10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2017

Commission File Number: 1-13441

HEMISPHERX BIOPHARMA, INC.

(Exact name of registrant as specified in its charter)

Delaware	52-0845822
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1617 JFK Boulevard, Suite 500, Philadelphia, PA 19103

(Address of principal executive offices) (Zip Code)

(215) 988-0080

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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.

[X] Yes [  ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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).

[X] Yes [  ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

[  ]	Large accelerated filer	[  ]	Accelerated filer
[  ]	Non-accelerated filer	[X]	Smaller reporting company
		[  ]	Emerging growth company

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 [X] No

26,461,072 shares of common stock were outstanding as of May 1, 2017.

PART I - FINANCIAL INFORMATION

ITEM 1: Financial Statements

HEMISPHERX BIOPHARMA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except for share and per share amounts)

	March 31,2017			December 31,2016
		(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	776		$	2,408
Marketable securities		2,973			3,460
Accounts receivable		41			—
Assets held for sale		764			764
Prepaid expenses and other current assets		636			309
Total current assets		5,190			6,941
Property and equipment, net		9,257			9,514
Patent and trademark rights, net		870			872
Other assets		1,546			1,546
Total assets	$	16,863		$	18,873
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	927		$	887
Accrued expenses		1,709			1,548
Total current liabilities		2,636			2,435
Redeemable warrants		1,279			940
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, par value $0.01 per share, authorized 5,000,000; issued and outstanding; none		-			-
Common stock, par value $0.001 per share, authorized 350,000,000 shares; issued and outstanding 26,186,998 and 24,202,921, respectively		26			24
Additional paid-in capital		316,238			315,980
Accumulated other comprehensive income (loss)		6			(5	)
Accumulated deficit		(303,322	)		(300,501	)
Total stockholders’ equity		12,948			15,498
Total liabilities and stockholders’ equity	$	16,863		$	18,873

See accompanying notes to consolidated financial statements.

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HEMISPHERX BIOPHARMA, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Loss

(in thousands, except share and per share data)

(Unaudited)

	Three months ended March 31,
	2017			2016
Revenues:
Clinical treatment programs - US	$	23		$	39
Clinical treatment programs - Europe		61			-
Total revenues		84			39
Costs and expenses:
Production costs		270			268
Research and development		1,391			1,002
General and administrative		1,664			2,448
Total costs and expenses		3,325			3,718
Operating loss		(3,241	)		(3,679	)
Interest and other income		26			61
Redeemable warrants valuation adjustment		393			-
Gain (loss) on sales of short term marketable securities		1			(107	)
Gain from sale of income tax net operating losses and research credits		-			1,561
Net loss		(2,821	)		(2,164	)
Other comprehensive income:
Reclassification adjustments for loss on sales of short term marketable securities included in net loss		(1	)		107
Unrealized gain on marketable securities		12			40
Net comprehensive loss	$	(2,810	)	$	(2,017	)
Basic and diluted loss per share	$	(0.11	)	$	(0.10	)
Weighted average shares outstanding, basic and diluted		25,341,068			20,630,328

See accompanying notes to consolidated financial statements.

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HEMISPHERX BIOPHARMA, INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Stockholders’ Equity

For the Three Months Ended March 31, 2017

(in thousands except share data)

(Unaudited)

	Common Stock Shares		Common Stock $0.001 Par Value		Additional Paid-In Capital			Accumulated Other Compre- hensive Income   (Loss)			Accumulated Deficit			Total Stockholders’ Equity
Balance at December 31, 2016		24,202,921	$	24	$	315,980		$	(5	)	$	(300,501	)	$	15,498
Equity-based compensation		40,105		—		52			—			—			52
Redeemable warrants		—		—		(734	)		—			—			(734	)
Common stock issuance, net of costs		1,818,185		2		873			—			—			875
Stock issued for accounts payable		125787		—		67			—			—			67
Net comprehensive income (loss)		—		—		—			11			(2,821	)		(2,810	)
Balance at March 31, 2017		26,186,998	$	26	$	316,238		$	6		$	(303,322	)	$	12,948

See accompanying notes to consolidated financial statements.

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HEMISPHERX BIOPHARMA, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2017 and 2016

(in thousands)

(Unaudited)

	2017			2016
Cash flows from operating activities:
Net loss	$	(2,821	)	$	(2,164	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment		261			300
Redeemable warrants valuation adjustment		(393	)		—
Amortization and abandonment of patent and trademark rights		13			30
Equity-based compensation		52			52
Realized loss on sale of marketable securities		(1	)		107
Change in assets and liabilities:
Accounts receivable		(41	)		—
Prepaid expenses and other current assets		(327	)		(28	)
Accounts payable		103			182
Accrued expenses		161			478
Net cash used in operating activities		(2,993	)		(1,043	)
Cash flows from investing activities:
Sale of marketable securities		500			—
Purchase of property, equipment and construction in progress		(3	)		—
Lease deposit refund		—			2
Additions to patent and trademark rights		(11	)		(62	)
Net cash provided by (used in) investing activities		486			(60	)
Cash flows from financing activities:
Payments on capital leases		—			(1	)
Proceeds from sale of stock, net of issuance costs		875			2
Net cash provided by financing activities		875			1
Net decrease in cash and cash equivalents		(1,632	)		(1,102	)
Cash and cash equivalents at beginning of period		2,408			2,115
Cash and cash equivalents at end of period	$	776		$	1,013
Supplemental disclosures of non-cash investing and financing cash flow information:
Unrealized gain on marketable securities	$	12		$	147
Stock issued for accounts payable	$	67		$	—
Fair value of redeemable warrants granted	$	734		$	—

See accompanying notes to consolidated financial statements.

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HEMISPHERX BIOPHARMA, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Basis of Presentation

The consolidated financial statements include the financial statements of Hemispherx Biopharma, Inc. and its wholly-owned subsidiaries (“Company”). The Company has two domestic subsidiaries: BioPro Corp. and BioAegean Corp., both of which are incorporated in Delaware and are dormant. The Company also has a foreign subsidiary, Hemispherx Biopharma Europe N.V./S.A., which was established in Belgium in 1998. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company has incurred numerous years of substantial operating losses as it pursued its clinical and pre-clinical development activities and appropriate regulatory approval processes before any such products can be sold and marketed. As of March 31, 2017, our accumulated deficit was approximately $303,000,000. The Company has not yet generated significant revenues from our products and may incur substantial losses in the future. The Company evaluated these conditions and events that may raise substantial doubt about the Company’s ability to continue as a going concern; however, the Company believes that it has alleviated the substantial doubt by implementing certain actions. The Company reexamined its fundamental priorities in terms of direction, corporate culture and its ability to fund operations. As a result, there were significant changes at the Company including the Company restructuring its executive management team, initiating the pursuit of international sales of clinical grade materials, and implementing a cost saving program which assisted the Company in gained efficiencies and eliminated redundancies within its workforce. In addition, the Company is in the process of selling an underutilized building adjacent to its New Jersey manufacturing facility site. Also, the Company is committed to a focused business plan oriented toward finding senior co-development partners with the capital and expertise needed to commercialize the many potential therapeutic aspects of our experimental drugs and our approved drug Alferon N. Lastly, the Company plans to access the public equity markets to raise further capital.

In the opinion of Management, all adjustments necessary for a fair presentation of such 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, 2016 and 2015, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Note 2: Net Loss Per Share

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 10,881,033 and 15,504,000 shares for the three months ended March 31, 2017 and 2016, respectively, are excluded from the calculation of diluted net loss per share since their effect is anti-dilutive.

Note 3: Equity-Based Compensation

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. There were no options or equity warrants granted in the three months ended March 31, 2017 and 2016.

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Stock option for employees’ activity during the three months ended March 31, 2017 is 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, 2017		836,256		$	16.82		4.47	$	—
Granted		—			—		—		—
Forfeited		(5,048	)		25.47		—		—
Outstanding March 31, 2017		831,208		$	16.77		4.24	$	—
Vested and expected to vest March 31, 2017		831,208		$	16.77		4.24	$	—
Exercisable March 31, 2017		786,936		$	16.54		3.24	$	—

Unvested stock option activity for employees:

	Number of Options			Weighted Average Exercise Price		Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		90,625		$	1.72		9.33	$	—
Granted		—			—		—		—
Vested		(46,354	)		1.58		—		—
Forfeited		—			—		—		—
Outstanding March 31, 2017		44,271		$	1.87		8.91	$	—

Stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		271,500		$	10.41		4.66	$	—
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited		(5,590	)		15.08		—		—
Outstanding March 31, 2017		265,910		$	10.31		4.41	$	—
Vested and expected to vest March 31, 2017		265,910		$	10.31		4.41	$	—
Exercisable March 31, 2017		254,104		$	10.69		4.11	$	—

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Unvested stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		26,389		$	1.65		8.61	$	—
Granted		—			—		—		—
Vested		(11,771	)		1.64		—		—
Forfeited		(2,812	)		1.68		—		—
Outstanding March 31, 2017		11,806		$	1.65		9.41	$	—

The impact on the Company’s results of operations of recording equity-based compensation for the three months ended March 31, 2017 and 2016 was to increase costs and expenses by approximately $52,000 and $52,000, respectively, which had no impact on earnings per share.

As of March 31, 2017 and 2016, respectively, there was $135,000 and $168,000 of unrecognized equity-based compensation cost related to options granted under the Equity Incentive Plan.

On January 26, 2016, the Board, based on the recommendation of its Compensation Committee, established two programs - the 2016 Senior Executive Deferred Cash Performance Award Plan for Dr. William A. Carter and Thomas K. Equels, the Company’s two primary executive officers, and the 2016 Voluntary Incentive Stock Award Plan for Company employees and Board members other than Dr. Carter and Mr. Equels. Both Plans include a Base Pay Supplement provision.

The Company maintains a record of the number of shares of stock represented by each Incentive Right issued out of the 2016 Voluntary Incentive Stock Award Plan. During the three months ended March 31, 2016, the Company granted rights to 53,051 incentive shares associated with the Plan and recorded $21,000 in equity-based compensation. There were no incentive shares issued during the quarter ended March 31, 2017.

Note 4: Inventories

The Company uses the lower of first-in, first-out (“FIFO”) cost or market method of accounting for inventory.

Inventories consist of the following:	(in thousands)
	March 31, 2017		December 31, 2016
Inventory work-in-process, January 1	$	—	$	1,326
Production		—		—
Transfer to other assets		—		(1,326	)
Spoilage		—		—
Inventory work-in-process, end of period	$	—	$	—

Commercial sales of Alferon® will not resume until new batches of commercial filled and finished product are produced and released by the FDA. The Company is continuing the validation of Alferon® production and production of new Alferon® API inventory commenced in February 2015. While the facility is approved by the FDA under the Biological License Application (“BLA”) for Alferon®, this status will need to be reaffirmed by an FDA pre-approval inspection. The Company will also need the FDA’s approval to release commercial product once it has submitted satisfactory stability and quality release data. Due to the Company extending the timeline of Alferon® production to an excess of one year, the Company reclassified Alferon® Work-In-Process inventory to other assets within the Company’s balance sheet.

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Note 5: Marketable Securities

Marketable securities consist of mutual funds. For the three months ended March 31, 2017 and 2016, it was determined that none of the marketable securities had other-than-temporary impairments. At March 31, 2017 and December 31, 2016, all securities were classified as available for sale investments and were measured as Level 1 instruments of the fair value measurements standard.

Securities classified as available for sale consisted of:

March 31, 2017

(in thousands)

Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Investments		Long Term Investments
Mutual Funds	$	2,967	$	6	$	—	$	2,973	$	2,973	$	—
Totals	$	2,967	$	6	$	—	$	2,973	$	2,973	$	—

December 31, 2016

(in thousands)

Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Short-Term Investments		Long Term Investments
Mutual Funds	$	3,465	$	—	$	(5	)	$	3,460	$	3,460	$	—
Totals	$	3,465	$	—	$	(5	)	$	3,460	$	3,460	$	—

Unrealized losses on investments

Investments with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values were as follows:

There were no investments in a loss position as of March 31, 2017.

December 31, 2016

(in thousands)

	Total		Less Than 12 Months					12 Months or Greater				Totals
Securities	Number In Loss Position		Fair Values		Unrealized Losses			Fair Values		Unrealized Losses		Total Fair Value		Total Unrealized Losses
Mutual Funds		1	$	1,853	$	(13	)	$	—	$	—	$	1,853	$	(13	)
Totals		1	$	1,853	$	(13	)	$	—	$	—	$	1,853	$	(13	)

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Note 6: Accrued Expenses

Accrued expenses consist of the following:

	(in thousands)
	March 31, 2017		December 31, 2016
Compensation	$	277	$	297
Professional fees		528		604
Clinical trial expenses		393		158
Other expenses		511		489
	$	1,709	$	1,548

Note 7: Property and Equipment

	(in thousands)
	March 31, 2017			December 31, 2016
Land, buildings and improvements	$	10,530		$	10,530
Furniture, fixtures, and equipment		5,625			5,630
Total property and equipment		16,155			16,160
Less: accumulated depreciation and amortization		(6,898	)		(6,646	)
Property and equipment, net	$	9,257		$	9,514

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 thirty-nine years. The Company also reclassified an underutilized building as an asset held for resale totaling $764,000 adjacent to its New Jersey manufacturing facility site that it is in the process of selling.

Note 8: Stockholders’ Equity

(a) Preferred Stock

The Company is authorized to issue 5,000,000 shares of $0.01 par value preferred stock with such designations, rights and preferences as may be determined by the Board of Directors. There were no Preferred Shares issued and outstanding as of March 31, 2017 and December 31, 2016.

(b) Common Stock

The Company’s stockholders approved an amendment to the Company’s corporate Charter at the Annual Shareholder Meeting held in Philadelphia, PA that concluded on December 8, 2011. This amendment increased the Company’s authorized shares from 200,000,000 to 350,000,000 with specific limitations and restrictions on the usage of 75,000,000 of the 150,000,000 newly authorized shares.

On September 16, 2015, the Company’s stockholders removed the limitations and restrictions on 67,000,000 shares. The Company’s stockholders approved up to an additional 60,000,000 shares for use in capital raising transactions and 7,000,000 shares for use in the Equity Plan of 2009. On August 29, 2016, the Company effected a 12 to 1 reverse stock split of the outstanding shares, in order to become compliant with the NYSE regulations. This did not affect the number of authorized shares.

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On July 23, 2012, the Company entered into an equity distribution agreement (the “Maxim EDA”) with Maxim Group LLC (“Maxim”) pursuant to which the Company could sell up to $75,000,000 worth of its shares of common stock from time to time through Maxim, as sales agent. Under the Maxim EDA, Maxim is entitled to a fixed commission rate of 4.0% of the gross sales price of Shares sold under the Maxim EDA, up to aggregate gross proceeds of $10,000,000, and thereafter, at a fixed commission rate of 3.0% of the gross sales price of Shares sold under the Maxim EDA. Sales of the Shares, if any, may be made in transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers’ transactions, including on the NYSE MKT, at market prices or as otherwise agreed with Maxim. The Company has no obligation to sell any of the Shares and may at any time suspend offers under the Maxim EDA or terminate the Maxim EDA. Up until August 4, 2015, the shares were being sold pursuant to the Company’s Universal Shelf Registration Statement on Form S-3, declared effective by the SEC on July 2, 2012. After August 4, 2015, the shares were sold pursuant to the Company’s Universal Shelf Registration Statement on Form S-3, declared effective by the SEC on August 4, 2015 (the “2015 Universal Shelf”). On August 4, 2015, the Company and Maxim Group LLC amended their July 23, 2012 EDA solely for the purpose of adding the registrant’s new registration statement on Form S-3 (File No 333-205228) to the definition of “registration statement” as the old registration statement expired. On December 15, 2015, the Company filed a Prospectus Supplement reducing all offerings pursuant to its existing equity distribution agreement with Maxim Group LLC to $0. No shares of common stock were sold through the Maxim EDA during the first quarter of 2017 or 2016.

On December 15, 2015, the Company entered into an Equity Distribution Agreement with Chardan Capital Markets, LLC (the “Chardan Agreement”) to create an at-the-market equity program under which it may sell shares of its common stock (the “Shares”) from time to time through Chardan Capital Markets, LLC, as sales agent (“Chardan”). Under the Chardan Agreement, Chardan will be entitled to a commission at a fixed commission rate of 3.0% of the gross sales price of Shares sold under the Chardan Agreement. Sales of the Shares, if any, under the Chardan Agreement may be made in transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers’ transactions, including on the NYSE MKT, at market prices or as otherwise agreed with Chardan. The Company has no obligation to sell any of the Shares, and may at any time suspend offers under the Chardan Agreement or terminate the Chardan Agreement. The Shares would be issued pursuant to the Company’s previously filed and effective Registration Statement on Form S-3 (File No. 333-205228). Effective August 26, 2016 the Company halted all future offers and sales of common stock under the Chardan Agreement reducing all offerings pursuant to its existing equity distribution agreement with Chardan to $0. No shares of common stock were sold through the Chardan Agreement during the first quarter of 2017 or 2016.

On February 1, 2017, the Company entered into Securities Purchase Agreements (each, a “February Purchase Agreement”) with certain investors for the sale by us of 1,818,185 shares of its common stock at a purchase price of $0.55 per share. Concurrently with the sale of the common stock, pursuant to the February Purchase Agreement, the Company also sold unregistered warrants to purchase 1,363,639 shares of common stock for aggregate net proceeds of approximately $875,000. The warrants have an exercise price of $0.75 per share, are exercisable six months after issuance, and will expire five years from the initial exercise date. Pursuant to an engagement agreement, the Company paid its placement agent an aggregate fee equal to 7% of the gross proceeds received by the Company from the sale of the securities in the offering and granted to its placement agent or its designees warrants to purchase up to 5% of the aggregate number of shares sold in the transactions amounting to 90,910 unregistered warrants. The placement agent warrants have substantially the same terms as the investor warrants, except that the placement agent warrants will expire on February 1, 2022 and have an exercise price equal to $0.6875 per share of common stock.

