 Update In March 2020, the World Health Organization declared COVID-19 a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets.
Added
Our intended transition to a new supplier for galanthus nivalis agglutinin, or GNA, a component of our Hemopurifier, is delayed as we work with the FDA for approval of our supplement to our IDE, which is required to make this manufacturing change.
Removed
We are monitoring closely the impact of the COVID-19 global pandemic on our business and have taken steps designed to protect the health and safety of our employees while continuing our operations, including clinical trials.
Added
In October 2022, we launched a wholly owned subsidiary in Australia, formed to conduct clinical research, seek regulatory approval and commercialize our Hemopurifier in that country. The subsidiary will initially focus on oncology trials in Australia.
Removed
Further, while we have not experienced significant disruptions to our manufacturing supply chain, business, results of operations, financial condition, clinical trials, or preclinical research to date, we are unable to assess the potential impact this pandemic could have on our manufacturing supply chain, business, results of operations, financial condition, clinical trials, or preclinical research in the future.
Added
The relevant authorities in India have accepted the use of the Hemopurifiers made with the GNA from our new supplier. In May 2023, we also received ERB approval from the Maulana Azad Medical College, or MAMC, for a second site for our clinical trial in India to treat severe COVID-19.
Removed
As we continue to actively advance our clinical trials, we remain in close contact with our clinical sites and are assessing the impact of COVID-19 on our trials, expected timelines and costs on an ongoing basis. We will assess any potential delays in our ability to timely ship clinical trial materials, including internationally, due to transportation interruptions.
Added
MAMC was established in 1958 and is located in New Delhi, India. MMAC is affiliated with the University of Delhi and is operated by the Delhi government. We also recently announced that we also have begun investigating the use of our Hemopurifier in the organ transplant setting.
Removed
The extent of the impact of COVID-19 and inflation on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our clinical trials, employees and vendors, all of which are uncertain and cannot be predicted.
Added
Our objective is to confirm that the Hemopurifier, in our translational studies, when incorporated into a machine perfusion organ preservation circuit, can remove harmful viruses and exosomes from harvested organs. We have previously demonstrated the removal of multiple viruses and exosomes from buffer solutions, in vitro, utilizing a scaled-down version of our Hemopurifier.
Removed
That revenue related to work performed in the three months ended March 31, 2021 and June 30, 2021 that had previously been recorded as deferred revenue as a result of falling short on certain milestones.
Added
This process potentially may reduce complications following transplantation of the harvested organ, which can include viral infection, delayed graft function and rejection. We believe this new approach could be additive to existing technologies that currently are in place to increase the number of viable organs for transplant.
Removed
We then achieved those March period milestones in the June quarter and the June period milestones in the September quarter and therefore recorded the previously deferred revenue as government contract revenue in the quarter ended September 30, 2021.
Added
Previously we were the majority owner of ESI a company formed to focus on the discovery of exosomal biomarkers to diagnose and monitor life-threatening diseases, and thus consolidated ESI in our consolidated financial statements. For more than four years, the primary activities of ESI were limited to the payment of patent maintenance fees and applications.

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