UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
of the Securities Exchange Act of 1934
SECURITIES EXCHANGE ACT OF 1934
For
the Quarterly Period Ended
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☐ Large accelerated filer | ☐ Accelerated filer |
| ☒
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
shares of common stock were outstanding, and no shares of series B preferred stock were outstanding as of August 12, 2024.
PART I- FINANCIAL INFORMATION
ITEM 1: Financial Statements
AIM IMMUNOTECH INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except for share and per share amounts)
(Unaudited June 30, 2024 and Audited December 31, 2023)
June 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable securities | ||||||||
| Funds receivable from New Jersey net operating loss | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right of use asset, net | ||||||||
| Patent and trademark rights, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Current portion of operating lease liability | ||||||||
| Current portion of note payable, net | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Operating lease liability | ||||||||
| Note payable, net | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Notes 12 and 13) | ||||||||
| Stockholders’ equity: | ||||||||
| Series A Junior Participating Preferred Stock, $ par value, and shares authorized as of June 30, 2024, and December 31, 2023, respectively: issued and outstanding – | ||||||||
| Series B Convertible Preferred Stock, stated value $ per share, shares authorized; issued and outstanding as of June 30, 2024 and issued and outstanding as December 31, 2023 | ||||||||
| Common Stock, $ par value, authorized shares - ; issued and outstanding shares and as of June 30, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| 2 |
AIM IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share data)
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues: | ||||||||||||||||
| Clinical treatment programs - US | $ | $ | $ | $ | ||||||||||||
| Total Revenues | ||||||||||||||||
| Costs and Expenses: | ||||||||||||||||
| Production costs | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total Costs and Expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain (Loss) on investments | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest and other income | ||||||||||||||||
| Interest expense and other finance costs | ( | ) | ( | ) | ||||||||||||
| (Loss) on sale of fixed assets | ( | ) | ||||||||||||||
| (Loss) on warrant issuance | ( | ) | ( | ) | ||||||||||||
| Gain from sale of income tax operating losses | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted loss per share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares outstanding basic and diluted | ||||||||||||||||
See accompanying notes to consolidated financial statements.
| 3 |
AIM IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
For the Six Months Ended June 30, 2024 and 2023
(in thousands except share data)
(Unaudited)
| Series
B Preferred Shares | Common
Stock Shares | Common
Stock .001 Par Value | Additional
Paid-in Capital | Accumulated
other Comprehensive Income (Loss) | Accumulated
Deficit | Total
Stockholders’ Equity | ||||||||||||||||||||||
| Balance December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Common stock issuance, net of costs | ||||||||||||||||||||||||||||
| Cashless Exercise of Warrants | ||||||||||||||||||||||||||||
| Equity-based compensation | — | |||||||||||||||||||||||||||
| Committed shares | ||||||||||||||||||||||||||||
| Net comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Common stock issuance, net of costs | ||||||||||||||||||||||||||||
| Issuance of warrants | — | |||||||||||||||||||||||||||
| Equity-based compensation | — | |||||||||||||||||||||||||||
| Series B preferred shares expired | ( | ) | — | |||||||||||||||||||||||||
| Net comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance June 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Series
B Preferred Shares | Common
Stock Shares | Common
Stock .001 Par Value | Additional
Paid-in Capital | Accumulated
other Comprehensive Income (Loss) | Accumulated
Deficit | Total
Stockholders’ Equity | ||||||||||||||||||||||
| Balance December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Common stock issuance, net of costs | ||||||||||||||||||||||||||||
| Equity-based compensation | — | |||||||||||||||||||||||||||
| Series B preferred shares converted to common shares | ( | ) | — | |||||||||||||||||||||||||
| Net comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Common stock issuance, net of costs | ||||||||||||||||||||||||||||
| Equity-based compensation | — | |||||||||||||||||||||||||||
| Series B preferred shares converted to common shares | ( | ) | — | |||||||||||||||||||||||||
| Net Comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance June 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
See accompanying notes to consolidated financial statements.