On September 6, 2016, the Company entered into Securities Purchase Agreements with certain investors for the sale by the Company of 3,333,334 shares of its common stock at a purchase price of $1.50 per share and sold warrants to purchase 2,500,000 shares of Common Stock for aggregate net proceeds of $4,520,000. Subject to certain ownership limitations, the warrants are initially exercisable six-month after issuance at an exercise price equal to $2.00 per share of Common Stock, subject to adjustments as provided under the terms of the warrants. The warrants are exercisable for five years from the initial exercise date. The Company received net proceeds from the foregoing transaction of approximately $4,520,000 after deducting certain fees due to the placement agent and the Company’s transaction expenses. The net proceeds received by the Company from tis offering will be used for preparation for technology transfer opportunities, expenses related to Ampligen® manufacturing, working capital and general corporate purposes. Pursuant to an engagement agreement, the Company paid its placement agent an aggregate fee equal to 7% of the gross proceeds received by the Company from the sale of the securities in the offering and granted to its placement agent or its designees warrants to purchase up to 5% of the aggregate number of shares sold in the transactions amounting to 166,667 unregistered warrants. The placement agent warrants have substantially the same terms as the investor warrants, except that the placement agent warrants will expire September 1, 2021 and have an exercise price equal to $1.875 per share of common stock.

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The common stock issued in the above two offerings were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3, which was initially filed with the SEC on June 25, 2015 and subsequently declared effective on August 4, 2015 (File No. 333-205228) and the base prospectus dated as of August 4, 2015 contained therein. The Company filed a prospectus supplements related to these two offerings with the SEC on February 3, 2017 and September 1, 2016, respectively, in connection with the sale of the common stock.

The Equity Incentive Plan of 2009, effective June 24, 2009, as amended and giving effect to the 12 to 1 reverse stock split, authorizes the grant of non-qualified and incentive stock options, stock appreciation rights, restricted stock and other stock awards. A maximum of 22,000,000 shares of common stock is reserved for potential issuance pursuant to awards under the Equity Incentive Plan of 2009. Unless sooner terminated, the Equity Incentive Plan of 2009 will continue in effect for a period of 10 years from its effective date. For the three months ended March 31, 2017, there were no options granted by the Company.

Note 9: Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Note 10: Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Upon the Company realizing operating revenues from the sale of commercialized product, the Company’s adoption of this guidance may have an impact on the Company’s financial statement presentation or disclosures.

In January 2016, the (“FASB”) has issued Accounting Standards Update (ASU) No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance is intended to improve the recognition and measurement of financial instruments. The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance permits early adoption of the own credit provision. The Company believes that the adoption of the guidance may have an impact on the Company’s financial statement presentation or disclosures.

In February 2016, the FASB issued ASU 2016-02 - Leases, which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018, and early adoption of is permitted as of the standard’s issuance date. ASU 2016-02 allows a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company has not adopted ASU 2016-02 and believes such adoption may have an impact on the Company’s financial statement presentation or disclosures.

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In August 2016, the FASB issued ASU 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The new guidance is intended to address the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this Update should be applied using a retrospective transition method to each period presented. The Company believes that the adoption of the guidance may not have a material impact on the Company’s financial statement presentation or disclosures.

In 2017, the FASB also issued Accounting Standards Updates (“ASU”) 2017-01 through 2017-08 These updates did not have a significant impact on the financial statements.

Note 11: Funds Received from Sale of Income Tax Net Operating Losses

As of December 31, 2016, the Company has approximately $174,000,000 of federal net operating loss carryforwards (expiring in the years 2018 through 2036) available to offset future federal taxable income. The Company also has approximately $36,000,000 of Pennsylvania state net operating loss carryforwards (expiring in the years 2018 through 2033) and approximately $8,000,000 of New Jersey state net operating loss carryforwards (expiring in 2036) available to offset future state taxable income.

In January 2016, the Company effectively sold $16,000,000 of its New Jersey state net operating loss carryforward for the year 2014 for approximately $1,320,000, and also sold New Jersey research and development credits for $241,000. In December 2016, the Company effectively sold $14,000,000 of its New Jersey state net operating loss carryforward for the year 2015 for approximately $1,120,000, and also sold New Jersey research and development credits for $189,000. The utilization of certain state net operating loss carry-forwards may be subject to annual limitations. With no tax due for the foreseeable future, the Company has determined that the accounting for interest or penalties related to the payment of tax is not necessary at this time.

Note 12: Fair Value

The Company is required under GAAP to disclose information about the fair value of all the Company’s financial instruments, whether or not these instruments are measured at fair value on the Company’s consolidated balance sheets.

The Company estimates that the fair values of cash and cash equivalents, other assets, accounts payable and accrued expenses approximate their carrying values due to the short-term maturities of these items. The Company also has certain warrants with a cash settlement feature in the unlikely occurrence of a Fundamental Transaction. The fair value of the redeemable warrants (“Warrants”) related to the Company’s August 2016 and February 2017 common stock and warrant issuance, are calculated using a Monte Carlo Simulation. While the Monte Carlo Simulation is one of a number of possible pricing models, the Company has determined it to be industry accepted and fairly presented the fair value of the Warrants. As an additional factor to determine the fair value of the Put’s liability, the occurrence probability of a Fundamental Transaction event was factored into the valuation.

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The Company recomputes the fair value of the Warrants at the issuance date and the end of each quarterly reporting period. Such value computation includes subjective input assumptions that are consistently applied each period. If the Company were to alter its assumptions or the numbers input based on such assumptions, the resulting fair value could be materially different.

The Company utilized the following assumptions to estimate the fair value of the August 2016 Warrants:

	March 31, 2017		December 31, 2016
Underlying price per share		$0.55		$0.69
Exercise price per share		$1.88 - $2.00		$1.88 - $2.00
Risk-free interest rate		1.81%-1.86%		1.86%
Expected holding period		4.40		4.70
Expected volatility		85%		85%
Expected dividend yield		-		-

The Company utilized the following assumptions to estimate the fair value of the January 2017 Warrants:

	March 31, 2017		February 1, 2017
Underlying price per share		$0.55		$0.64
Exercise price per share		$0.69-$0.75		$0.69-$0.75
Risk-free interest rate		1.90%		1.86%-1.93%
Expected holding period		4.80-4.90		5.00
Expected volatility		85%		80%-85%
Expected dividend yield		-		-

The significant assumptions using the Monte Carlo Simulation approach for valuation of the Warrants are:

(i)	Risk-Free Interest Rate. The risk-free interest rates for the Warrants are based on U.S. Treasury constant maturities for periods commensurate with the remaining expected holding periods of the warrants.
(ii)	Expected Holding Period. The expected holding period represents the period of time that the Warrants are expected to be outstanding until they are exercised. The Company utilizes the remaining contractual term of the Warrants at each valuation date as the expected holding period.
(iii)	Expected Volatility. Expected stock volatility is based on daily observations of the Company’s historical stock values for a period commensurate with the remaining expected holding period on the last day of the period for which the computation is made.
(iv)	Expected Dividend Yield. Expected dividend yield is based on the Company’s anticipated dividend payments over the remaining expected holding period. As the Company has never issued dividends, the expected dividend yield is $-0- and this assumption will be continued in future calculations unless the Company changes its dividend policy.
(v)	Expected Probability of a Fundamental Transaction. The possibility of the occurrence of a Fundamental Transaction triggering a Put right is extremely remote. As discussed above, a Put right would only arise if a Fundamental Transaction 1) is an all cash transaction; (2) results in the Company going private; or (3) is a transaction involving a person or entity not traded on a national securities exchange. The Company believes such an occurrence is highly unlikely because:

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a.	The Company only has one product that is FDA approved but which will not be available for commercial sales for at least approximately 18 months;
b.	The Company may have to perform additional clinical trials for FDA approval of its flagship product;
c.	Industry and market conditions continue to include a global market recession, adding risk to any transaction;
d.	Available capital for a potential buyer in a cash transaction continues to be limited;
e.	The nature of a life sciences company is heavily dependent on future funding and high fixed costs, including Research & Development;
f.	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
g.	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		0.5	%
Medium		1.0	%
High		5.0	%

The Monte Carlo Simulation has incorporated a 5.0% probability of a Fundamental Transaction to date for the life of the securities.

(vi)	Expected Timing of Announcement of a Fundamental Transaction. As the Company has no specific expectation of a Fundamental Transaction, for reasons elucidated above, the Company utilized a discrete uniform probability distribution over the Expected Holding Period to model in the potential announcement of a Fundamental Transaction occurring during the Expected Holding Period.
(vii)	Expected 100 Day Volatility at Announcement of a Fundamental Transaction. An estimate of future volatility is necessary as there is no mechanism for directly measuring future stock price movements. Daily observations of the Company’s historical stock values for the 100 days immediately prior to the Warrants’ grant dates, with a floor of 100%, were utilized as a proxy for the future volatility.
(viii)	Expected Risk-Free Interest Rate at Announcement of a Fundamental Transaction. The Company utilized a risk-free interest rate corresponding to the forward U.S. Treasury rate for the period equal to the time between the date forecast for the public announcement of a Fundamental Transaction and the Warrant expiration date for each simulation.
(ix)	Expected Time Between Announcement and Consummation of a Fundamental Transaction. The expected time between the announcement and the consummation of a Fundamental Transaction is based on the Company’s experience with the due diligence process performed by acquirers, and is estimated to be six months. The Monte Carlo Simulation approach incorporates this additional period to reflect the delay Warrant Holders would experience in receiving the proceeds of the Put.

While the assumptions remain consistent from period to period (e.g., utilizing historical stock prices), the numbers input change from period to period (e.g., the actual historical prices input for the relevant period). The carrying amount and estimated fair value of the above Warrants was approximately $1,279,000 at March 31, 2017 and 940,000 at December 31, 2016.

The Company applies FASB ASC 820 (formerly Statement No. 157 Fair Value Measurements) that defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The guidance does not impose any new requirements around which assets and liabilities are to be measured at fair value, and instead applies to asset and liability balances required or permitted to be measured at fair value under existing accounting pronouncements. The Company measures its warrant liability for those warrants with a cash settlement feature at fair value.

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FASB ASC 820-10-35-37 (formerly SFAS No. 157) establishes a valuation hierarchy based on the transparency of inputs used in the valuation of an asset or liability. Classification is based on the lowest level of inputs that is significant to the fair value measurement. The valuation hierarchy contains three levels:

● 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.

● 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.

● 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 March, 2017, 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 these warrants.

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 March 31, 2017
	Total		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	2,973	$	2,973	$	-	$	-
Liabilities:
Redeemable warrants	$	1,279		-		-	$	1,279

	(in thousands) As of December 31, 2016
	Total		Level 1		Level 2		Level 3
Assets:
Marketable Securities	$	3,460	$	3,460	$	-	$	-
Liabilities:
Redeemable warrants		940		-		-		940

The changes in Level 3 Liabilities measured at fair value on a recurring basis are summarized as follows (in thousands):

Balance at December 31, 2016	$	940
Issuance of warrants		732
Fair value adjustments		(393	)
Balance at March 31, 2017	$	1,279

Note 13: Subsequent Events

The Board of Directors approved up to $500,000 for all directors, officers and employees to buy company shares from the company at the market price. Subsequent to March 31, 2017, the Company issued 328,020 shares of its common stock at prices between $0.50 and $0.69 per share directly to executives and employees, for $185,000 in a series of private transactions pursuant to stock purchase agreements.

In May 2017, the Company entered into a mortgage and note payable agreement with a bridge funding company to obtain a two-year funding line of up to $4,000,000 secured by the property and assets located at 783 Jersey Ave., New Brunswick, New Jersey. Subject to the lender's approval, the Company will be able to request up to $1,800,000 of the line in monthly advances during the loan term of 24 months. The Company will be able to request future advances in excess of $2,000,000 at the lender's discretion and be payable in full upon maturity. The Company will pay interest on this note at a fixed rate of 12% per annum for the first 18 months and change to a rate equal to 800 basis points above the prime rate of interest during the remainder of the term; however, the interest rate will not be less than 12% for the entire term. The note will be interest only and payable monthly through the maturity. The Company is permitted to prepay the line without penalty commencing after six months.

The Company evaluated subsequent events through the date on which these financial statements were issued and determined that no subsequent event, other than the above, constituted a matter that required adjustment to the financial statements for the three months ended March 31, 2017.

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ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Special Note Regarding Forward-Looking Statements

Certain statements in this Report, including statements under “Item 1. Legal Proceedings” and “Item 1A. Risk Factors” in Part II, contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks, uncertainties and other important factors. We discuss many of these risks, uncertainties and other important factors in greater detail under “Item 1A. Risk Factors” in Part II in this Report. Because the risk factors referred to above and in our Annual Report on Form 10-K for our most recent fiscal year filed with the Securities and Exchange Commission could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, you should not place undue reliance on any such forward-looking statements.

Further, these forward-looking statements represent our estimates and assumptions only as of the date such forward-looking statements are made. You should carefully read this Report completely and with the understanding that our actual future results may be materially different from what we expect. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our business, results of operations and financial condition. Any forward-looking statement speaks only as of the date on which it is made and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which will arise. We cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Any statements in this Report about our expectations, beliefs, plans, objectives, assumptions or future events or performance that are not historical facts are forward-looking statements. You can identify these forward-looking statements by the use of words or phrases such as “believe”, “may”, “could”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “seek”, “plan”, “expect”, “should”, or “would,” and similar expressions intended to identify forward-looking statements.

Among the factors that could cause actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties inherent in our business including, without limitation: our ability to adequately fund our projects, the potential therapeutic effect of our products, the possibility of obtaining regulatory approval, our ability to find senior co-development partners with the capital and expertise needed to commercialize our products and to enter into arrangements with them on commercially reasonable terms, our ability to manufacture and sell any products, our ability to enter into arrangements with third party vendors, market acceptance of our products, our ability to earn a profit from sales or licenses of any drugs, our ability to discover new drugs in the future, changing market conditions, changes in laws and regulations affecting our industry, and issues related to our New Brunswick, New Jersey facility. We have disclosed that in February 2013, we received a Complete Response from the U.S. Food and Drug Administration (the “FDA”) declining to approve our Ampligen® New Drug Application (“NDA”) for Chronic Fatigue Syndrome Treatment, sometimes referred to as myalgic encephalomyelitis/chronic fatigue syndrome (“ME/CFS”), stating that we should conduct at least one additional clinical trial, complete various nonclinical studies and perform a number of data analyses. Accordingly, the remaining steps to potentially gain FDA approval of the Ampligen® NDA, the final results of these and other ongoing activities could vary materially from our expectations and could adversely affect the chances for approval of the Ampligen® NDA. These activities and the ultimate outcomes are subject to a variety of risks and uncertainties, including but not limited to risks that (i) the FDA may ask for additional data, information or studies to be completed or provided; and (ii) the FDA may require additional work related to the commercial manufacturing process to be completed or may, in the course of the inspection of manufacturing facilities, identify issues to be resolved. With regard to our NDA for Ampligen® to treat ME/CFS, we noted above that there are additional steps which the FDA has advised Hemispherx to take in our seeking approval. The final results of these and other ongoing activities, and of the FDA review, could vary materially from Hemispherx’ expectations and could adversely affect the chances for approval of the Ampligen® NDA. Any failure to satisfy the FDA’s requirements could significantly delay, or preclude outright, approval of our drugs for commercial sale in the United States.

On August 18, 2016, we received approval of our NDA from Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica (“ANMAT”) for commercial sale of rintatolimod (U.S. tradename: Ampligen®) in the Argentine Republic for the treatment of severe ME/CFS. The product will be marketed by GP Pharm, our commercial partner in Latin America. We believe that this approval provides a platform for potential commercial sales in certain countries within the European Union under regulations that support cross-border pharmaceutical sales of licensed drugs. We and GP Pharm are now working to expand the approval of rintatolimod to additional countries with a focus on Latin America. In Europe, approval in a country with a stringent regulatory process in place, such as Argentina, should add further validation for the product as the Early Access Program as discussed below and underway in Europe. ANMAT approval is only an initial, but important, step in the overall successful commercialization of our product. There are a number of actions that must occur before we could be able to commence commercial sales in Argentina. Commercialization in Argentina will require, among other things, an appropriate reimbursement level, appropriate marketing strategies, completion of manufacturing preparations for launch (including possible requirements for approval of final manufacturing) and we most likely will need additional funds to manufacture product at a sufficient level for a commercial launch. There are no assurances as to whether or when such multiple subsequent steps will be successfully performed to result in an overall successful commercialization and product launch. Approval of rintatolimod for ME/CFS in the Argentine Republic does not in any way suggest that the Ampligen® NDA in the United States will obtain commercial approval.

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On May 24, 2016, we entered into an amended and restated agreement with Impatients, N.V. (“myTomorrows”), a Netherlands based company for the commencement and management of an Early Access Program (“EAP”) in Europe and Turkey (the “Territory”) related to ME/CFS. Pursuant to the agreement, myTomorrows, as our exclusive service provider and distributor in the Territory, is performing EAP activities directed to (a) the education of physicians and patients regarding the possibility of early access to innovative medical treatments not yet the subject of a Marketing Authorization (regulatory approval) through named-patient use, compassionate use, expanded access and hospital exemption, (b) patient and physician outreach related to a patient-physician platform, (c) the securing of Early Access Approvals (exemptions and/or waivers required by regulatory authorities for medical treatments prior to Marketing Authorization) for the use of such treatments, (d) the distribution and sale of such treatments pursuant to such Early Access Approvals, (e) pharmacovigilance (drug safety) activities and/or (f) the collection of data such as patient-reported outcomes, doctor-reported experiences and registry data. No assurance can be given that activities under the EAP will result in Marketing Authorization or the sale of substantial amounts of Ampligen® in the Territory.

Our overall objectives include plans to continue seeking approval for commercialization of Ampligen® in the United States and abroad as well as seeking to broaden commercial therapeutic indications of Alferon N Injection® presently approved in the United States and Argentina. We continue to pursue senior co-development partners with the capital and expertise needed to commercialize our products and to enter into arrangements with them on commercially reasonable terms. Our ability to commercialize our products, widen commercial therapeutic indications of Alferon N Injection® and/or capitalize on our collaborations with research laboratories to examine our products as potential preventatives for, and treatments of, MERS and Ebola Virus Disease (EVD), among others, are subject to a number of significant risks and uncertainties including, but not limited to our ability to enter into more definitive agreements with some of the research laboratories and others that we are collaborating with, to fund and conduct additional testing and studies, whether or not such testing is successful or requires additional testing and meets the requirements of the FDA and comparable foreign regulatory agencies. We do not know when, if ever, our products will be generally available for commercial sale for any indication.

We outsource certain components of our manufacturing, quality control, marketing and distribution while maintaining control over the entire process through our quality assurance and regulatory groups. We cannot provide any guarantee that the facility or our contract manufacturer will necessarily pass an FDA pre-approval inspection for Alferon® manufacture.

The production of new Alferon® API inventory will not commence until the validation phase is complete. While the facility is approved by FDA under the Biological License Application (“BLA”) for Alferon®, this status will need to be reaffirmed by a successful Pre-Approval Inspection by the FDA prior to commercial sale of newly produced inventory product. If and when the Company obtains a reaffirmation of FDA BLA status and has begun production of new Alferon® API, it will need FDA approval as to the quality and stability of the final product to allow commercial sales to resume. We most likely will need additional funds to finance the revalidation process in our facility to initiate commercial manufacturing, thereby readying ourselves for an FDA Pre-Approval Inspection. If we are unable to gain the necessary FDA approvals related to the manufacturing process and/or final product of new Alferon® inventory, our operations most likely will be materially and/or adversely affected. In light of these contingencies, there can be no assurances that the approved Alferon N Injection® product will be returned to production on a timely basis, if at all, or that if and when it is again made commercially available, it will return to prior sales levels.

On March 15, 2016, we received written notice from the NYSE MKT LLC that we were not in compliance with its continued listing standards because our common stock had been selling for a low price per share for a substantial period of time. The NYSE MKT determined that the continued listing of our common stock was predicated on our effecting a reverse stock split of our common stock. Our stockholders approved a reverse stock split, our Board effected a 12-to-1 reverse stock split effective August 26, 2016 and our reverse split shares started trading on August 29, 2016. On September 15, 2016, we received written notice from the NYSE MKT LLC that we were back in compliance with the continued listing standards set forth in Section 1003(f)(v) of the NYSE MKT Company Guide referenced in the Exchange’s letter dated March 15, 2016. The Company will be subject to NYSE Regulation’s normal continued listing monitoring. However, in accordance with Section 1009(h) of the Company Guide, if the Company is again determined to be below any of the continued listing standards within 12 months of the date of this letter, NYSE MKT will examine the relationship between the two incidents of noncompliance and re-evaluate the Company’s financial recovery from the first incident. NYSE Regulation will then take appropriate action, which depending on the circumstances, may include truncating the compliance procedures described in Section 1009 of the Company Guide or immediately initiate delisting procedures.

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We do not undertake and specifically decline any obligation to publicly release the results of any revisions which may be made to any forward-looking statement to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Overview

General

Hemispherx Biopharma, Inc. and its subsidiaries (collectively, “Hemispherx”, “Company”, “we” or “us”) are a specialty pharmaceutical company headquartered in Philadelphia, Pennsylvania and engaged in the clinical development of new drug therapies based on natural immune system enhancing technologies for the treatment of viral and immune based disorders. We were first formed in 1966 and in the early 1970s were doing contract research for the National Institutes of Health. Since that time, we have established a strong foundation of laboratory, pre-clinical and clinical data with respect to the development of natural interferon and nucleic acids to enhance the natural antiviral defense system of the human body and to aid the development of therapeutic products for the treatment of certain chronic diseases. We have two domestic subsidiaries BioPro Corp., and BioAegean Corp., all of which are incorporated in Delaware and are dormant. Our foreign subsidiary is Hemispherx Biopharma Europe N.V./S.A. which was established in Belgium in 1998.

Our flagship products include Alferon N Injection® and the experimental therapeutic Ampligen®. Alferon N Injection® is approved for a category of STD infection, and Ampligen® represents an experimental RNA being developed for globally important viral diseases and disorders of the immune system. Hemispherx’ platform technology includes components for potential treatment of various severely debilitating and life threatening diseases.

The below chart provides a summary of the clinical indications for both Ampligen® and Alferon® currently under development.

We own and operate a 30,000 sq. ft. facility in New Brunswick, NJ with the objective of producing Alferon® and Ampligen® upon FDA approval. As part of our objectives to achieve our commercial goals and increase stockholder value, we are in the process of selling an underutilized building adjacent to our New Jersey manufacturing facility site. We do not believe that the sale of this building will have an impact on the production of our products. In May 2017, we entered into a mortgage and note payable agreement with a bridge funding company to obtain a two-year funding line of up to $4,000,000 secured by our property and assets located at 783 Jersey Ave., New Brunswick, New Jersey. Subject to the lender’s approval, we will be able to request up to $1,800,000 of the line in monthly advances during the loan term of 24 months. We will be able to request future advances in excess of $2,000,000 at the lender’s discretion and be payable in full upon maturity. We will pay interest on this note at a fixed rate of 12% per annum for the first 18 months and change to a rate equal to 800 basis points above the prime rate of interest during the remainder of the term; however, the interest rate will not be less than 12% for the entire term. The note will be interest only and payable monthly through the maturity. We are permitted to prepay the line without penalty commencing after six months. The mortgage requires permission from the lender to amend our charter or by-laws; however, such permission cannot be unreasonably withheld. Please see “Manufacturing” section below.

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On February 1, 2013, we received a Complete Response Letter (“CRL”) from the FDA declining to approve our NDA for Ampligen® for Chronic Fatigue Syndrome (“CFS”). Please see the discussion in “Our Products - Ampligen®” below for more detail.

We have taken significant actions to focus on our business and management and reserve capital so the Company can better achieve its commercial goals, including, but not limited to, a strict anti-nepotism policy, listing for sale underutilized assets, aggressively pursuing international sales of clinical grade materials, and implementing a strong financial austerity plan. We are committed to a focused business plan oriented toward finding senior co-development partners with the capital and expertise needed to commercialize the many potential therapeutic aspects of our experimental drugs and our approved drug Alferon® N.

Our principal executive office is located at One Penn Center, 1617 JFK Boulevard, Philadelphia, Pennsylvania 19103, and our telephone number is 215-988-0080.

OUR PRODUCTS

Our primary pharmaceutical product platform consists of our experimental compound, Ampligen®, our FDA approved natural interferon product, Alferon N Injection®, and our experimental liquid natural interferon for oral administration, Alferon® LDO (Low Dose Oral).

Ampligen®

Ampligen® is approved for sale in Argentina and is an experimental drug currently undergoing clinical development for the treatment of CFS in the United States of America. As noted above and discussed below, the FDA in its CRL declined to approve our NDA for the treatment of CFS with Ampligen®. Over its developmental history, Ampligen® has received various designations, including Orphan Drug Product Designation (FDA), Treatment protocol (e.g., “Expanded Access” or “Compassionate” use authorization) with Cost Recovery Authorization (FDA) and “promising” clinical outcome recognition based on the evaluation of certain summary clinical reports (“AHRQ” or Agency for Healthcare Research and Quality). Ampligen® represents the first drug in the class of large (macromolecular) RNA (nucleic acid) molecules to apply for NDA review. Based on the results of published, peer reviewed pre-clinical studies and clinical trials, we believe that Ampligen® may have broad-spectrum anti-viral and anti-cancer properties.

We believe that nucleic acid compounds represent a potential new class of pharmaceutical products as they are designed to act at the molecular level for treatment of human diseases. There are two forms of nucleic acids, DNA and RNA. DNA is a group of naturally occurring molecules found in chromosomes, the cell’s genetic machinery. RNA is a group of naturally occurring informational molecules which orchestrate a cell’s behavior which, in turn, regulates the action of groups of cells, including the cells which compromise the body’s immune system. RNA directs the production of proteins and regulates certain cell activities including the activation of an otherwise dormant cellular defense against viruses and tumors. Our drug technology utilizes specifically-configured RNA. Our double-stranded RNA drug product, trademarked Ampligen®, is an experimental, unapproved drug, that would be administered intravenously. Ampligen® has been assigned the generic name rintatolimod by the United States Adopted Names Council (USANC) and has the chemical designation poly(I):poly(C₁₂U).

Clinical trials of Ampligen® already conducted by us include studies of the potential treatment of CFS, Hepatitis B, HIV and cancer patients with renal cell carcinoma and malignant melanoma. All of these potential uses will require additional clinical trials to generate the safety and effectiveness data necessary to support regulatory approval.

On February 1, 2013, we received a CRL from the FDA declining to approve our NDA for Ampligen® for CFS. In its CRL, the FDA communicated that Hemispherx should conduct at least one additional clinical trial, complete various nonclinical studies and perform a number of data analyses. The additional clinical study should address, among other things, Ampligen®’s efficacy in treating CFS patients, be of sufficient size and duration to assess the safety of Ampligen® and be sufficient to determine appropriate dosing. The FDA set forth the reasons for this action and provided recommendations to address certain outstanding issues. The FDA stated that the submitted data does not provide substantial evidence of efficacy of Ampligen® for the treatment of CFS and that the data does not provide sufficient information to determine whether the product is safe for use in CFS due to the limited size of the safety database and multiple discrepancies within the submitted data. In addition to the safety and effectiveness issues recommended to be addressed in at least one additional clinical trial, the CRL states that Hemispherx should conduct complete rodent carcinogenicity studies in two species prior to approval and also conduct additional animal toxicology studies providing more comprehensive evaluation of Ampligen® fragments and degradation products. The CRL also requests evaluation of variation between lots of Ampligen® tested in the development process and recommends tighter control of the Ampligen® manufacturing process.

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In response to the CRL, we continue to plan to avail ourselves of the opportunity for an “end-of-review” meeting with representatives of the Office of Drug Evaluation II which issued the CRL, in order to clarify and seek to narrow the outstanding issues regarding the further development of Ampligen® for the treatment of CFS.

FDA regulations provide a formal dispute resolution process to obtain review of any FDA decision, including a decision not to approve an NDA, by raising the matter with the supervisor of the FDA office that made the decision. The formal dispute resolution process exists to encourage open, prompt discussion of scientific (including medical) disputes and procedural (including administrative) disputes that arise during the drug development, new drug review, and post-marketing oversight processes of the FDA. Depending on the outcome of a number of initiatives in the CFS community, including the FDA’s Patient Focused Drug Development Initiatives, forthcoming drug guidance and other scientific initiatives by the Institute of Medicine, Center for Disease Control and National Institute of Health, we will continue to examine the opportunity for an “end-of-review” meeting. Depending on the results of these initiatives, we may request an “end-of-review” conference with the FDA as a precursor to a possible submission of a formal appeal to the Office of New Drugs within the FDA’s Center for Drug Evaluation and Research regarding the FDA’s decision. Please see “Risks Associated with Our Business” in Part I; Item 1A. Risk Factors below.

Until we undertake the end-of-review conference(s), or otherwise reach an agreement with the FDA regarding the design of a confirmatory study, we are unable to reasonably estimate the nature, costs, necessary efforts to obtain FDA clearance or anticipated completion dates of any additional clinical study or studies. Utilizing the industry norms for undertaking a Phase III clinical study, we estimate upon acceptance of the study’s design that it would take approximately 18 months to three years to complete a new well-controlled Ampligen® clinical study for resubmission to the FDA. Industry norms suggest that it will require three to six months to initiate the study, one to two years to accrue and test patients, three to six months to close-out the study and file the necessary documents with the FDA. The actual duration to complete the clinical study may be different based on the length of time it takes to design the study and obtain FDA’s acceptance of the design, the final design of an acceptable Phase III clinical study, availability of suitable participants and clinical sites along with other factors that could impact the implementation of the study, analysis of results or requirements of the FDA and/or other governmental organizations. We anticipate that the time and cost to undertake clinical trial(s), studies and data analysis are beyond our current financial resources without gaining access to additional funding. Please see “Part I; Item 1A, Risk Factors: “We may require additional financing which may not be available.”

In May 1997, the FDA authorized an open-label treatment protocol, (“AMP-511”), allowing patient access to Ampligen® for treatment in an open-label safety study under which severely debilitated CFS patients have the opportunity to be on Ampligen® to treat this very serious and chronic condition. The data collected from the AMP-511 protocol through a consortium group of clinical sites provide safety information regarding the use of Ampligen® in patients with CFS. . We are establishing an enlarged data base of clinical safety information which we believe will provide further documentation regarding the absence of autoimmune disease associated with Ampligen® treatment. We believe that continued efforts to understand existing data, and to advance the development of new data and information, will ultimately support our future filings for Ampligen® and/or the design of future clinical studies. In 2015, we engaged an independent certified public accountant to recalculate the cost per dose consistent with the current guidelines, utilizing the costs to produce a vial. In October 2016, the FDA granted our request to implement the new cost which was initiated during the quarter ended March 31, 2017. As of May 1, 2017, there are 18 patients participating in this open-label treatment protocol.

On July 12, 2012, we filed a new drug application for Ampligen® with the ANMAT (Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica), the agency responsible for the national regulation of drugs, foods and medical technology in Argentina, under the ANMAT’s Orphan Drug regulations. We believe that the approval of Ampligen® as an Orphan Drug may allow reimbursement by the Health Services Authority (SSS), the central health authority in Argentina for patients seeking treatment for CFS. On August 18, 2016, we received approval of our NDA from ANMAT for commercial sale of rintatolimod (U.S. tradename: Ampligen®) in the Argentine Republic for the treatment of ME/CFS. The product will be marketed by GP Pharm, our commercial partner in Latin America. There are a number of actions that must occur before we could be able to commence commercial sales in Argentina. Commercialization in Argentina will require, among other things, an appropriate reimbursement level, appropriate marketing strategies, completion of manufacturing preparations for launch (including possible requirements for approval of final manufacturing) and we most likely will need additional funds to manufacture product at a sufficient level for a commercial launch.

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On January 11, 2017, we announced that the EAP through our agreement with myTomorrows designed to enable access of Ampligen® to ME/CFS patients has been extended to pancreatic cancer patients beginning in the Netherlands. myTomorrows is our exclusive service provider in Europe and Turkey and will manage all EAP activities relating to the pancreatic cancer extension of the program. A competent authority in the Netherlands has recently approved 50 patients for treatment in the EAP for pancreatic cancer including a funding mechanism to remunerate us for the use of Ampligen® in the program.

On May 12, 2017 we entered into a material transfer agreement with Sanofi Vaccine Technologies, France.

Alferon N Injection®

Alferon N Injection® is the registered trademark for our injectable formulation of natural alpha interferon, which was approved by the FDA in 1989 for the treatment of certain categories of genital warts. Alferon® is the only natural-source, multi-species alpha interferon currently approved for sale in the U.S. for the intralesional (within lesions) treatment of refractory (resistant to other treatment) or recurring external genital warts in patients 18 years of age or older. Certain types of human papilloma viruses (“HPV”) cause genital warts, a sexually transmitted disease (“STD”). The U.S. Centers for Disease Control and Prevention (“CDC”) estimates that “approximately twenty million Americans are currently infected with HPV with another six million becoming newly infected each year. HPV is so common that at least 50% of sexually active men and women get it at some point in their lives.” Although they do not usually result in death, genital warts commonly recur, causing significant morbidity and entail substantial health care costs.

Interferons are a group of proteins produced and secreted by cells to combat diseases. Researchers have identified four major classes of human interferon: alpha, beta, gamma and omega. Alferon® N Injection® contains a multi-species form of alpha interferon. The world-wide market for injectable alpha interferon-based products has experienced rapid growth and various alpha interferon injectable products are approved for many major medical uses worldwide. Alpha interferons are manufactured commercially in three ways: by genetic engineering, by cell culture, and from human white blood cells. All three of these types of alpha interferon are or were approved for commercial sale in the U.S. Our natural alpha interferon is produced from human white blood cells.

The potential advantages of natural alpha interferon over recombinant (synthetic) interferon produced and marketed by other pharmaceutical firms may be based upon their respective molecular compositions. Natural alpha interferon is composed of a family of proteins containing many molecular species of interferon. In contrast, commercial recombinant alpha interferon products each contain only a single species. Researchers have reported that the various species of interferons may have differing antiviral activity depending upon the type of virus. Natural alpha interferon presents a broad complement of species, which we believe may account for its higher activity in laboratory studies. Natural alpha interferon is also glycosylated (partially covered with sugar molecules). Such glycosylation is not present on the currently U.S. marketed recombinant alpha interferons. We believe that the absence of glycosylation may be, in part, responsible for the production of interferon-neutralizing antibodies seen in patients treated with recombinant alpha interferon. Although cell culture-derived interferon is also composed of multiple glycosylated alpha interferon species, the types and relative quantity of these species are different from our natural alpha interferon.