| 4 |
AIM IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2024 and 2023
(in thousands)
(Unaudited)
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation of property and equipment | ||||||||
| Amortization of patent, trademark rights | ||||||||
| Changes in right of use assets | ||||||||
| Gain from sale of income tax operating losses | ( | ) | ||||||
| Equity-based compensation | ||||||||
| Loss (gain) on sale of marketable securities | ( | ) | ||||||
| Loss on issuance of warrants | ||||||||
| Amortization of financial obligation | ||||||||
| Change in assets and liabilities: | ||||||||
| Funds receivable from New Jersey net operating loss | ||||||||
| Prepaid expenses and other current assets and other non-current assets | ||||||||
| Lease liability | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of marketable securities | ||||||||
| Purchase of marketable securities | ( | ) | ( | ) | ||||
| Proceeds from sale of property and equipment | ||||||||
| Purchase of patent and trademark rights | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from sale of stock, net of issuance costs | ||||||||
| Proceeds from note payable, net of issuance costs | ||||||||
| Proceeds from issuance of equity warrants | ||||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosures of non-cash investing and financing cash flow information: | ||||||||
| Operating lease-Right of Use Assets | $ | $ | ( | ) | ||||
| Unrealized gain on marketable securities | $ | $ | ||||||
| Conversion of Series B preferred | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| 5 |
AIM IMMUNOTECH INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Business and Basis of Presentation
AIM ImmunoTech Inc. and its subsidiaries (collectively, “AIM”, “Company”, “we” or “us”) are an immuno-pharma company headquartered in Ocala, Florida, and focused on the research and development of therapeutics to treat multiple types of cancers, viral diseases and immune-deficiency disorders. We have established a strong foundation of laboratory, pre-clinical and clinical data with respect to the development of nucleic acids and natural interferon to enhance the natural antiviral defense system of the human body, and to aid the development of therapeutic products for the treatment of certain cancers and chronic diseases.
AIM’s flagship products are Ampligen (rintatolimod) and Alferon N Injection (Interferon alfa). Ampligen is a double-stranded RNA (“dsRNA”) molecule being developed for globally important cancers, viral diseases and disorders of the immune system. Ampligen has not been approved by the FDA or marketed in the United States, but is approved for commercial sale in the Argentine Republic for the treatment of severe Chronic Fatigue Syndrome (“CFS”).
The Company is currently proceeding primarily in four areas:
| ● | Conducting clinical trials to evaluate the efficacy and safety of Ampligen for the treatment of pancreatic cancer. | |
| ● | Evaluating Ampligen across multiple cancers as a potential therapy that modifies the tumor microenvironment with the goal of increasing anti-tumor responses to checkpoint inhibitors. | |
| ● | Exploring Ampligen’s antiviral activities and potential use as a prophylactic or treatment for existing viruses, new viruses and mutated viruses thereof. | |
| ● | Evaluating Ampligen as a treatment for myalgic encephalomyelitis/chronic fatigue syndrome (“ME/CFS”) and fatigue and/or the Post-COVID condition of fatigue. |
The Company is prioritizing activities in an order related to the stage of development, with those clinical activities such as pancreatic cancer, ME/CFS and Post-COVID conditions having priority over antiviral experimentation. The Company intends that priority clinical work be conducted in trials authorized by the FDA or European Medicines Agency (“EMA”), which trials support a potential future NDA. However, AIM’s antiviral experimentation is designed to accumulate additional preliminary data supporting their hypothesis that Ampligen is a powerful, broad-spectrum prophylaxis and early-onset therapeutic that may confer enhanced immunity and cross-protection. Accordingly, AIM will conduct antiviral programs in those venues most readily available and able to generate valid proof-of-concept data, including foreign venues.
AIM’s business plan requires one or more Contract Manufacturing Organizations (“CMO”) to produce Ampligen and its Active Pharmaceutical Ingredients (APIs). This includes utilizing Jubilant HollisterStier and Sterling for the manufacture of Ampligen and our Poly I and Poly C12U polynucleotides, respectively. Additionally, our relationship with Polysciences Inc. (“Polysciences”) continues and R&D development of polymer manufacture is ongoing.