Alferon N Injection® [Interferon alfa-n3 (human leukocyte derived)] is a highly purified, natural-source, glycosylated, multi-species alpha interferon product. There are essentially no neutralizing antibodies observed against Alferon N Injection® to date and the product has a relatively low side-effect profile. The recombinant DNA derived alpha interferon formulations have been reported to have decreased effectiveness after one year, probably due to neutralizing antibody formation.

See “Manufacturing” and “Marketing/Distribution” sections below for more details on the manufacture and marketing/distribution of Alferon N Injection®.

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Alferon® LDO (Low Dose Oral)

Alferon® LDO [Low Dose Oral Interferon Alfa-n3 (Human Leukocyte Derived)] is an experimental low-dose, oral liquid formulation of natural alpha interferon and like Alferon® N Injection®, should not cause antibody formation, which is a problem with recombinant interferon. It is an experimental immunotherapeutic believed to work by stimulating an immune cascade response in the cells of the mouth and throat, enabling it to bolster systemic immune response through the body by absorption through the oral mucosa. Oral interferon could be economically feasible for patients and logistically manageable globally for development programs for prevention and, or treatment of pandemic influenza, seasonal influenza and other emerging viruses. Oral administration of Alferon® LDO, with its anticipated affordability, low toxicity, no production of antibodies, and broad range of potential bioactivity, could be a breakthrough treatment or preventative for viral diseases.

Hemispherx currently has an FDA authorized protocol to conduct a Phase II, double-blind, adaptive-design, randomized, placebo-controlled, dose-ranging study of Alferon® LDO for the prophylaxis and treatment of seasonal influenza of more than 200 subjects. Our Phase II study has continued to be delayed as additional work regarding this study would require additional funding if and when it became available.

Other Diseases

In December 2013, we announced that we were supporting the University of Pittsburgh’s Chemokine Modulation Research initiative which includes Ampligen® as an adjuvant. As part of this collaboration, Hemispherx has supplied clinical grade Ampligen® (rintatolimod) to the University. The study, under the leadership of Professor of Surgery Pawel Kalinski, M.D., Ph.D., involved the Chemokine Modulatory regimen developed by Dr. Kalinski’s group and successfully completed the Phase 1 dose escalation in patients with resectable colorectal cancer. In the 1^st quarter of this year, Dr. Kalinski relocated to Roswell Park Cancer Institute (RPCI) in Buffalo, NY. Dr. Kalinski is currently working to establish a cancer program at RPCI which will continue to require a supply of Ampligen. The cancer protocols utilizing Ampligen at the University of Pittsburgh have been closed except for the ovarian study for which Dr. Edwards is the investigator. This study of recurrent ovarian cancer patients which includes Ampligen® as a component of the treatment regimen has enrolled 8 patients to date.

In July 2015, we submitted an application for orphan drug designation to the European Medicines Agency (EMA) for Alferon® N to treat MERS and on January 6, 2016, the EMA forwarded to us both its Public Summary of Opinion and its record designation approving the Orphan Medicinal Products Designation for Alferon® N Injection, also known as interferon alfa-n3, as a potential treatment of MERS. In addition, we concluded our series of collaborations designed to determine the potential effectiveness of Alferon® N and Ampligen® as potential preventative and/or therapeutic treatments for Ebola related disorders. Although we believe that the threat of both MERS and Ebola globally may reemerge in the future, it appears that the spread of these disorders has somewhat diminished. As a result, we have elected to focus our research and development efforts on other areas at this time.

On January 11, 2017, we announced that the EAP through our agreement with myTomorrows designed to enable access of Ampligen® to ME/CFS patients has been extended to pancreatic cancer patients beginning in the Netherlands. myTomorrows is our exclusive service provider in Europe and Turkey and will manage all EAP activities relating to the pancreatic cancer extension of the program. A competent authority in the Netherlands has recently approved 50 patients for treatment in the EAP for pancreatic cancer including a funding mechanism to remunerate us for the use of Ampligen® in the program.

Laboratory experiments do not necessarily indicate clinical benefit. Some of the research both past and present has been, and may in the future be, sponsored in part by contracts or grants from us to various independent research entities.

Manufacturing

We had a Supply Agreement with Jubilant Hollister-Stier LLC of Spokane, Washington (“Jubilant”), pursuant to which Jubilant would formulate and package Ampligen® from the key raw materials that Hemispherx would supply to them. This Supply Agreement expired March 11, 2014. In October 2014, we entered into a purchase commitment with Jubilant for approximately $700,000 for the manufacture of batches of Ampligen®. On January 3, 2017, we entered into a purchase order to replace the previous purchase commitment with Jubilant pursuant to which Jubilant will manufacture batchs of Ampligen® for us. Pursuant to the new order, Jubilant will perform tooling and validation activities as well as final fill and finish services.

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On July 27, 2016, we reached an agreement with Avrio Biopharmaceuticals, now Nitto Denko Avecia Inc. (“Avecia”) to serve as an additional contract manufacturer of Hemispherx’s experimental drug, Ampligen®. . Please see “Risks Associated with Our Business” in Part I, Item 1A. Risk Factors within our 2016 Form 10-K filed with the Securities and Exchange Commission on March 31, 2017.

Commercial sales of Alferon® and Alferon® API internationally are projected to begin as soon as the necessary regulatory approvals are obtained. However, commercial sales of Alferon® in the USA will not resume until new batches of commercial filled and finished product are produced and released by the FDA. While the facility is approved by the FDA under the BLA for Alferon®, this status will need to be reaffirmed by an FDA pre-approval inspection. We will also need the FDA’s approval to release commercial product once we have submitted satisfactory stability and quality release data. Currently, the manufacturing process is on hold and there is no definitive timetable to have the facility back online. Due to the Company extending the timeline of Alferon® production to an excess of one year, we reclassified Alferon® work-process-inventory to other assets within our balance sheet as of March 31, 2017. In addition, due to the high cost estimates to bring the facility back online, we most likely will need additional funds to finance the revalidation process in our facility to initiate commercial manufacturing, thereby readying ourselves for an FDA Pre-Approval Inspection. If we are unable to gain the necessary FDA approvals related to the manufacturing process and/or final product of new Alferon® inventory, our operations most likely will be materially and/or adversely affected. In light of these contingencies, there can be no assurances that the approved Alferon N Injection® product will be returned to production on a timely basis, if at all, or that if and when it is again made commercially available, it will return to prior sales levels.

In May 2017, we entered into a mortgage and note payable agreement with a bridge funding company to obtain a two-year funding line of up to $4,000,000 secured by our assets and property located at 783 Jersey Ave., New Brunswick, New Jersey. Subject to the lender’s approval, we will be able to request up to $1,800,000 of the line in monthly advances during the loan term of 24 months. We will be able to request future advances in excess of $2,000,000 at the lender’s discretion and be payable in full upon maturity. We will pay interest on this note at a fixed rate of 12% per annum for the first 18 months and change to a rate equal to 800 basis points above the prime rate of interest during the remainder of the term; however, the interest rate will not be less than 12% for the entire term. The note will be interest only and payable monthly through the maturity. We are permitted to prepay the line without penalty commencing after six months.

To formulate, fill, finish and package (“fill and finish”) Alferon N Injection® drug product, we require a FDA approved third party Contract Manufacturing Organization (“CMO”). In January 2012, we agreed to a Technology, Transfer, Validation and Commercial Supply Agreement with Ajinomoto Althea, Inc., formerly Althea Technologies, Inc. (“Althea”) of San Diego, CA, regarding the fill and finish process for Alferon® N Injection®. In November 2014, we entered into a purchase commitment with Althea for approximately $622,000 for the production of validation batches of Alferon® N Injection for emergency use and/or commercial sale. We have paid approximately $210,000 to Althea with regard to this open purchase commitment as of March 31, 2017 and has recorded this amount within Work-In-Process inventory.

Marketing/Distribution

Our marketing strategy for Ampligen® reflects the differing health care systems around the world along with the different marketing and distribution systems that are used to supply pharmaceutical products to those systems. We expect that, subject to receipt of FDA, ANMAT and/or other regulatory approval, Ampligen® may be utilized in four medical arenas: physicians’ offices, clinics, hospitals, and the home treatment setting. In preparation for the FDA’s consideration of our Ampligen® NDA, we undertook early stage development of pre-launch and launch driven marketing plans focusing on audience development, medical support and payer reimbursement initiatives which could facilitate product acceptance and utilization at the time of regulatory approval, if obtained. Similarly, we continued to consider distribution scenarios for the Specialty Pharmacy/Infusion channel which could provide market access, offer 3PL (third party logistics) capabilities and provide the requisite risk management control mechanisms. It is our intent to utilize third party service providers to execute elements of both the marketing/sales and distribution plans. As a possible option, we considered a plan to utilize a small group of Managed Market account managers to introduce the product to payor, employer and government account audiences. We believe that this approach could establish a market presence and facilitate the generation of revenue without incurring the substantial costs associated with a traditional sales force. Furthermore, Management believes that any approach considered should enable us to retain multiple options for future marketing strategies.

In January 2010, we engaged an Argentinean regulatory and business design entity to explore the possibility of initiating clinical trials of Alferon N Injection®, Ampligen® and Alferon® LDO during the influenza season in Argentina. On June 14, 2010, we executed a five year exclusive Sales, Marketing, Distribution and Supply Agreement for Argentina with GP Pharm Latinoamerica (“GP Pharm”), an affiliate company of Spanish GP Pharm SA. Under this Agreement, GP Pharm is responsible for gaining regulatory approval in Argentina for Ampligen® to treat CFS in Argentina and for commercializing Ampligen® for this indication in Argentina. We granted GP Pharm the right to expand rights to sell this experimental therapeutic into other Latin America countries based upon GP Pharm achieving certain performance milestones. We also granted GP Pharm an option to market Alferon N Injection® in Argentina and other Latin America countries. Under these agreements, we will manufacture and supply Ampligen® and Alferon N Injection® to GP Pharm. On November 15, 2010, we amended our June 14, 2010 agreement with GP Pharm to include Mexico in the Territory under the Sales, Marketing, Distribution and Supply Agreement. Under this Agreement, GP Pharm Mexico will be responsible for seeking regulatory approval in Mexico for Ampligen®, an experimental therapeutic, to treat CFS in Mexico and, if approval is obtained, for commercializing Ampligen® for this indication in Mexico. On May 24, 2016, we entered into a five year exclusive Renewed Sales, Marketing, Distribution and Supply Agreement (the “Agreement”) with GP Pharma whereby all material provisions within the Agreement remained consistent with the original agreement.

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In January 2012, the ANMAT approved the sale and distribution of Alferon N Injection® (under the brand name “Naturaferon”) in Argentina. The receipt of the ANMAT approval for HPV is the first step of a regulatory process towards the commercial sales of Naturaferon®. On September 20, 2012, we filed with ANMAT an amended NDA for the use of Alferon N Injection® in patients with chronic hepatitis C who have become refractory to recombinant interferon as a result of the appearance of neutralizing antibodies against recombinant interferon. On February 6, 2013, we received the ANMAT approval for the treatment of refractory patients, that failed or were intolerant to treatment with recombinant interferon, with Naturaferon® in Argentina.

On September 6, 2011, we executed an amended agreement with Asembia, formerly Armada Healthcare, LLC, to undertake the marketing, education and sales of Alferon N Injection® throughout the United States. This agreement also provides start-up along with ongoing sales and marketing support to the Company. On July 31, 2015, it was mutually agreed upon to extend this agreement through August 14, 2017 subject to the same terms and conditions. We previously extended this agreement for the previous three years also under the same terms and conditions. Due to our manufacturing process for Alferon® being on hold and there being no definitive timetable to have the facility back online, we will review our expiring agreement on August 14, 2017 with Asembia.

On September 6, 2011, we executed a new agreement with specialty distributor, BioRidge Pharma, LLC (“BioRidge”) to warehouse, ship, and distribute Alferon N Injection® on an exclusive basis in support of U.S. sales. On July 31, 2015, it was mutually agreed upon to extend this agreement through August 14, 2017 subject to the same terms and conditions. We previously extended this agreement for the previous three years also under the same terms and conditions. Due to our manufacturing process for Alferon® being on hold and there being no definitive timetable to have the facility back online, we will review our expiring agreement on August 14, 2017 with Asembia.

On May 24, 2016, we entered into an amended and restated five year agreement (the “Impatients Agreement”) with Impatients, N.V. (“myTomorrows”), a Netherlands based company, for the commencement and management of an Early Access Program (“EAP”) in Europe and Turkey (the “Territory”) related to CFS. Pursuant to the agreement, myTomorrows, as our exclusive service provider and distributor in the Territory, is performing EAP activities. These activities will be directed to (a) the education of physicians and patients regarding the possibility of early access to innovative medical treatments not yet the subject of a Marketing Authorization (regulatory approval) through named-patient use, compassionate use, expanded access and hospital exemption, (b) patient and physician outreach related to a patient-physician platform, (c) the securing of Early Access Approvals (exemptions and/or waivers required by regulatory authorities for medical treatments prior to Marketing Authorization) for the use of such treatments, (d) the distribution and sale of such treatments pursuant to such Early Access Approvals, (e) pharmacovigilance (drug safety) activities and/or (f) the collection of data such as patient-reported outcomes, doctor-reported experiences and registry data. We are supporting these efforts and supplying Ampligen® to myTomorrows at a predetermined transfer price. In the event that we receive Marketing Authorization in any country in the Territory, we will pay myTomorrows a royalty on products sold. Pursuant to the Impatients Agreement, the royalty would be a percentage of Net Sales (as defined in the Impatients Agreement) of Ampligen® sold in the Territory where Marketing Authorization was obtained, and the maximum royalty would be a percentage of Net Sales. The formula to determine the percentage of Net Sales will be based on the number of patients that are entered into the EAP. The Company believes that disclosure of the exact maximum royalty rate and royalty termination date could cause competitive harm. However, to assist the public in gauging these terms, the actual maximum royalty rate is somewhere between 2% and 10% and the royalty termination date is somewhere between 8 and 15 years from the First Commercial Sale of a product within a specific country. The parties established a Joint Steering Committee comprised of representatives of both parties to oversee the EAP. No assurance can be given that activities under the EAP will result in Marketing Authorization or the sale of substantial amounts of Ampligen® in the Territory. In 2017, the Company commenced sales of recently manufactured Ampligen® in international programs.

On January 11, 2017, we announced that the EAP through our agreement with myTomorrows designed to enable access of Ampligen® to ME/CFS patients has been extended to pancreatic cancer patients beginning in the Netherlands. MyTomorrows, doing business as MyTomorrows, is our exclusive service provider in Europe and Turkey and will manage all EAP activities relating to the pancreatic cancer extension of the program. A competent authority in the Netherlands has recently approved 50 patients for treatment in the EAP for pancreatic cancer including a funding mechanism to remunerate us for the use of Ampligen® in the program.

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401(k) Plan

Each participant immediately vests in his or her deferred salary contributions, while Company contributions will vest over one year. The 6% Company matching contribution was terminated effective January 1, 2016. For the three months ended March 31 2017, the Company did not make any contributions towards the 401(k) Plan.

New Accounting Pronouncements

See “Note 10: Recent Accounting Pronouncements”.

Disclosure About Off-Balance Sheet Arrangements

None.

Critical Accounting Policies

There have been no material changes in our critical accounting policies and estimates from those disclosed in Part II; Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations; Critical Accounting Policies” contained in our Annual Report on Form 10-K for the year ended December 31, 2016.

RESULTS OF OPERATIONS

Three months ended March 31, 2017 versus three months ended March 31, 2016

Net Loss

Our net loss was approximately $2,821,000 and $2,164,000 for the three months ended March 31, 2017 and 2016, respectively, representing an increase in loss of approximately $657,000 or 30% when compared to the same period in 2016. This increase in loss for these three months was primarily due to the following:

1)	a decrease in the gain from sale of income tax net operating losses of $1,561,000;
2)	an increase in research and development expense of $389,000 or 39%; offset by,
3)	a decrease in general and administrative expense of $784,000 or 32%; and
4)	a decrease in the loss on sale of short term marketable securities of approximately $108,000.

Net loss per share was $(0.11) and $(0.10) for the three months ended March 31, 2017 and 2016, respectively. The weighted average number of shares of our common stock outstanding as of March 31, 2017 was 25,341,068 as compared to 20,630,328 as of March 31, 2016.

Revenues

Revenues from our Ampligen® Cost Recovery Program were $84,000 and $39,000 for the three months ended March 31, 2017 and 2016, respectively. The primary reason for the increase in revenues of $45,000 between periods was primarily due to our EAP through our agreement with MyTomorrows designed to enable access of Ampligen® to pancreatic cancer patients in the Netherlands. For the three months ended March 31, 2017 and 2016, we had no Alferon N Injection® Finished Good product to commercially sell and all revenue was generated from the EAP and our FDA approved open-label treatment protocol, (“AMP 511”), that allows patient access to Ampligen® for treatment in an open-label safety study.

Production Costs

Production costs were approximately $270,000 and $268,000, respectively, for the three months ended March 31, 2017 and 2016, representing an increase of $2,000 in production costs in the current period. These costs primarily represent stability testing and pre-production expenses related to Alferon®.

Research and Development Costs

Overall Research and Development (“R&D”) costs for the three months ended March 31, 2017 were approximately $1,391,000 as compared to $1,002,000 for the same period a year ago, reflecting an increase of approximately $389,000 or 39%. The primary reason for the increase in research and development costs was due to an increase in Ampligen® stability and compliance testing of approximately $133,000 for use in the EAP to treat pancreatic cancer patients in the Netherlands as well as an increase in AMP 511 costs of approximately $455,000 associated with Ampligen® clinical study work. This was offset by a decrease in executive salaries and wages of approximately $155,000.

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General and Administrative Expenses

General and Administrative (“G&A”) expenses for the three months ended March 31, 2017 and 2016, were approximately $1,664,000 and $2,448,000, respectively, reflecting a decrease of approximately $784,000 or 32%. The decrease in G&A expenses during the current period was mainly due to a one-time charge in 2016 resulting from a severance payment to an executive upon termination.

Interest and Other Income

Interest and other income for the three months ended March 31, 2017 and 2016 were approximately $26,000 and $61,000, respectively, representing a decrease of approximately $35,000 or 57%. The primary cause for the decrease in investment income during the current quarter was primarily due to lower balances available to invest in the current period as compared to the prior period.

Redeemable Warrants

The quarterly fiscal revaluation of certain redeemable warrants resulted in a non-cash adjustment to the redeemable warrants liability for the three months ended March 31, 2017 amounting to a gain of approximately $393,000 (see Part I; Item 1; Financial Statements; “Note 12: Fair Value” for the various factors considered in the valuation of redeemable warrants).

Gain (Loss) on Sale of Marketable Securities

Gain (loss) on sale of market securities disclosed a gain of $1,000 for the three months ended March 31, 2017 as compared to a loss on the sale of marketable securities of approximately $107,000 for the three months ended March 31, 2016.

Sale of New Jersey Tax Net Operating Loss

In January 2016, the Company effectively sold $16,000,000 of its approximately $29,000,000 of New Jersey state net operating loss carryforwards (for the year 2014) for approximately $1,320,000 and sold research credits for $241,000.

Liquidity and Capital Resources

As of March 31, 2017, we had approximately $3,749,000 in cash, cash equivalents and marketable securities inclusive of approximately $2,973,000 in Marketable Securities, representing a decrease of approximately $2,119,000 from December 31, 2016. Cash used in operating activities for the three months ended March 31, 2017 was approximately $2,993,000 compared to approximately $1,043,000 for the same period in 2016, an increase of $1,950,000 or 187%. The primary reason for this increase in cash used in operations in 2017 was due to the receipt of $1,561,000 in funds in 2016 due to the sale of our New Jersey state net operating loss carryforwards. There was no such receipt of funds in 2017. In addition, prepaid expenses and other current assets increased by approximately $327,000 as compared to the prior period as a result of a deposit paid to our contract manufacturer of approximately $320,000 in 2017.

Cash provided by investing activities for the three months ended March 31, 2017 was approximately $486,000 compared to cash used in investing activities of approximately $60,000 for the same period in 2016, representing an increase of $546,000. The primary reason for the increase can be attributable to the sale of marketable securities of approximately $500,000 during the current period.

Cash provided by financing activities for the three months ended March 31, 2017 was approximately $875,000 compared to approximately $1,000 for the same period in 2016, an increase of $874,000. The primary reason for the increase can be attributable to the Company receiving net proceeds of $875,000 from the sale by us of 1,818,185 shares of our common stock at a purchase price of $0.55 per share pursuant to a Securities Purchase Agreements (each, a “Purchase Agreement”) with certain investors entered into in February 2017 (see below and “Note 8: Stockholders’ Equity”).

If we are unable to commercialize and sell Ampligen® or Alferon® LDO and/or recommence material sales of Alferon N Injection®, our operations, financial position and liquidity may be adversely impacted, and additional financing may be required. In this regard, due to the high cost estimates to bring the facility back online, we most likely will need additional funds to finance the revalidation process in our facility to initiate commercial manufacturing, thereby readying ourselves for an FDA Pre-Approval Inspection. However, there is no assurance that such financing will be available.

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We have reexamined our fundamental priorities in terms of direction, corporate culture and our ability to fund operations and have made significant changes at the Company this past year. The CEO of the Company was terminated and the Board of Directors made several changes to the Company’s executive management team to provide effective and competent leadership that, management believes, will properly position the Company to achieve its commercial goals and increase stockholder value. Recent actions include aggressively pursuing international sales of clinical grade materials and implementing a strong financial austerity plan. We are committed to a focused business plan oriented toward finding senior co-development partners with the capital and expertise needed to commercialize the many potential therapeutic aspects of its experimental drug and its approved drug Alferon®. A co-development partner may help in the acceleration of the commercialization of many of our potential experimental drugs as they have access to additional resources and capital; however, there can be no assurance that such co-development partnerships will be on acceptable terms, or that such partnerships, will be acceptable from a profitability standpoint. Management’s primary objectives are to create stockholder value and deliver much needed therapies to patients.

On February 1, 2017, we entered into Securities Purchase Agreements (each, a “Purchase Agreement”) with certain investors for the sale by us of 1,818,185 shares of our common stock at a purchase price of $0.55 per share. Concurrently with the sale of the common stock, pursuant to the Purchase Agreement, we also sold warrants to purchase 1,363,639 shares of common stock for aggregate net proceeds of approximately $875,000. We also issued placement agent warrants for the purchase of an aggregate of 90,909 shares of our common stock.

In May 2017, we entered into a mortgage and note payable agreement with a bridge funding company to obtain a two-year funding line of up to $4,000,000 secured by our assets and property located at 783 Jersey Ave.,New Brunswick, New Jersey. Subject to the lender’s approval, we will be able to request up to $1,800,000 of the line in monthly advances during the loan term of 24 months. We will be able to request future advances in excess of $2,000,000 at the lender’s discretion and be payable in full upon maturity. We will pay interest on this note at a fixed rate of 12% per annum for the first 18 months and change to a rate equal to 800 basis points above the prime rate of interest during the remainder of the term; however, the interest rate will not be less than 12% for the entire term. The note will be interest only and payable monthly through the maturity. We are permitted to prepay the line without penalty commencing after six months.

There can be no assurances that, if needed, we will be able to raise adequate funds from these or other sources or enter into licensing, partnering or other arrangements to advance our business goals. Our inability to raise such funds or enter into such arrangements, if needed, could have a material adverse effect on our ability to develop our products. Also, we have the ability to curtail discretionary spending, including some research and development activities, if required to conserve cash. Because of our long-term capital requirements, we may seek to access the public equity market whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. We are unable to estimate the amount, timing or nature of future sales of outstanding common stock or instruments convertible into or exercisable for our common stock. Any additional funding may result in significant dilution and could involve the issuance of securities with rights, which are senior to those of existing stockholders. We may also need additional funding earlier than anticipated, and our cash requirements, in general, may vary materially from those now planned, for reasons including, but not limited to, changes in our research and development programs, clinical trials, acquisitions of intellectual property or assets, enhancements to the manufacturing process, competitive and technological advances, the regulatory processes including the commercializing of Ampligen® products or new utilization of Alferon® products. See Part II, Item 1A. Risk Factors; “We may require additional financing which may not be available.”

The proceeds from our financing have been used to fund infrastructure growth including manufacturing, regulatory compliance and market development along with our efforts regarding the Ampligen® NDA and preparedness for the FDA pre-approval inspections of the New Brunswick manufacturing facility. There can be no assurances that, if needed, we will raise adequate funds from these or other sources, which may have a material adverse effect on our ability to develop our products. Also, we have the ability to curtail discretionary spending, including some research and development activities, if required to conserve cash.

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ITEM 3: Quantitative and Qualitative Disclosures About Market Risk

We had approximately $3,749,000 in cash, cash equivalents and marketable securities at March 31, 2017 as compared to $5,868,000 at December 31, 2016.

To the extent that our cash and cash equivalents exceed our near term funding needs, we intend to invest the excess cash in money market accounts, high-grade corporate bonds or fixed-income type bond funds. We employ established conservative policies and procedures to manage any risks with respect to investment exposure.

ITEM 4: Controls and Procedures

Our Chairman of the Board (serving as the principal executive officer) and the Chief Financial Officer performed an evaluation of the effectiveness of our disclosure controls and procedures, which have been designed to permit us to effectively identify and timely disclose important information. In designing and evaluating the disclosure controls and procedures, Management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the controls and procedures were effective as of March 31, 2017, to ensure that material information was accumulated and communicated to our Management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

During the three months ended March 31, 2017, we have made no change in our internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Part II – OTHER INFORMATION

ITEM 1: Legal Proceedings

None

ITEM 1A: Risk Factors

The following cautionary statements identify important factors that could cause our actual results to differ materially from those projected in the forward-looking statements made in this Form 10-Q. Among the key factors that have a direct bearing on our results of operations are:

Risks Associated with Our Business:

We may continue to incur substantial losses and our future profitability is uncertain.

We last reported net profit from 1985 through 1987. Since 1987, with a major emphasis on new drug diagnostic and development, we have incurred substantial operating losses, as we pursued our clinical trial effort to get our experimental drug, Ampligen®, approved. As of March 31, 2017, our accumulated deficit was approximately $303,322,000. We have not yet generated significant revenues from our products and may incur substantial and increased losses in the future. We cannot assure that we will ever achieve significant revenues from product sales or become profitable. We require, and will continue to require, the commitment of substantial resources to develop our products. We cannot assure that our product development efforts will be successfully completed or that required regulatory approvals will be obtained or that any products will be manufactured and marketed successfully, or be profitable.

We most likely will require additional financing which may not be available.

The development of our products requires the commitment of substantial resources to conduct the time consuming research, preclinical development, and clinical trials that are necessary to bring pharmaceutical products to market. As of March 31, 2017, we had approximately $3,749,000 in cash, cash equivalents and marketable securities (inclusive of approximately $2,973,000 in Marketable Securities). However, if we are unable to commercialize and sell Ampligen® or Alferon® LDO and/or recommence material sales of Alferon N Injection®, our operations, financial position and liquidity may be adversely impacted.

In its CRL, the FDA communicated that Hemispherx should conduct at least one additional clinical trial, complete various nonclinical studies and perform a number of data analyses. Until we undertake the end-of-review conference(s) with the FDA or otherwise reach an agreement with the FDA regarding the design of a confirmatory study, we are unable to reasonably estimate the nature, costs, necessary efforts to obtain FDA clearance or anticipated completion dates of any additional clinical study or studies. Utilizing the industry norms for undertaking a Phase III clinical study, we estimate upon acceptance of the study’s design that it would take approximately 18 months to three years to complete a new well-controlled Ampligen® clinical study for resubmission to the FDA. It can be reasonably anticipated that the time and cost to undertake clinical trial(s), studies and data analysis are beyond our current financial resources without gaining access to additional funding. The actual duration to complete the clinical study may be different based on the length of time it takes to design the study and obtain FDA’s acceptance of the design, the final design of an acceptable Phase III clinical study design, availability of suitable participants and clinical sites along with other factors that could impact the implementation of the study, analysis of results or requirements of the FDA and/or other governmental organizations.

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Given the challenging economic conditions, we continue to review every aspect of our operations for cost and spending reductions to assure our long-term financial stability while maintaining the resources necessary to achieve our primary objectives of obtaining NDA approval of Ampligen® along with the manufacturing, marketing and distribution of our products, including Alferon N Injection®. Due to the repair issues mentioned above within our NJ facility and the high cost estimates to bring the facility back online, we most likely will need additional funds to finance the revalidation process in our facility to initiate commercial manufacturing, thereby readying ourselves for an FDA Pre-Approval Inspection. We may also need additional capital to eventually commercialize and sell Ampligen® or Alferon® LDO and/or recommence and increase sales of Alferon N Injection® or our other products. We anticipate considering multiple options in an attempt to secure funding, including but not limited to such methods as the sales of additional equity, licensing agreements, partnering with other organizations, debt financing or other sources of capital.

We did raise approximately $875,000 in February 2017 from the sale of our securities. However, if we are unable to obtain additional funding, through an Equity Distribution Agreement (“EDA”) or other sales of securities and/or otherwise, our ability to develop our products, commercially produce inventory or continue our operations may be materially adversely affected.

Risks Associated with an Investment in Our Common Stock:

The market price of our stock may be adversely affected by market volatility.

The market price of our common stock has been and is likely to be volatile. This is especially true given the current significant instability in the financial markets. In addition to general economic, political and market conditions, the price and trading volume of our stock could fluctuate widely in response to many factors, including:

• announcements of the results of clinical trials by us or our competitors;

• announcements of availability or projections of our products for commercial sale;

• announcements of legal actions against us and/or settlements or verdicts adverse to us;

• adverse reactions to products;

• governmental approvals, delays in expected governmental approvals or withdrawals of any prior governmental approvals or public or regulatory agency comments regarding the safety or effectiveness of our products, or the adequacy of the procedures, facilities or controls employed in the manufacture of our products;

• changes in U.S. or foreign regulatory policy during the period of product development;

• developments in patent or other proprietary rights, including any third party challenges of our intellectual property rights;

• announcements of technological innovations by us or our competitors;

• announcements of new products or new contracts by us or our competitors;

• actual or anticipated variations in our operating results due to the level of development expenses and other factors;

• changes in financial estimates by securities analysts and whether our earnings meet or exceed the estimates;

• conditions and trends in the pharmaceutical and other industries;

• new accounting standards;

• overall investment market fluctuation;

• restatement of prior financial results;

• notice of NYSE MKT non-compliance with requirements; and

• occurrence of any of the risks described in these “Risk Factors”.

Our common stock is listed for quotation on the NYSE MKT. For the three months ended March 31, 2017, the trading price of our common stock has ranged from $0.93 to $0.39 per share. We expect the price of our common stock to remain volatile. The average daily trading volume of our common stock varies significantly.

Our stock price may be adversely affected if a significant amount of shares is sold in the public market.

We may issue shares to be used to meet our capital requirements or use shares to compensate employees, consultants and/or Directors. In this regard, we have registered securities for public sale pursuant to a universal shelf registration statement and we had been selling shares under this shelf registration statement and the EDA with Maxim. Effective December 15, 2015, we halted all future offers and sales of our Common Stock under the EDA with Maxim and reduced the amount of potential future offers and sales under the EDA to $0.00. Between July 23, 2012, the date of the EDA, and December 15, 2015, we sold an aggregate of 8,881,788 shares of Common Stock pursuant to the EDA for aggregate gross proceeds of $47,453,220. On December 15, 2015, we filed a prospectus supplement related to the issuance and sale of up to $7,941,000 of our common stock from time to time through our sales agent, Chardan Capital Markets, LLC. Effective August 26, 2016, we halted all future offers and sales of its common stock under the Chardan Agreement and reduced the amount of potential future offers and sales under the Chardan Agreement to $0.00. Between December 15, 2015, the date of the Chardan Agreement, and August 26, 2016, we sold an aggregate of 114,394 shares of common stock pursuant to the Chardan Agreement for aggregate net proceeds of approximately $74,000. On September 6, 2016, we entered into Securities Purchase Agreements with certain investors for the sale by us of 3,333,334 shares of our common stock at a purchase price of $1.50 per share. Concurrently with the sale of the common stock, pursuant to the Purchase Agreement, we also sold warrants to purchase 2,500,000 shares of common stock for aggregate net proceeds of $4,520,000. We also issued placement agent warrants for the purchase of an aggregate of 166,667 shares of our common stock. On February 1, 2017, we entered into Securities Purchase Agreements with certain investors for the sale by us of 1,818,185 shares of our common stock at a purchase price of $0.55 per share. Concurrently with the sale of the common stock, pursuant to the Purchase Agreement, we also sold warrants to purchase 1,363,639 shares of common stock for aggregate net proceeds of approximately $875,000. We also issued placement agent warrants for the purchase of an aggregate of 90,909 shares of our common stock. Please see Part I, Item II - Management’s Discussion and Analysis of Financial Condition and Result of Operations; Liquidity and Capital Resources” above for more information.

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We are unable to estimate the amount, timing or nature of future sales of outstanding common stock or instruments convertible into or exercisable for our common stock. Sales of substantial amounts of our common stock in the public market, including additional sale of securities pursuant to the EDA with Chardan or otherwise under the universal shelf registration statement or upon exercise of outstanding options and warrants, could cause the market price for our common stock to decrease. Furthermore, a decline in the price of our common stock would likely impede our ability to raise capital through the issuance of additional shares of common stock or other equity securities.

Please also see Part I, Item IA – “Risk Factors” for more information concerning risks associated with our business and risks associated with an investment in our common stock contained within our 2016 Form 10-K filed with the SEC on March 31, 2017.

Special Note Regarding Forward Looking Statements

Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, you should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Our research in clinical efforts may continue for the next several years and we may continue to incur losses due to clinical costs incurred in the development of Ampligen® for commercial application. Possible losses may fluctuate from quarter to quarter as a result of differences in the timing of significant expenses incurred and receipt of licensing fees and/or cost recovery treatment revenue. Please see “Cautionary Statement Regarding Forward-Looking Statements” set forth before Part I of this report.

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds

On February 1, 2017, we entered into Securities Purchase Agreements (each, a “February Purchase Agreement”) with certain investors for the sale by us of 1,818,185 shares of our common stock at a purchase price of $0.55 per share. Concurrently with the sale of the common stock, pursuant to the February Purchase Agreement, we also sold unregistered warrants to purchase 1,363,639 shares of common stock for aggregate gross proceeds of approximately $1,000,000. The warrants have an exercise price of $0.75 per share, are exercisable six months after issuance, and will expire five years from the initial exercise date. Pursuant to an engagement agreement, we paid our placement agent an aggregate fee equal to 7% of the gross proceeds received by us from the sale of the securities in the offering and granted to our placement agent or its designees warrants to purchase up to 5% of the aggregate number of shares sold in the transactions amounting to 90,910 unregistered warrants. The placement agent warrants have substantially the same terms as the investor warrants, except that the placement agent warrants will expire on February 1, 2022 and have an exercise price equal to $0.6875 per share of common stock.