In the opinion of management, all adjustments necessary for a fair presentation of its consolidated financial statements have been included. Such adjustments consist of normal recurring items. Interim results are not necessarily indicative of results for a full year.
The interim consolidated financial statements and notes thereto are presented as permitted by the Securities and Exchange Commission (“SEC”), and do not contain certain information which will be included in the Company’s annual consolidated financial statements and notes thereto.
These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the years ended December 31, 2023, and 2022, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed on April 1, 2024.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure (“GAAP”) of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates, and those differences may be material. Accounts requiring the use of significant estimates include determination of other-than-temporary impairment on securities, valuation of deferred taxes, patent and trademark valuations, stock-based compensation calculations, fair value of warrants, and contingency accruals.
| 6 |
Note 2: Cash and Cash Equivalents
Cash
includes bank deposits maintained at several financial institutions. The Company considers highly liquid instruments with an original
maturity of three months or less to be cash equivalents. At various times throughout the six months ended June 30, 2024, some accounts
held at financial institutions were in excess of the federally insured limit of $
Basic and diluted net loss per share is computed using the weighted average number of shares of common stock outstanding during the period. Equivalent common shares, consisting of stock options and warrants which amounted to and for the three months ended June 30, 2024, and 2023, respectively; and and shares for the six months ended June 30, 2024 and 2023, respectively, are excluded from the calculation of diluted net loss per share since their effect is anti-dilutive.
The 2018 Equity Incentive Plan, effective September 12, 2018, as amended and restated on August 19, 2019 (the “2018 Equity Incentive Plan”) authorizes the grant of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards. Initially, a maximum of shares of Common Stock were reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. When the plan was amended and restated, an additional shares were reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. The number of shares of the Company’s common stock available for grant and issuance under the 2018 Equity Incentive Plan is subject to an annual increase on July 1 of each calendar year, by an amount equal to two percent (2%) of the then outstanding shares of the Company’s common stock (the “2018 Plan Evergreen Provision”). On August 3, 2020 and July 1, 2021, 2022 and 2023, the number of shares of the Company’s common stock available for grant and issuance under the 2018 Equity Incentive Plan increased by shares, shares, shares and shares, respectively. As a result of the 2018 Plan Evergreen Provisions, a maximum of shares of Common Stock is reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan as of January 1, 2024. Unless sooner terminated, the 2018 Equity Incentive Plan will continue in effect for a period of years from its effective date. During the fiscal year ending December 31, 2018 the Board of Directors (the “Board”) issued options to each employee, the officers and directors at the exercise price of $ expiring in years. During the fiscal year ending December 31, 2019, options were issued to each of these officers with an exercise price of $ for a period of with a vesting period of one year. During the fiscal year ending December 31, 2020, options were issued to each of these officers and directors with an exercise price range of $ to $ for a period of with a vesting period of one year During the fiscal year ending December 31, 2021, options were issued to officers, directors and consultants with an exercise price range of $ to $ for a period of with a vesting period of one year. During the fiscal year ending December 31, 2022, options were issued to officers, directors and consultants with an exercise price range of $ to $ for a period of with a vesting period of one year. During the fiscal year ending December 31, 2023, options were issued to officers with an exercise price range of $ for a period of with a vesting period of one year. During the six months ended June 30, 2024 there were options issued.
The fair value of each option and equity warrant award is estimated on the date of grant using a Black-Scholes-Merton option pricing valuation model. Expected volatility is based on the historical volatility of the price of the Company’s stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option and equity warrant. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates. During the six months ended June 30, 2024 and 2023, there were options granted.