On April 10, 2017, we issued 200,000 shares of our common stock at $0.50 per share directly to Thomas Equels, our CEO, for $100,000 in a private transaction pursuant to a stock purchase agreement.

ITEM 3: Defaults upon Senior Securities

None.

ITEM 4: Mine Safety Disclosures

Not Applicable.

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ITEM 5: Other Information

None.

ITEM 6: Exhibits

(a) Exhibits

10.1	Mortgage and Security Agreement with SW Partners LLC dated May 12, 2017.
10.2	Promissory Note with SW Partners LLC dated May 12, 2017.
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 from the Company’s Chief Executive Officer.
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 from the Company’s Chief Financial Officer.
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 from the Company’s Chief Executive Officer.
32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 from the Company’s Chief Financial Officer.
101	The following materials from Hemispherx’ Quarterly Report on Form 10-Q for the period ended March 31,
	2017 formatted in eXtensible Business Reporting Language (“XBRL”): (i) Condensed Balance Sheets; (ii)
	Condensed Consolidated Statements of Comprehensive Loss; (iii) Changes in Stockholders’ Equity;
	(iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HEMISPHERX BIOPHARMA, INC.
	/s/ Thomas K. Equels
	Thomas K. Equels, Esq.
	Chief Executive Officer & President
	/s/ Adam Pascale
	Adam Pascale
	Chief Financial Officer
Date: May 15, 2017

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EX-10.1

Exhibit 10.1

Record and Return to:

Eugene R. Boffa, Esq.

Schumann Hanlon LLC

Harborside Plaza 10, Suite 1201

3 Second Street

Jersey City, NJ 07311

MORTGAGE AND SECURITY AGREEMENT

THIS MORTGAGE AND SECURITY AGREEMENT (“Mortgage”) is made this 12 day of May, 2017, by Hemispherx Biopharma, Inc., (“Mortgagor”), whose address is One Penn Center, 1617 JFK Boulevard St. 500, Philadelphia, PA 19103, in favor of SW PARTNERS LLC, a Florida limited liability company (“Mortgagee”), whose address is at 2700 North Military Trail, Suite 225, Boca Raton, FL 33431.

W I T N E S S E T H:

In consideration of the indebtedness hereinafter referred to, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor does hereby mortgage, grant, bargain, sell, assign and convey unto Mortgagee, with the power of sale and right of entry and possession, all of Mortgagor’s estate, right, title and interest in, to and under, and grants to Mortgagee a security interest in, all of the following described property (“Mortgaged Property”) now owned or held or hereafter acquired by Mortgagor:

(i)       All of the land described in Exhibit “A” annexed hereto and incorporated herein by this reference (“Land”), including all of the rights, privileges and appurtenances thereunto belonging, and all of the estate, right, title and interest of Mortgagor therein or thereto, either in law or in equity, now or hereafter acquired, and in and to all streets, roads and public places, opened or proposed, in front of or adjoining the said Land, and all easements and rights-of-way, public or private, now or hereafter used in connection with the Land (collectively, the “Realty”);

(ii)       All buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Land. All fixtures, machinery, appliances, equipment, furniture, inventory and personal property of every nature whatsoever now or hereafter owned by Mortgagor and located in or on, or attached to, or used or intended to be used in connection with or with the operation of, the Realty, buildings, structures or other improvements, or in connection with any construction being conducted or which may be conducted thereon, and owned by Mortgagor, including all extensions, additions, improvements, betterments, renewals, substitutions, and replacements to any of the foregoing and all of the right, title and interest of Mortgagor in and to any such personal property or fixtures together with the benefit of any deposits or payments now or hereafter made on such personal property or fixtures by Mortgagor or on its behalf (“Improvements”);

(iii)       If applicable, all leases and other agreements, including, without limitation, insurance contracts pertaining to the ownership, occupancy, use, possession or enjoyment of all or any part of the Mortgaged Property, now or hereafter entered into, and any modification, renewal or extension thereof, and all guaranties of the lessees’, tenants’ or occupants’ obligations thereunder, including, without limitation, deposits of cash or securities (collectively, the “Leases”), and all of the rents, royalties, issues, profits, revenue, income, unearned insurance premiums and other benefits hereafter accruing under any Lease or otherwise arising from the ownership, occupancy, use, possession or enjoyment of all or any part of the Mortgaged Property (collectively, the “Rents and Profits”);

(iv)       All proceeds and products of every kind and description of the conversion, voluntary or involuntary, of any of the foregoing into cash, noncash or liquidated claims, including, without limitation, proceeds of insurance and condemnation awards;

(v)       All of Mortgagor’s rights further to encumber said Mortgaged Property for debt.

TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its successors and assigns, forever, for the purpose of securing unto Mortgagee:

(a)       The payment of the maximum principal sum of FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00) and interest thereon, as provided in that certain Promissory Note made by Mortgagor to Mortgagee of even date herewith, and any modification, renewal or extension thereof (“Note”); and the payment of the principal sum, with interest thereon, of any future advances made to Mortgagor by Mortgagee pursuant to the provisions of Paragraph 28 hereof;

(b)       The performance and observance of, and compliance with, each and every obligation, covenant, warranty, agreement, term, provision and condition contained in the Note and this Mortgage and in all other Loan Documents (as hereinafter defined); and

(c)       The payment of all other sums incurred or advanced by Mortgagee or otherwise becoming due and payable under the provisions of the Note, this Mortgage or any Loan Document, and interest thereon; and

(d)       the payment or performance, as the case may be, of all obligations of Mortgagor pursuant to any interest rate hedge or exchange agreement (including, but not necessarily limited to, any ISDA Master Agreement and any other swap agreements as defined in 11 U.S.C. §101) heretofore or hereafter executed by Mortgagor and Mortgagee, together with any related schedules and confirmations; and

(e)       the repayment of all reimbursement obligations due or that may become due under or in connection with any present or future letters of credit issued by Mortgagee for the account of Mortgagor.

THIS IS A FIRST MORTGAGE GIVEN TO SECURE ANY PRESENT AND FUTURE OBLIGATIONS OF MORTGAGOR.

Mortgagor further covenants and agrees with Mortgagee as follows:

2.       Wherever used in this Mortgage, unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, the word “Mortgagor” shall mean Mortgagor and/or any subsequent owner or owners of the Mortgaged Property; the word “Mortgagee” shall mean Mortgagee or any subsequent holder or holders of this Mortgage; the word “Note” shall mean the note described in paragraph (a) above of even date herewith secured by this Mortgage, and any additional notes hereafter to be issued and secured by this Mortgage pursuant to the future advance provisions hereof and any renewal or modification of any of the foregoing”; the word “Obligor” shall include Mortgagor, any guarantor of indebtedness secured hereby and any other person directly or indirectly liable to Mortgagee for any indebtedness secured hereby; the word “person” shall mean an individual, corporation, partnership, limited liability company, unincorporated association, joint stock corporation and/or joint venture; the word “Loan Documents” shall mean the Note, this Mortgage, and all other documents executed and/or delivered by Mortgagor, any Obligor or any other person to Mortgagee having reference to or arising in connection with the Note or this Mortgage; and pronouns of any gender shall include the other gender, and either the singular or plural shall include the other. If Mortgagor consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several. “Will” and “shall” are used interchangeably in this Mortgage; both denote an obligation.

3.       Mortgagor covenants and warrants that Mortgagor is seized of an indefeasible estate in fee simple in the Mortgaged Property, has good and absolute title to all existing personal property hereby mortgaged or made subject to the security interest hereby created and has good right, full power and lawful authority to convey, mortgage and encumber the same as provided herein: that the Mortgaged Property is and shall be kept free and clear of all liens, security interests, charges and encumbrances whatsoever, except for the lien for property taxes not yet due and payable and those encumbrances, if any, described in a schedule of exceptions to coverage in any title policy insuring Mortgagee’s interest in the Mortgaged Property. Mortgagor fully warrants the title to the Mortgaged Property and every part thereof, and will forever defend the same against the claims of all persons whomsoever.

4.       Mortgagor shall perform, observe and comply with all provisions hereof, of the Note and of all Loan Documents, and will promptly pay to Mortgagee the principal with interest thereon and all other sums required to be paid by Mortgagor under the Note and pursuant to the provisions of this Mortgage and of all Loan Documents when payment shall become due, all without deduction or credit for taxes or other similar charges paid or payable by Mortgagor.

5.       Mortgagor shall pay promptly, when and as due, and shall promptly deliver to Mortgagee within fifteen (15) days of when due, receipts for the payment of, all taxes including but not limited to assessments, rates, dues, charges, fees, levies, fines, impositions, liens for unpaid withholding taxes, liabilities, obligations and encumbrances of every kind whatsoever now or hereafter imposed, levied or assessed upon or against the Mortgaged Property or any part thereof, or upon or against this Mortgage or the indebtedness or other sums secured hereby, or upon or against the interest of Mortgagee in the Mortgaged Property, as well as all income taxes, assessments and other governmental charges levied and imposed by the United States of America or any state, county, municipality, or other taxing authority upon or against Mortgagor or in respect of the Mortgaged Property or any part thereof, and any charge which, if unpaid, would become a lien or charge upon the Mortgaged Property prior to or equal to the lien of this Mortgage before they become delinquent and before any interest attaches or any penalty is incurred. Mortgagor shall pay all property taxes on or before November 30 of each year for the property taxes that come due during that year (so that Mortgagor shall be entitled to the maximum discount available).

6.       For purposes of this Mortgage, the following terms have the following meanings:

“Full Replacement Cost” means (1) with respect to the Improvements, the cost of replacing the Improvements without regard to deduction for depreciation, and (2) with respect to Personal Property the cost of replacing such Personal Property.

“Rental Income” means the sum of (1) the total of the then ascertainable Rents payable under the Leases, and (2) the total ascertainable amount of all other amounts to be received by Borrower from third parties which are the legal obligations of Tenants.

Borrower represents and warrants that Borrower has not received notice from any insurance company or bonding company of any defects or inadequacies in any or all of the Property which could (1) adversely affect the insurability of any or all of the Property, (2) cause the imposition of increased premiums or charges or (3) cause the termination of any insurance policy or bond.

Borrower will maintain at all times the following types of insurance upon or related to the Property (collectively, “Insurance Policies”):

(1) Casualty Insurance. “All risk” coverage insurance against loss or da mage to the Property from all risk perils, including acts of terrorism (foreign or domestic), fire, lightning, wind, hail , flood, earthquake, subsidence, vandalism, riot or civil commotion, malicious mischief burglary and theft. The amount of such insurance shall not be less than one hundred percent (100%) of the Full Replacement Cost of the Improvements, Fixtures, and Personal Property owned by Borrower from time to time. The determination of the amount of the Full Replacement Cost shall be adjusted annually to comply with the requirements of the insurer providing such coverage or, at Lender’s election, by reference to such indexes, appraisals or information as Lender determines in its discretion. Absent such annual adjustment, each policy shall contain inflation guard coverage insuring that the policy limit will be increased over time to reflect the effect of inflation. Each policy or policies shall contain a replacement cost endorsement and either an agreed amount endorsement (to avoid the operation of any co-insurance provisions) or a waiver of any co-insurance provisions. Co-insurance is not permitted and, in all events, the amount of such insurance shall be sufficient to prevent Lender from becoming a co-insurer within the terms of the applicable policies and under applicable Law. The maximum deductible under such insurance will not exceed the Casualty Insurance Deductible.

(2) Comprehensive General Liability Insurance. Commercial general liability insurance for personal injury, bodily injury, death and property damage liability in amounts not less than $1,000,000 per occurrence, $2,000,000 aggregate (exclusive of umbrella coverage). Lender may require Borrower to increase the amount of such liability insurance maintained by Borrower should Lender deem an increase to be reasonably prudent under then existing circumstances. Such policy must include coverage for premises and operations, products and completed operations, independent contractors, blanket contractual liability, hired, owned and non-owned automobile liability, and innkeeper’s legal liability. No deductible is permitted under such liability insurance.

(3) Flood Insurance. If the Land or any part thereof is identified by the Secretary of Housing and Urban Development and/or the Federal Emergency Management Agency as being situated in an area now or subsequently designated as having special flood hazards (including those areas designated as Zone A or Zone V), flood insurance in an amount equal to the lesser of (1) one hundred percent (100%) of the Full Replacement Cost of the Improvements, or (2) the maximum amount of available flood insurance. The maximum deductible under such insurance will not exceed $20,000.00.

(4) Builder’s All-Risk Completed Value Insurance. During the period of any construction on the Property or renovation or alteration of the improvements, Builder’s All-Risk insurance in an amount approved by Lender and with an agreed amount endorsement waiving co-insurance provisions.

All insurance required by this Mortgage shall be underwritten by companies approved by Lender and each policy shall (1) in the case of a liability policy, name Lender as additional insured, and (2) name Lender as mortgagee and loss payee.

Borrower shall deliver to Lender an original of each insurance policy required to be maintained, or a certificate of such insurance reasonably acceptable to Lender, together with a copy of the declaration page for each such policy. Not later than fifteen (15) days prior to the expiration of each policy of Required Insurance, Borrower shall deliver a renewed policy or policies, or certificates of insurance, or duplicate original or originals thereof and, if requested by Lender, accompanied by evidence of payment satisfactory to Lender with standard non-contributory mortgage clauses in favor of and acceptable to Lender. Upon request of Lender, Borrower shall use its best efforts to cause its insurance underwriter or broker to certify to Lender in writing that all the requirements of this Mortgage governing insurance have been satisfied.

Without limiting the foregoing, within sixty (60) days after the close of each fiscal year of Borrower, Borrower shall furnish to Lender a statement in form and substance satisfactory to Lender setting forth the amounts of Required Insurance, the risks covered by such insurance and of the insurance company or companies providing such insurance, which statement shall be accompanied by copies of all certificates of insurance evidencing the required coverages and endorsements.

Each Required Insurance policy shall (1) in the case of a liability policy, name Lender and its successors and assigns as additional insured , (2) in the case of a casualty policy, name Lender and its successors and assigns as mortgagee and loss payee, (3) be for a term of not less than one (I) year, (4) include a standard mortgagee clause providing that the interest of Lender shall be insured regardless of any breach or violation by Borrower or any Tenant of any warranties, declarations or conditions in such policy, (5) if any such Required Insurance policy is subject to cancellation, termination or being endorsed to effect a change in coverage for any reason whatsoever, the insurer under such policy shall promptly notify Lender in writing and such cancellation, termination or change shall not be effective as to Lender until thirty (30) days after receipt by Lender of such notice (unless such cancellation is for non-payment, in which case such insurer shall be obligated to provide Lender with not less than ten (I 0) days written notice), (6) shall include an effective waiver of all subrogation rights against any loss payee, additional insured or named insured, (7) in the case of property damage insurance policies such policies automatically reinstate after a Casualty, (8) provide that no loss payee or additional insured is responsible for any insurance premiums on or assessments pursuant to any such policy, (9) permit Lender to pay the premiums and continue such policy upon failure of Borrower to pay such premium, and (I 0) to the extent available at commercially reasonable rates, a waiver of subrogation endorsement as to Lender. Lender may, but shall not be obligated to, make premium payments to prevent such cancellation. In addition, each Required Insurance policy shall be subject to the approval of Lender as to insurance company, amounts, content, form of policy, method by which premiums are paid and expiration date.

Borrower shall (1) pay when due all insurance premiums for all Required Insurance, (2) comply with and conform to (a) all provisions of each such Required Insurance policy, and (b) all requirements of the insurers applicable to Borrower or to the Property or to the use, manner of use, occupancy, possession, operation, maintenance, alterations or repair of any of the Property, (3) not use or permit the use of the Property in any manner which permits any insurer to cancel or void any Required Insurance policy.

Borrower shall give Lender prompt notice of, and copies of documents delivered or received by Borrower in connection with, each of the following: (l) any claims made against Borrower for any personal injury, bodily injury or property damage incurred on or about the Property, (2) any Casualty, and (3) any cancellation or non-renewal of any Required Insurance policy.

Not less than fifteen (15) days prior to the expiration, termination or cancellation of any insurance policy required to be maintained under this Agreement, Borrower shall renew such policy or obtain a replacement policy or policies (or a binding commitment for such replacement policy or policies), which shall be effective not later than the date of the expiration, termination or cancellation of the previous policy, and shall deliver to Lender a certificate in respect of such policy or policies or a copy of the binding commitment for such policy or policies and confirming that such policy complies with all requirements of this Mortgage.

If at any time Lender is not in receipt of written evidence that all Required Insurance is in full force and effect, Lender has the right but not the obligation, without notice to Borrower, to obtain such insurance coverage as Lender in its sole discretion deems appropriate. Borrower agrees that all premiums incurred by Lender in connection with obtaining and maintaining such insurance shall be paid by Borrower to Lender upon demand and until paid shall bear interest at the Default Rate. At Lender’s option, said premiums may be paid by Lender from the Escrow Fund.

7.       At the option of Mortgagee, Mortgagor shall deposit with Mortgagee monthly at the time that payment is due under the Note, in addition to making any required payments of principal and interest, until the Note is fully paid, an amount equal to one-twelfth (1/12th) of the yearly real property taxes, assessments and other similar charges against the Mortgaged Property or any part thereof as estimated by Mortgagee to be sufficient to enable Mortgagee to pay the same at least thirty (30) days before they become delinquent. Such deposits shall not be, nor be deemed to be, trust funds, but may be commingled with the general funds of Mortgagee, and no interest shall be payable in respect thereof. Upon demand by Mortgagee, Mortgagor shall deliver to Mortgagee such additional monies as are required to make up any deficiencies in the amounts necessary to enable Mortgagee to pay such taxes, assessments and similar charges. In the event of a default under any of the terms, covenants and conditions in the Note, this Mortgage or any other Loan Document to be kept, performed or observed by Mortgagor, Mortgagee may apply to the reduction of the sums secured hereby, in such manner as Mortgagee shall determine, any amount under this Paragraph 6 remaining to Mortgagor’s credit. The amount of existing credit hereunder at the time of any transfer of the title to the Mortgaged Property, shall, without any specific assignment thereof, inure to the benefit of the successor owner of the Mortgaged Property. Upon payment in full of the secured indebtedness, the amount of any unused credit shall be paid over to the owner of record as of the date of such full payment.

8.       Notwithstanding any taking by eminent domain, alteration of the grade of any street or other injury to or decrease in value of the Mortgaged Property by any public or quasi-public authority or corporation, Mortgagor shall continue to make the regular payments of principal and/or interest as required by the Note and any other evidence of indebtedness secured hereby until the loan secured hereby is paid in full. Such award or payment shall first be applied toward Mortgagee’s expenses and attorneys fees in obtaining the award, and then Mortgagee may, at the option of Mortgagee in Mortgagee’s sole discretion, either retain and apply the remaining amounts toward payment of any moneys secured by this Mortgage, or after the payment of Mortgagee’s expenses and attorneys fees in obtaining the award, pay over wholly or in part any remaining award to Mortgagor for the purpose of altering, restoring or rebuilding any part of the Mortgaged Property, which may have been altered, damaged or destroyed as a result of any such taking, alteration of grade, or other injury to the Mortgaged Property, or for any other purpose or object satisfactory to Mortgagee. Nothing herein contained shall waive the right of Mortgagee to demand payment in full of all obligations hereby secured pursuant to Paragraph 19 hereof upon the occurrence of such taking.

9.       Mortgagor shall preserve and maintain the Mortgaged Property in good condition and repair. Mortgagor shall not erect any building, structure or other improvement and shall not remove, demolish, materially alter or change the use of any building, structure or other improvement presently or hereafter on the Land without the prior written consent of Mortgagee, (such consent not to be unreasonably withheld, conditioned or delayed). Mortgagor shall not permit, commit or suffer any waste, impairment or deterioration of the Mortgaged Property or of any part thereof, and will not take any action which will increase the risk of fire or other hazard to the Mortgaged Property or to any part thereof. No material fixtures, personal property or other part of the Mortgaged Property shall be removed, demolished or altered, without the prior written consent of Mortgagee, other than items which may become worn out, undesirable or obsolete provided that they are replaced with similar items of at least equal value which shall, without further action, become subject to the lien of this Mortgage. Mortgagor will promptly repair, restore, replace or rebuild any part of the Mortgaged Property now or hereafter subject to the lien of this Mortgage which may be damaged or destroyed by any casualty whatsoever or which may be affected by any proceeding of the character referred to in Paragraph 7. Mortgagee may enter upon and inspect the Mortgaged Property at any reasonable time during the life of this Mortgage.

10. Mortgagor will promptly comply with all present and future laws, ordinances, rules and regulations of any governmental authority affecting the Mortgaged Property or any part thereof or its use and occupancy, including, without limitation, all applicable zoning requirements.

11.       Subject to the terms and conditions of this Mortgage, Mortgagor shall not sell, convey, mortgage, transfer, lease or further encumber any legal or equitable interest in all or any part of the Mortgaged Property, without the prior written consent of Mortgagee, which can be withheld by Mortgagee in its sole discretion, and any such sale, conveyance, mortgage, transfer, lease or encumbrances made without Mortgagee’s prior written consent shall, in addition to being an Event of Default, be voidable at Mortgagee’s option. For purposes of this Paragraph, sale or transfer of any direct or indirect interest of Mortgagor or a change in the beneficial ownership of Mortgagor, or a change in the management of Mortgagor, shall be considered a conveyance of the Mortgaged Property. If any person should obtain any interest in all or any part of the Mortgaged Property pursuant to the execution or enforcement of any lien, security interest or other right, whether superior, equal or subordinate to this Mortgage or the lien hereof, such event shall be deemed to be a transfer by Mortgagor.

Notwithstanding anything to the contrary contained herein, Mortgagor covenants and agrees at Mortgagor’s sole cost and expense not to: (a) engage in any line of business or other activity other than (1) acquiring, owning, developing, operating, leasing, managing and disposing (subject to the terms hereof) of the Mortgaged Property, (2) executing, delivering and performing the Loan Documents, and (3) any and all lawful activities incidental, necessary and appropriate thereto; (b) acquire or own any assets other than (1) the Mortgaged Property, and (2) such incidental personal property as may be necessary for the operation of the Mortgaged Property or the conduct of its business as contemplated herein; (c) merge into or consolidate with any person, or dissolve, terminate, liquidate in whole or in part, or change its legal structure; (d) transfer or otherwise dispose of all or substantially all of its assets, or engage in any transfer of assets outside the ordinary course of its business; (e) form, acquire, hold or own any subsidiary, or make any investment in any person; (f) commingle its assets with the assets of any other person; (g) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (1) the loan evidenced by the Note, and/or (2) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (A) unsecured, (B) not evidenced by a note, (C) on commercially reasonable terms and conditions, and (D) due not more than sixty (60) days past the date incurred and paid on or prior to such date; (h) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other person or have its assets listed on the financial statement of any other entity; (i) enter into any contract or agreement with any affiliate except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties; (j) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other person; (k) assume or guaranty or otherwise become obligated for the debts of any other person, hold itself out to be responsible for the debts of any other person, or otherwise pledge its assets for the benefit of any other person (other than to Mortgagee to secure the loan evidenced by the Note) or hold out its credit as being available to satisfy the obligations of any other person; (l) make any loans or advances to any person; (m) fail either to hold itself out to the public as a legal entity separate and distinct from any other person (including identifying itself as a division or part of any other person), or to conduct its business solely in its own name (including the failure to use separate stationery, invoices and checks bearing its own name) or fail to correct any known misunderstanding regarding its separate identity; (n) fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations (including the failure to remain solvent or pay its own expenses and liabilities (including salaries of its own employees) only from its own funds); (o) without the unanimous written consent of all of its partners/managers/members/shareholders: (1) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any creditors rights laws, (2) seek or consent to the appointment of a receiver, liquidator or any similar official, (3) take any action that might cause such entity to become insolvent, (4) make an assignment for the benefit of creditors, (5) otherwise seek relief under any laws relating to the relief from debts of the protection of debtors generally, or (6) take any action in furtherance of any of the foregoing; or (p) fail to fairly and reasonably allocate expenses that are shared with an affiliate (including for shared office space and for services performed by an employee of an affiliate) among the persons sharing such expenses.

12. Mortgagor shall notify Mortgagee in writing promptly of the occurrence of any of the following: (a) fire or other casualty (including flooding) causing damage to the Mortgaged Property; (b) receipt of notice from any governmental authority relating to the structure, use or occupancy of the Mortgaged Property; (c) receipt of any notice of alleged default from the holder of any lien or security interest in the Mortgaged Property; or (d) commencement of any litigation affecting the Mortgaged Property.

13.       Mortgagor shall pay or reimburse Mortgagee for all costs, charges and expenses, including reasonable attorney’s fees and disbursements and costs, incurred or paid by Mortgagee in any threatened, pending or completed action, proceeding or dispute in which Mortgagee is or might be made a party or appears as a party plaintiff or party defendant and which affects or might affect the Note, this Mortgage or any other instrument securing the Note, or the Mortgaged Property or any part thereof, or the interests of Mortgagor or Mortgagee therein, including, but not limited to, the foreclosure of this Mortgage, condemnation involving all or part of the Mortgaged Property or any action to protect the security hereof, including all appellate proceedings in connection with or arising out of any of the foregoing. All costs, charges and expenses so incurred or paid by Mortgagee shall become due and payable immediately, whether or not there be notice, demand, attempt to collect or suit pending. The amounts so incurred or paid by Mortgagee, together with interest thereon at the Default Rate from the date incurred until paid by Mortgagor, shall be added to the indebtedness and secured by the lien of this Mortgage.

14.       If Mortgagor defaults in the payment of any tax, assessment, encumbrance or other imposition, in its obligation to furnish insurance hereunder or in the performance or observance of any other covenant, condition or term in this Mortgage or in any Loan Document, Mortgagee may at its option perform or observe the same, and all payments made (whether such payments are regular or accelerated payments) and costs and expense incurred or paid by Mortgagee in connection therewith shall become due and payable immediately, whether or not there be notice or demand. The amounts so incurred or paid by Mortgagee, together with interest thereon at the Default Rate from the date incurred until paid by Mortgagor, shall be added to the indebtedness and secured by the lien of this Mortgage. Nothing contained herein shall be construed as requiring Mortgagee to advance or expend monies for any purposes mentioned in this Paragraph, or for any other purpose. Mortgagee is hereby empowered to enter and to authorize others to enter upon the Mortgaged Property or any part thereof for the purpose of performing or observing any such defaulted covenant, condition or terms, without thereby becoming liable to Mortgagor or any person in possession holding under Mortgagor.

15.       Mortgagor shall keep and maintain at all times complete, true and accurate books of account and records reflecting the results of the operation of the Mortgaged Property. Mortgagor shall furnish to Mortgagee such financial statements and other financial information as reasonably required by Mortgagee.

16.       As additional security for the obligations of Mortgagor under the Note, Mortgagor hereby transfers and assigns to Mortgagee all of Mortgagor’s right, title and interest, but not its liability, in, under, and to all construction, architectural and design contracts existing with respect to the Mortgaged Property, as well as any and all building permits, plats, site plans, surveys, architectural plans and specifications, shop drawings, governmental approvals, licenses, concurrency certificates, permits, agreements with any utility companies (together with any deposits, impact fees, reservation fees, allocation fees, prepaid fees and charges paid thereon), and all other consents, approvals and rights which it may now or hereafter own with respect to or in connection with the Mortgaged Property (collectively, the “Plans”), and agrees that all of the same are covered by the security agreement provisions of this Mortgage. Mortgagor agrees to deliver to Mortgagee from time to time upon Mortgagee’s request such consents to the foregoing assignment from parties contracting with Mortgagor as Mortgagee may require. Neither this assignment nor any action by Mortgagee shall constitute an assumption by Mortgagee of any obligation under any contract or with respect to the Plans, Mortgagor hereby agrees to perform all of its obligations under any contract, and Mortgagor shall continue to be liable for all obligations of Mortgagor with respect thereto. Mortgagee shall have the right at any time (but shall have no obligation) to take in its name or in the name of Mortgagor such action as Mortgagee may determine to be necessary to cure any default under any contract or with respect to the Plans or to protect the rights of Mortgagor or Mortgagee with respect thereto. Mortgagor irrevocably constitutes and appoints Mortgagee as Mortgagor’s attorney in fact, which power of attorney is coupled with an interest and irrevocable, to enforce in Mortgagor’s name or in Mortgagee’s name all rights of Mortgagor under any contract or with respect to the Plans. Mortgagee shall incur no liability if any action so taken by it or on its behalf shall prove to be inadequate or invalid. Mortgagor indemnifies and holds Mortgagee harmless against and from any loss, cost, liability or expense (including, but not limited to, consultants’ fees and expenses and attorneys’ fees and expenses) incurred in connection with Mortgagor’s failure to perform such contracts or any action taken by Mortgagee. Mortgagee may use the Plans for any purpose relating to the Mortgaged Property. Mortgagor represents and warrants to Mortgagee that the copy of any contract furnished or to be furnished to Mortgagee is and shall be a true and complete copy thereof, that the copies of the Plans delivered to Mortgagee are and shall be true and complete copies of the Plans, that there have been no modifications thereof which are not fully set forth in the copies delivered, and that Mortgagor’s interest therein is not subject to any claim, setoff, or encumbrance.

17.       In addition to the lien on and security interest in the Realty and Improvements created hereby, this Mortgage shall, to the extent applicable, constitute a security agreement with respect to all personal property secured hereby; and Mortgagor hereby agrees to execute and deliver on demand and hereby irrevocably authorizes and appoints Mortgagee the attorney-in-fact of Mortgagor, jointly or severally, to execute in the name of Mortgagor, deliver and, if appropriate, to file with the appropriate filing officer or office such security agreements, financing statements, amendments to financing statements and comparable instruments as Mortgagee may require in order to impose, perfect or more effectively evidence the lien or security interest hereby created. In addition to any other rights and remedies provided herein or by law, Mortgagee shall be entitled to pursue any and all remedies of a secured party under the Uniform Commercial Code and other applicable statutes of the place or places where the Mortgaged Property is located, it being hereby agreed that ten (10) days’ notice as to the time and place of any sale shall be reasonable. No inference shall be drawn from the inclusion of any of the Mortgaged property in a Financing Statement filed with the New Jersey Secretary of State or Treasury that such property is considered by Mortgagee to be personalty as opposed to realty, Mortgagor agrees that in the event of uncertainty as to whether any portion of the Mortgaged Property is personalty or Realty, the presumption shall be that such item is Realty.

18.       At any time and from time to time, upon Mortgagee’s request, Mortgagor shall make, execute and deliver or cause to be made, executed and delivered to Mortgagee and, where appropriate, shall cause to be recorded or filed and from time to time thereafter to be re-recorded or refiled at such time and in such offices and places as shall be deemed desirable by Mortgagee, any and all such further mortgages, instruments or further assurance, certificates and other documents as Mortgagee may consider necessary or desirable in order to effectuate, complete, enlarge or perfect, or to continue and preserve the obligations of Mortgagor under the Note and this Mortgage, and the lien of this Mortgage as a first and prior lien upon all of the Mortgaged Property, whether now owned or hereafter acquired by Mortgagor. Upon any failure by Mortgagor to do so, Mortgagee may make, execute, record, file, re-record or refile any and all such mortgages, instruments, certificates and documents for and in the name of Mortgagor, and Mortgagor hereby irrevocably appoints Mortgagee the agent and attorney-in-fact of Mortgagor to do so.

19.       Intentionally Omitted.

20.       Mortgagee shall have the unconditional right, at its option, to require payment in full of all indebtedness secured hereby and to declare all such indebtedness immediately due and payable: (a) after default in the payment when due of any installment of principal and/or of interest under the Note beyond any applicable grace or cure period thereunder; or (b) after default in the payment of any tax, water rate or assessment for ten (10) days after the same becomes due; or (c) after default for ten (10) days after notice and demand either in assigning and delivering the Insurance Policies hereinbefore described or referred to or in reimbursing Mortgagee for premiums paid to obtain such insurance as herein provided; or (d) after default for ten (10) days after request in furnishing a statement of the amount due on the Mortgage and whether any offsets or defenses exist to the payment of all indebtedness secured hereby; or (e) after default for ten (10) days after notice and demand in the payment of any installment of any assessment for local improvements which may now or hereafter affect the Mortgaged Property and may be or become payable in installments; or (f) after default for ten (10) days after notice and demand in the repayment of any sum advanced by Mortgagee to protect the security hereof; or (g) upon the actual or threatened waste, removal or demolition of, or material alteration to or enlargement of, any building or other Improvement on the Mortgaged Property or upon the commencement of unpermitted construction of any new buildings(s) on any part of the Mortgaged Property; or (h) upon default in keeping in force the insurance required by Paragraph 5 above; or (i) upon the entry by any court of last resort of a decision that an undertaking by Mortgagor as herein provided to pay taxes, assessments, levies, liabilities, obligations and encumbrances is legally inoperative or cannot be enforced; or (j) after default for ten (10) days after notice and demand in the removal of any Federal tax lien on any of the Mortgaged Property; or (k) after default for ten (10) days after notice and demand in the observance or performance of any other covenant(s) or agreement(s) of Mortgagor hereunder, unless such default is not curable in which event there shall be no grace period, or after default of Mortgagor or any Obligor under any of the Loan Documents beyond any applicable grace or cure period thereunder; or (l) upon the election by Mortgagee to accelerate the maturity of said principal sum pursuant to the provisions of any other instrument which may be held by Mortgagee as additional security for the Note; or (m) upon the dissolution of Mortgagor; or (n) after failure to comply within ten (10) days with a requirement or order or notice of violation of a law or ordinance issued by any political subdivision or governmental department claiming jurisdiction over any of the Mortgaged Property or any operation conducted on any of the Mortgaged Property, or in the case of noncompliance which cannot be cured or complied with within said period, then upon the failure of Mortgagor to commence to comply with said orders or notices within said period or thereafter diligently pursue such cure to completion; or (o) immediately upon the filing in any court of competent jurisdiction by the United States of America, or any instrumentality thereof, of any lis pendens against any of the Mortgaged Property or any notice of intention to acquire under the power of eminent domain any of the Mortgaged Property, or any part thereof, or upon notice from the State of New Jersey, or any political subdivision of the State of New Jersey, or any redevelopment agency of a notice of taking of the Mortgaged Property or any part thereof; or (p) upon the issuance of any order by the State of New Jersey, or any political subdivision, any administrative board or, thereof or any department thereof, declaring unlawful or suspending the current operation of any part of the Mortgaged Property; or (q) upon the filing by or against Mortgagor or any Obligor of any petition or application for relief, extension, moratorium or reorganization under any bankruptcy, insolvency or debtor’s relief law or law whereunder Mortgagor or any Obligor is making an assignment for the benefit of creditors, or entering into any arrangement with creditors or becomes a party to any receivership proceeding, which is not dismissed within sixty (60) days of filing in the case of matters filed against Mortgagor or any Obligor; or (r) if Mortgagor shall grant any lien or mortgage on the Mortgaged Property or any part thereof junior to this Mortgage; or (s) except as permitted in this Mortgage, upon the transfer, lease, sale, pledge, hypothecation, or further encumbrance of the Mortgaged Property or any portion thereof or of the rents and profits therefrom; or (t) upon the commencement of any suit against any part of the Mortgaged Property upon any other claim or lien (whether superior or inferior to the lien of this Mortgage) which is not dismissed within ten (10) days of filing; or (u) if there be any mortgage superior to this Mortgage, then upon the failure to pay when due any sums secured by or owing under said superior mortgage or the failure to abide by any other terms or provisions of said superior mortgage, or the modification of, or acceptance of any future or additional advance under, any such superior mortgage; or (v) upon determination by Mortgagee that any representation, warranty, or covenant made by Mortgagor or any Obligor or any other person in this Mortgage or in any other instrument or document executed in connection with this Mortgage, or in any certificate, agreement, affidavit or statement contemplated by, or made or delivered pursuant to, or in connection with, any such documents, is untrue or materially misleading; or (w) if Mortgagor, shall fail to pay when due any indebtedness for borrowed money owed by Mortgagor, or any interest or premium thereon, whether such indebtedness shall become due by scheduled maturity, required payment, acceleration, demand or otherwise; or (x) if Mortgagor or any Obligor shall fail to abide by any term, covenant, or agreement under any agreement or instrument evidencing, securing or relating to any indebtedness for borrowed money owing by Mortgagor or such Obligor, if the effect of such failure is to accelerate, or permit the holder or holders to accelerate, the maturity of such indebtedness, whether or not such failure be waived by the holder or holders of such indebtedness; or (y) a material adverse change occurs in Mortgagor or any Obligor’s financial condition. The occurrence of any of the foregoing events is hereinafter referred to as an “Event of Default”. No consent or waiver express or implied by Mortgagee to or of any default by Mortgagor hereunder shall be construed as a consent or waiver to or of any further default of the same or any other term, covenant, condition or provision hereof, or of or under any of the obligations secured hereby; and no consent or waiver shall be deemed or construed to exist by reason of any curative action initiated by Mortgagor or any other course of conduct or in any other manner whatsoever except by a writing duly executed by Mortgagee and then only to the single occasion to which such writing is addressed. In order to accelerate the maturity of the indebtedness secured hereby because of the failure to pay any tax, assessment, premium, charge, liability, obligation or encumbrance upon the Mortgaged Property as herein provided, it shall not be necessary or required that Mortgagee first pay the same.