| 7 |
Stock options activity during the three months ended June 30, 2024, was as follows:
| Number
of Options | Weighted
Average Exercise Price | Weighted
Average Remaining Contractual Term (Years) | Aggregate
Intrinsic Value | |||||||||||||
| Outstanding March 31, 2024 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Forfeited | — | |||||||||||||||
| Expired | ( | ) | — | |||||||||||||
| Outstanding June 30, 2024 | $ | $ | ||||||||||||||
| Vested and expected to vest June 30, 2024 | $ | $ | ||||||||||||||
| Exercisable June 30, 2024 | $ | $ | ||||||||||||||
| Number
of Options | Weighted
Average Exercise Price | Weighted
Average Remaining Contractual Term (Years) | Aggregate
Intrinsic Value | |||||||||||||
| Unvested March 31, 2024 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Expired | ( | ) | — | |||||||||||||
| Vested | ( | ) | ||||||||||||||
| Unvested June 30, 2024 | $ | $ | ||||||||||||||
| Number
of Options | Weighted
Average Exercise Price | Weighted
Average Remaining Contractual Term (Years) | Aggregate
Intrinsic Value | |||||||||||||
| Outstanding March 31, 2024 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Forfeited | — | |||||||||||||||
| Expired | — | |||||||||||||||
| Outstanding June 30, 2024 | $ | $ | ||||||||||||||
| Vested and expected to vest June 30, 2024 | $ | $ | ||||||||||||||
| Exercisable June 30, 2024 | $ | $ | ||||||||||||||
| Number
of Options | Weighted
Average Exercise Price | Weighted
Average Remaining Contractual Term (Years) | Aggregate
Intrinsic Value | |||||||||||||
| Unvested March 31, 2024 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Expired | — | |||||||||||||||
| Vested | ( | ) | ||||||||||||||
| Unvested June 30, 2024 | $ | $ | ||||||||||||||
Stock-based compensation expense was approximately $ and $ for the three months ended June 30, 2024 and 2023, resulting in a decrease in general and administrative expenses, respectively.
| 8 |
Employee stock option activity during the six months ended June 30, 2024, was as follows:
Stock option activity for employees:
| Number
of Options | Weighted
Average Exercise Price | Weighted
Average Remaining Contractual Term (Years) | Aggregate
Intrinsic Value | |||||||||||||
| Outstanding January 1, 2024 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Forfeited | — | |||||||||||||||
| Expired | ( | ) | — | |||||||||||||
| Outstanding June 30, 2024 | $ | $ | ||||||||||||||
| Vested and expected to vest June 30, 2024 | $ | $ | ||||||||||||||
| Exercisable June 30, 2024 | $ | $ | ||||||||||||||
Unvested stock option activity for employees:
| Number
of Options | Weighted
Average Exercise Price | Weighted
Average Remaining Contractual Term (Years) | Aggregate
Intrinsic Value | |||||||||||||
| Unvested January 1, 2024 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Expired | ( | ) | — | |||||||||||||
| Vested | ( | ) | ||||||||||||||
| Unvested June 30, 2024 | $ | $ | ||||||||||||||
| Number
of Options | Weighted
Average Exercise Price | Weighted
Average Remaining Contractual Term (Years) | Aggregate
Intrinsic Value | |||||||||||||
| Outstanding January 1, 2024 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Forfeited | — | |||||||||||||||
| Expired | — | |||||||||||||||
| Outstanding June 30, 2024 | $ | $ | ||||||||||||||
| Vested and expected to vest June 30, 2024 | $ | $ | ||||||||||||||
| Exercisable June 30, 2024 | $ | $ | ||||||||||||||
| 9 |
Unvested stock option activity for non-employees:
| Number
of Options | Weighted
Average Exercise Price | Weighted
Average Remaining Contractual Term (Years) | Aggregate
Intrinsic Value | |||||||||||||
| Unvested January 1, 2024 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Expired | — | |||||||||||||||
| Vested | ( | ) | ||||||||||||||
| Unvested June 30, 2024 | $ | $ | ||||||||||||||
Stock-based compensation expense was approximately $ and $ for the six months ended June 30, 2024 and 2023, respectively.
On June 30, 2024, and 2023, respectively, there was approximately $ and $ of unrecognized equity-based compensation cost related to options granted under the Equity Incentive Plan.
Note 5: Marketable Securities
Marketable
securities consist of mutual funds. At June 30, 2024 and December 31, 2023, it was determined that none of the marketable securities
had an other-than-temporary impairment. At June 30, 2024 and December 31, 2023, all securities were measured as Level 1 instruments of
the fair value measurements standard (See Note 11: Fair Value). At June 30, 2024, and December 31, 2023 the Company held $
Mutual Funds classified as available for sale consisted of:
June 30, 2024 (in thousands) | ||||||||
| Securities | Fair
Value | Short-Term
Investments | ||||||
| Mutual Funds | $ | $ | ||||||
| Totals | $ | $ | ||||||
| Securities | For the six June 30, 2024 (in thousands) | |||
| Net gain recognized during the period on equity securities | $ | ( | ) | |
| Less: Net gains and losses recognized during the period on equity securities sold during the period | ( | ) | ||
| Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date | $ | |||
December 31, 2023 (in thousands) | ||||||||
| Securities | Fair
Value | Short-Term
Investments | ||||||
| Mutual Funds | $ | $ | ||||||
| Totals | $ | $ | ||||||
| 10 |
| Securities | For the six months ended June 30, 2023 (in thousands) | |||
| Net losses recognized during the period on equity securities | $ | |||
| Less: Net gains and losses recognized during the period on equity securities sold during the period | ( | ) | ||
| Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date | $ | |||
Note 6: Accrued Expenses
Accrued expenses consist of the following:
| (in thousands) | ||||||||
| June 30, 2024 | December 31, 2023 | |||||||
| Compensation | $ | $ | ||||||
| Professional fees | ||||||||
| Clinical trial expenses | ||||||||
| Interest | ||||||||
| Other expenses | ||||||||
| $ | $ | |||||||
Note 7: Property and Equipment, net
| (in thousands) | ||||||||
| June 30, 2024 | December 31, 2023 | |||||||
| Furniture, fixtures, and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Property
and equipment are recorded at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful
lives of the respective assets, ranging from three to ten years. Depreciation expense for the six months ending June 30, 2024 and June
30, 2023 was $
Note 8: Patents, and Trademark Rights, Net
Patent and trademark rights consist of the following (in thousands):
| June 30, 2024 | December 31, 2023 | |||||||||||||||||||||||
| Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||||||||||||
| Patents | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Trademarks | ( | ) | ( | ) | ||||||||||||||||||||
| Net amortizable patents and trademarks rights | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| 11 |
Patent and trademark rights acquisitions, abandonments and amortization:
| December 31, 2023 | $ | |||
| Acquisitions | ||||
| Abandonments | ( | ) | ||
| Amortization | ( | ) | ||
| June 30, 2024 | $ |
Patents
and trademarks are stated at cost (primarily legal fees) and are amortized using the straight-line method over an estimated useful life
of
Amortization of patents and trademarks for each of the next five years and thereafter is as follows:
| Year Ending December 31, | ||||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total | $ | |||
Note 9: Stockholders’ Equity
(a) Preferred Stock
The Company is authorized to issue shares of $ par value preferred stock with such designations, rights and preferences as may be determined by the Board. Of our authorized preferred stock, shares have been designated as Series A Junior Participating Preferred Stock and shares have been designated as Series B Convertible Preferred Stock.
Series A Junior Participating Preferred Stock
On May 10, 2023, the Company filed a Certificate of Increase in Delaware, increasing the number of preferred stock designated as Series A Junior Participating Preferred Stock to from shares. As of June 30, 2024, there were no Series A Junior Participating Preferred Stock outstanding.
Series B Convertible Preferred Stock
The Company has designated shares of its preferred stock as Series B Convertible Preferred Stock (the “Preferred Stock”). Each share of Preferred Stock has a par value of $ per share and a stated value equal to $ (the “Stated Value”). The shares of Preferred Stock shall initially be issued and maintained in the form of securities held in book-entry form and the Depository Trust Company or its nominee (“DTC”) shall initially be the sole registered holder of the shares of Preferred Stock.
Each
share of Preferred Stock shall be convertible, at any time and from time to time from and after the Original Issue Date at the option
of the Holder thereof or at any time and from time to time on or after the second anniversary of the Original Issue Date at the option
of the Corporation, into that number of shares of Common Stock (subject in each case to the limitations determined by dividing the Stated
Value of such share of Preferred Stock by the Conversion Price). The conversion price for the Preferred Stock shall be equal to $
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Pursuant
to a registration statement relating to a rights offering (the “Rights Offering”) declared effective by the SEC on
February 14, 2019, AIM distributed to its holders of common stock and to holders of certain options and redeemable warrants as of
February 14, 2019, at no charge, one non-transferable subscription right for each share of common stock held or deemed held on the
record date. Each right entitled the holder to purchase one unit, at a subscription price of $
per unit, consisting of one share of Series B Convertible Preferred Stock with a face value of $
(b) Common Stock and Equity Finances
The Company has authorized shares of with specific limitations and restrictions on the usage of of the authorized shares. As of June 30, 2024, and December 31, 2023, there were and shares of Common Stock issued and outstanding, respectively.
Employee Stock Purchase Plan (Not equity compensation)
On
July 7, 2020, the Board approved a plan pursuant to which all directors, officers, and employees could purchase from the Company up to
an aggregate of $
During the three months ended
June 30, 2024, the Company issued a total of shares of its Common Stock at a price of $ for total proceeds of approximately
$
During
the six months ended June 30, 2024, the Company issued a total of shares of its Common Stock at a price ranging from $ to
$ for total proceeds of approximately $
During the three months ended June 30, 2023, the Company did t issue any shares of its Common Stock as part of the employee stock purchase plan.
During
the six months ended June 30, 2023, the Company issued a total of shares of its Common Stock at a price of $ for total proceeds
of approximately $
Rights Plan
On May 12, 2023, the Company amended and restated its November 14, 2017 Rights Plan with American Stock Transfer & Trust Company as Rights Agent (the “Rights Plan”).
Warrants (Rights offering)
On
September 27, 2019, the Company closed a public offering underwritten by A.G.P./Alliance Global Partners, LLC (the “Offering”)
of (i) shares of Common Stock; (ii) pre-funded warrants exercisable for
During
the three months ended June 30, 2024, there were no warrants exercised. During the six months ended June 30, 2024, warrants were exercised, and
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Equity Distribution Agreement
On
April 19, 2023, the Company entered into an Equity Distribution Agreement (the “EDA”) with Maxim Group LLC
(“Maxim”), pursuant to which the Company may sell, from time to time, shares of its common stock having an aggregate
offering price of up to $
Equity Purchase Agreement
On
March 28, 2024, the Company entered into a purchase agreement and a registration rights agreement with Atlas Sciences, LLC (“Atlas”), pursuant to which Atlas committed to purchase up to $
Under
the terms of the purchase agreement, the Company, at its sole discretion, shall have the right to issue Put shares to the Investor
at
Securities Purchase Agreement
On
May 31, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) to complete an offering
(the “Transactions”) with a single accredited investor (the “Purchaser”), pursuant to which the Company will
issue to the Purchaser, (i) in a registered direct offering, shares of the Company’s common stock (the “Shares”),
par value $ per share (“Common Stock”) and (ii) in a concurrent private placement, the Company will issue to the Purchaser
Class A common warrants to purchase an aggregate of up to shares of its common stock (the “A Warrants”) at an exercise
price of $
The Shares are being offered by the Company pursuant to a shelf registration statement on Form S-3 (File No. 333-262280), which was declared effective on February 4, 2022 (as amended from time to time, the “Registration Statement”).
Pursuant to the terms of the Purchase Agreement, subject to certain exceptions, the Company cannot issue any equity securities for 60 days following the issuance date, provided that the Company will be able to utilize its at-the-market offering program with the Placement Agent after 30 days. Additionally, the Company cannot enter into a variable rate transaction (other than the ATM program with the Placement Agent) for 120 days after the issuance date. In addition, the Company’s executive officers and each of the Company’s directors have entered into lock-up agreements with the Company pursuant to which each of them has agreed not to, for a period of 90 days from the closing of the Transactions, offer, sell, transfer or otherwise dispose of the Company’s securities, subject to certain exceptions.
The exercise price of the Common Warrants, and the number of Common Warrant Shares, will be subject to adjustment in the event of any stock dividend or split, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Common Warrants. If a Fundamental Transaction (as defined in the Common Warrants) occurs, then the successor entity will succeed to, and be substituted for the Company, and may exercise every right and power that the Company may exercise and will assume all of its obligations under the Common Warrants with the same effect as if such successor entity had been named in the warrant itself. Common Warrant Holders will have additional rights defined in the Common Warrants. The Common Warrants will be exercisable on a “cashless” basis only if there is not a current registration statement permitting public resale. In this regard, the Company has agreed to file a registration statement to register the resale of the Common Warrant Shares as soon as practicable (and in any event within 45 calendar days) providing for the resale of the Shares issued and issuable upon exercise of the Common Warrants. The Company has agreed to use commercially reasonable efforts to cause such registration statement to become effective within 181 days following the issuance date and to keep such registration statement effective at all times until no Purchaser owns any Warrants or Warrant Shares issuable upon exercise thereof.
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Maxim
Group LLC acted as the placement agent (the “Placement Agent”) on a “commercially reasonable best efforts” basis,
in connection with the Transactions pursuant to the Placement Agency Agreement, dated May 31, 2024 (the “Placement Agency Agreement”),
by and between the Company and the Placement Agent. Pursuant to the Placement Agency Agreement, the Placement Agent will be entitled
to a cash fee of
The Company evaluated
the Common Warrants under the guidance of ASC 480 – Distinguishing Liabilities from Equity and determined that they were in
scope under the guidance as freestanding financial instruments but did not meet the criteria for liability classification and are
classified as equity within the condensed consolidated financial statements. Proceeds allocated to such warrants totaled approximately $
Note 10: Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. Accounting pronouncements issued by the FASB since filing the Annual Report on Form 10-K for the year ended December 31, 2023 did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
Note 11: Fair Value
Fair Value
The Company complies with the provisions of FASB ASC 820 “Fair Value Measurements” for its financial and non-financial assets and liabilities. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis.
The fair values of cash and cash equivalents, other assets, accounts payable and accrued expenses approximate their carrying values due to the short-term maturities of these items and are considered a Level 1 instrument of the fair value measurements standard. The Company also has certain warrants with a cash settlement feature in the occurrence of a Fundamental Transaction. The fair value of the warrants (“June 2024 Warrants”) related to the Company’s June 2024 common stock and warrant issuance, are calculated using a Monte Carlo Simulation.
The
Company also had certain redeemable warrants in the Rights Offering with a cash settlement feature in the occurrence of a Fundamental
Transaction. No Fundamental Transaction occurred. In March 2024,
The Company estimated the fair value of the June 2024 Warrants using the Black-Scholes Model, which uses multiple inputs including the Company’s stock price, the exercise price of the warrant, volatility of the Company’s stock price, the risk-free interest rate and the expected term of the warrants.
The Company utilized the following assumptions to estimate the fair value of the Class A Warrants:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Underlying price per share | $ | |||||||
| Exercise price per share | $ | |||||||
| Risk-free interest rate | % | |||||||
| Expected holding period | ||||||||
| Expected volatility | % | |||||||
| Expected dividend yield | ||||||||
The Company utilized the following assumptions to estimate the fair value of the Class B Warrants:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Underlying price per share | $ | |||||||
| Exercise price per share | $ | |||||||
| Risk-free interest rate | % | |||||||
| Expected holding period | ||||||||
| Expected volatility | % | |||||||
| Expected dividend yield | ||||||||
The significant assumptions using the Monte Carlo Simulation approach for valuation of the Warrants are:
| (i) | Risk-Free Interest Rate. The risk-free interest rates for the Warrants are based on U.S. Treasury constant maturities for periods commensurate with the remaining expected holding periods of the warrants. | |
| (ii) | Expected Holding Period. The expected holding period represents the period of time that the Warrants are expected to be outstanding until they are exercised. The Company utilizes the remaining contractual term of the Warrants at each valuation date as the expected holding period. | |
| (iii) | Expected Volatility. Expected stock volatility is based on daily observations of the Company’s historical stock values for a period commensurate with the remaining expected holding period on the last day of the period for which the computation is made. | |
| (iv) | Expected Dividend Yield. The expected dividend yield is based on the Company’s anticipated dividend payments over the remaining expected holding period. As the Company has never issued dividends, the expected dividend yield is 0% and this assumption will be continued in future calculations unless the Company changes its dividend policy. | |
| (v) | Expected Probability of a Fundamental Transaction. Put rights arise if a Fundamental Transaction 1) is an all cash transaction; (2) results in the Company going private; or (3) is a transaction involving a person or entity not traded on a national securities exchange. The Company believes such an occurrence is unlikely because: |
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| 1. | The Company only has one product that is FDA approved but is currently not available for commercial sales. | |
| 2. | The Company will have to perform additional clinical trials for FDA approval of its flagship product. | |
| 3. | Industry and market conditions continue to include uncertainty, adding risk to any transaction. | |
| 4. | The nature of a life sciences company is heavily dependent on future funding and high fixed costs, including Research & Development. | |
| 5. | The Company has minimal revenues streams which are insufficient to meet the funding needs for the cost of operations or construction at their manufacturing facility; and | |
| 6. | The Company’s Rights Agreement and Executive Agreements make it less attractive to a potential buyer. |
With the above factors utilized in analysis of the likelihood of the Put’s potential Liability, the Company estimated the range of probabilities related to a Put right being triggered as:
| Range of Probability | Probability | |||
| Low | % | |||
| Medium | % | |||
| High | % | |||
The
Monte Carlo Simulation has incorporated a
| (vi) | Expected Timing of Announcement of a Fundamental Transaction. As the Company has no specific expectation of a Fundamental Transaction, for reasons elucidated above, the Company utilized a discrete uniform probability distribution over the Expected Holding Period to model in the potential announcement of a Fundamental Transaction occurring during the Expected Holding Period. | |
| (vii) | Expected 100 Day Volatility at Announcement of a Fundamental Transaction. An estimate of future volatility is necessary as there is no mechanism for directly measuring future stock price movements. Daily observations of the Company’s historical stock values for the 100 days immediately prior to the Warrants’ grant dates, with a floor of 100%, were utilized as a proxy for future volatility estimates. | |
| (viii) | Expected Risk-Free Interest Rate at Announcement of a Fundamental Transaction. The Company utilized a risk-free interest rate corresponding to the forward U.S. Treasury rate for the period equal to the time between the date forecast for the public announcement of a Fundamental Transaction and the Warrant expiration date for each simulation. | |
| (ix) | Expected Time Between Announcement and Consummation of a Fundamental Transaction. The expected time between the announcement and the consummation of a Fundamental Transaction is based on the Company’s experience with the due diligence process performed by acquirers and is estimated to be six months. The Monte Carlo Simulation approach incorporates this additional period to reflect the delay Warrant Holders would experience in receiving the proceeds of the Put. |
While the assumptions remain consistent from period to period (e.g., utilizing historical stock prices), the actual historical prices input for the relevant period input change.
The Company accounts for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. AIM categorizes each of its fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
| 1. | Level 1 – Quoted prices are available in active markets for identical assets or liabilities at the reporting date. Generally, this includes debt and equity securities that are traded in an active market. | |
| 2. | Level 2 – Observable inputs other than Level 1 prices such as quote prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Generally, this includes debt and equity securities that are not traded in an active market. | |
| 3. | Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. As of June 30, 2024, the Company has classified the warrants with cash settlement features as Level 3. Management evaluates a variety of inputs and then estimates fair value based on those inputs. As discussed above, the Company utilized the Monte Carlo Simulation Model in valuing the warrants. |
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The table below presents the balances of assets and liabilities measured at fair value on a recurring basis by level within the hierarchy as (in thousands):
| As of June 30, 2024 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||