21.       Upon the occurrence of an Event of Default, Mortgagee may, in its sole and absolute discretion, either with or without entry or taking possession as hereinabove provided or otherwise, proceed by suit or suits at law or in equity or by any other appropriate proceeding or remedy: (a) to enforce payment of the Note or the performance of any term hereof or any other right; (b) to foreclose this Mortgage and to sell, as an entirety or in separate parcels, the Mortgaged Property, under the judgment or decree of a court or courts of competent jurisdiction; and (c) to pursue any other remedy available to it under law or in the other Loan Documents. Mortgagee shall take action either by such proceedings or by the exercise of its powers with respect to entry or taking possession, or both, as Mortgagee may determine. If any of the proceeds of the loan evidenced by the Note have not been disbursed, upon the occurrence of an Event of Default, Mortgagee shall have the absolute right to refuse to disburse any such proceeds.

22.       If an Event of Default shall have occurred, Mortgagee, to the extent permitted by law and without regard to the value or occupancy of the security, shall be entitled as a matter of right if it so elects in its sole and absolute discretion to the appointment of a receiver to enter upon and take possession of the Mortgaged Property and to collect all rents, revenues, issues, income, products and profits thereof and apply the same as the court may direct. The receiver shall have all rights and powers permitted under the laws of the state where the Land is located and such other powers as the court making such appointment shall confer, including the right to sell the Mortgaged Property. The expenses, including receiver’s fees, attorneys’ fees, costs and agent’s compensation incurred pursuant to the powers herein contained shall be secured by this Mortgage. The right to enter and take possession of and to manage and operate the Mortgaged Property, and to collect the rents, issues and profits thereof, whether by a receiver or otherwise, shall be cumulative to any other right or remedy hereunder or afforded by law, and may be exercised concurrently therewith or independently thereof. Mortgagee shall be liable to account only for such rents, issues and profits actually received by Mortgagee whether received pursuant to this Paragraph or any other provision hereof. Notwithstanding the appointment of any receiver or other custodian, Mortgagee shall be entitled as pledgee to the possession and control of any cash deposits or instruments at the time held by, or payable or deliverable under the terms of this Mortgage to Mortgagee.

23.       Mortgagee shall have the power and authority to institute and maintain any suits and proceedings as Mortgagee may deem advisable (a) to prevent any impairment of the Mortgaged Property by any acts which may be unlawful or to prevent any violation of this Mortgage; (b) to preserve or protect its interest in the Mortgaged Property; and (c) to restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order might impair the security hereunder or be prejudicial to Mortgagee’s interest.

24.       No delay or omission of Mortgagee or of any holder of the Note to exercise any right, power or remedy accruing upon any Event of Default shall exhaust or impair any such right, power or remedy or shall be construed to waive any such Event of Default or to constitute acquiescence therein. Every right, power and remedy given to Mortgagee may be exercised from time to time as often as may be deemed expedient by Mortgagee.

25.       If Mortgagee: (a) grants forbearance or an extension of time for the payment of any sums secured hereby; (b) takes other or additional security for the payment thereof; (c) waives or does not exercise any right granted in the Note, this Mortgage or any other Loan Document; (d) releases any part of the Mortgaged Property from the lien of this Mortgage or any other instrument securing the Note; (e) consents to the filing of any map, plat or replat of the Land; or (f) consents to the granting of any easement on the Land, no such act or omission shall release, discharge, modify, change or affect the original liability under the Note, this Mortgage or otherwise of Mortgagor, or any subsequent purchaser of the Mortgaged Property or any part thereof or any mortgagor, co-signer, endorser, or surety. No such act or omission shall preclude Mortgagee from exercising any right, power or privilege herein granted or intended to be granted in case of any Event of Default then existing or of any subsequent Event of Default nor, except as otherwise expressly provided in an instrument or instruments executed by Mortgagee shall the lien of this Mortgage be altered thereby. In the event of the sale or transfer by operation of law or otherwise of all or any part of the Mortgaged Property, Mortgagee, without notice to any person, firm or corporation, is hereby authorized and empowered to deal with any such vendee or transferee with reference to the Mortgaged Property or the indebtedness secured hereby, or with reference to any of the terms or conditions hereof, as fully and to the same extent as it might deal with the original parties hereto and without in any way releasing or discharging any of the liabilities or undertakings hereunder.

26.       If Mortgagee shall have proceeded to enforce any right or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reasons, or shall have been determined adversely to Mortgagee, then, at the option of Mortgagee, Mortgagor and Mortgagee shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of Mortgagee shall continue as if no such proceeding had occurred or had been taken.

27.       No right, power or remedy conferred upon or reserved to Mortgagee by the Note, this Mortgage or any other Loan Document is exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or under the Note or any other Loan Document, or now or hereafter existing at law, in equity or by statute.

28.       This Mortgage is also given to secure advances, whether such advances are obligatory or are to be made at the option of Mortgagee, or otherwise, made to Mortgagor, as are made within twenty (20) years from the date hereof, to the same extent as if such future advances were made on the date of the execution of this Mortgage. The total amount of indebtedness that may be so secured may decrease or increase from time to time, but the total unpaid balance so secured at one time shall not exceed FourMillion Dollars ($4,000,000), plus interest thereon, and any disbursements made for the payment of taxes, levies or insurance on the Mortgaged Property, with interest on such disbursements at the Default Rate. Advances may be made pursuant to this provision to an Obligor without the consent of Mortgagor being obtained prior thereto. Mortgagor hereby agrees that the Mortgaged Property shall secure any and all such advances.

29.       If as part of the inducement to Mortgagee to make the loan evidenced by the Note, Mortgagor has caused certain other persons, firms or corporations to enter into certain guaranty agreements with Mortgagee guaranteeing the obligations of Mortgagor, Mortgagor covenants and agrees that such persons, firms or corporations shall fully perform, comply with and abide by such agreements. It is further understood and agreed by Mortgagor that such representations and agreements by such other persons, firms and corporations shall constitute for the purpose of its obligations hereunder, covenants on behalf of Mortgagor.

30.       In the event of a conflict between the terms hereof and the Note or any other Loan Document, the terms of the document which shall either enlarge the interest of Mortgagee in the Mortgaged Property, grant to Mortgagee greater financial security in the Mortgaged Property and/or assure payment of the Note and all sums secured hereby in full shall control.

31.       Whenever one of the parties hereto is named or referred to herein, the heirs, successors and assigns of such party shall be included and all covenants and agreements contained in this Mortgage, by or on behalf of Mortgagor or Mortgagee, shall bind and inure to the benefit of their respective heirs, successors and assigns, whether so expressed or not.

32.       All notices, demands, requests and other communications made hereunder shall be in writing and shall be properly given and deemed delivered on the date of delivery if sent by personal delivery or nationally recognized overnight courier and on the third business day following mailing if sent by certified or registered mail, postage prepaid, return receipt requested, to the address of such party on the first page of this Mortgage. Either party may change the address to which any such notice, report, demand or other instrument is to be delivered or mailed by furnishing written notice in accordance herewith of such change to the other party, but no such notice of change shall be effective unless and until received by such other party.

33.       In the event that any of the covenants, agreements, terms or provisions contained in the Note, this Mortgage or any other Loan Document shall be invalid, illegal or unenforceable in any respect, the validity of the remaining covenants, agreements, terms or provisions contained herein and in the Note and any other Loan Document shall be in no way affected, prejudiced or disturbed thereby.

34.       Neither this Mortgage nor any term hereof may be changed, waived, discharged or terminated orally, or by any action or inaction, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any agreement hereafter made by Mortgagor and Mortgagee relating to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance.

35.       “Default Rate” shall have the meaning defined in the Note.

36.       In addition to the obligations described above (as evidenced by the Note or otherwise), this Mortgage is given to secure any and all obligations from Mortgagor to Mortgagee arising by virtue of any security agreement, promissory note, guaranty or other agreement between Mortgagor and Mortgagee and for all obligations of Mortgagor to Mortgagee, contingent or absolute, direct or indirect, regardless of however or whenever created.

37.       Mortgagee is hereby subrogated to the lien and to the rights of the owner and holder thereof of each and every mortgage, lien or other encumbrance on the Mortgaged Property, or any portion thereof, which is paid or satisfied, in whole or in part, out of the proceeds of the loan secured hereby, and the respective liens of said mortgage, liens or other encumbrances shall be preserved and shall pass to and be held by Mortgagee as security for the indebtedness secured hereby to the same extent as if they had been duly assigned by separate instrument of assignment and notwithstanding the fact that the same shall be canceled and satisfied of record.

38.       That acceptance by Mortgagee of any payment which is less than full payment of all amounts due and payable at the time of such payment, even if made by one other than the Obligor, shall not constitute a waiver of Mortgagee’s right to exercise its option to declare the whole of the principal sum then remaining unpaid, together with all accrued interest thereon, immediately due and payable without notice or to exercise any other rights of Mortgagee except and as to the extent otherwise provided by law or this Mortgage.

39.       Mortgagor consents to any and all renewals and extensions in the time of payment of the secured indebtedness, and agrees further that, at any time and from time to time without notice to any person, the terms of payment provided for in the Note may be modified or the security described in this Mortgage (or any other collateral which may be held by Mortgagee) may be released (in whole or in part) or increased, changed or exchanged by agreement between Mortgagee and any owner of the Mortgaged Property affected by this Mortgage without in anyway affecting the liability of any party to the Note, or any person liable or to become liable with respect to the secured indebtedness. Mortgagor agrees that no sale of the Mortgaged Property, no forbearance on the part of Mortgagee and no extensions, whether oral or in writing, of the time for the payment of the whole or any part of the obligations hereby secured (or secured by any other collateral which may be held by Mortgagee), or any other indulgence given by Mortgagee, whether with or without consideration, shall operate to relieve or, in any manner, affect the original liability of Mortgagor or the priority of this Mortgage or to limit, prejudice or impair any right of Mortgagee, notice of any such extension, indulgence and forbearance being hereby waived by Mortgagor (and by any endorsers, or other persons liable or who may become liable for payment of all or any portion of the indebtedness secured hereby) and all those claiming by, through and under Mortgagor. It is expressly agreed that any release or releases may be made by Mortgagee without the consent or approval of any other person or persons whomsoever.

40.       If Mortgagor shall, with the duly issued prior written consent of Mortgagee, grant any lien or mortgage on the Mortgaged Property junior to this Mortgage, such junior lien or mortgage shall be subject to, in addition to all tenancies now or hereafter affecting the Mortgaged Property, all such renewals and extensions, modifications, releases, increases, increases in interest rate, future advances, changes or exchanges to the Note and this Mortgage as Mortgagor and Mortgagee may agree upon or as may be provided herein, without joinder or consent of such junior lien or mortgage holder, and without any obligation on Mortgagee’s part to give notice of any kind thereto. Notwithstanding the foregoing, Mortgagor will not suffer or permit any act or omission whereby any of the Mortgaged Property shall become subject to any attachment, judgment, lien, charge or other encumbrances whatsoever or whereby any of the security represented by this Mortgage shall be impaired or threatened. Mortgagor will not directly or indirectly do anything or take any action which might prejudice any of the rights, titles or interests of Mortgagee in or to any of the Mortgaged Property and/or impose or create any direct or indirect obligation or liability on the part of Mortgagee with respect to any of the Mortgaged Property. If any such attachment, judgment, lien, charge or other encumbrance is filed against the Mortgaged Property, or any portion thereof. Mortgagor shall cause the same to be immediately discharged or otherwise bonded or transferred to other security.

41.       Mortgagee does not intend to violate any applicable usury laws. Accordingly, all agreements between Mortgagor and Mortgagee are expressly limited so that in no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof, acceleration of maturity of the unpaid principal balance hereof, or otherwise, shall the amount paid or agreed to be paid to Mortgagee for the use, forbearance or detention of the money to be advanced hereunder (including all interest on the Note, the loan fees payable in connection herewith, and the aggregate of all other amounts taken, reserved or charged pursuant to the Note, this Mortgage, or any Loan Document, which, under applicable laws is or may be deemed to be interest) exceed the maximum rate allowed by applicable law. If, from any circumstances whatsoever, fulfillment of any obligation hereof or of the Note or any Loan Document, at the time performance of such obligation shall be due, shall cause the effective rate of interest upon the sums evidenced by the Note or hereby to exceed the maximum rate of interest allowed by applicable law then, the obligation to be fulfilled shall be reduced automatically to the extent necessary to prevent that effective rate of interest from exceeding the maximum rate allowable under applicable law and to the extent that Mortgagee shall receive any sum which would constitute excessive interest, such sum shall be applied to the reduction of the unpaid principal balance due hereunder and not to the payment of interest or, if such excessive interest exceeds the unpaid balance of principal the excess shall be refunded to Mortgagor. This provision shall control every other provision of all agreements between Mortgagor and Mortgagee. Nothing herein shall be deemed to limit any rights, powers or privileges which Mortgagee may have by reason of its being a national or state banking association pursuant to any law of the United States of America or the State of New Jersey, or any rule, regulation or order of any department or agency thereof and nothing herein shall be deemed to make unlawful any transaction or conduct by Mortgagee which is lawful pursuant to, or which is permitted by, any of the foregoing.

42. Mortgagor represents, warrants and covenants that Mortgagor has not used Hazardous Materials (as hereinafter defined), on, from, or affecting the Mortgaged Property in any manner which violates federal, state, or local laws, ordinances, rules regulations or policies governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials, and to Mortgagee’s kn0wledge no prior owner of the Mortgaged Property or any tenant, subtenant prior tenant or prior subtenant has used Hazardous Materials on, from, or affecting the Mortgaged Property, in any manner which violates federal, state or local laws, ordinances, rules, regulations or policies governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials. Mortgagor shall keep or cause the Mortgaged Property to be kept free of Hazardous Materials. Without limiting the foregoing, Mortgagor shall not cause or permit the Mortgaged Property to be used to generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or process Hazardous Materials, except in compliance with all applicable federal, state and local laws and regulations, nor shall Mortgagor cause or permit, as a result of any intentional or unintentional act or omission on the part of Mortgagor or any tenant or subtenant, a release of Hazardous Materials onto the Mortgaged Property or onto any other property. Mortgagor shall comply with and ensure compliance by all tenants and subtenants with all applicable federal, state and local laws, ordinances, rules and regulations, whenever and by whomever triggered, and shall obtain and comply with any and all approvals, registrations or permits required thereunder. Mortgagor shall (a) conduct and complete all investigations, studies, sampling, and testing and all remedial, removal, and other actions necessary to clean up and remove all Hazardous Materials, on, from, or affecting the Mortgaged Property (i) in accordance with all applicable federal, state, and local laws, ordinances, rules, regulations, and policies, (ii) to the satisfaction of Mortgagee, and (iii) in accordance with the orders and directions of all federal, state and local governmental authorities and (b) defend, indemnify, and hold harmless Mortgagee and its employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs, or expenses of whatever kind or nature, known or unknown, contingent or otherwise, arising out of, or in any way related to (i) the presence, disposal, release, or threatened release of any Hazardous Materials which are on, from, or affecting the soil, water, vegetation, buildings, personal property, persons, animals, or otherwise; (ii) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials; (iii) any lawsuit brought or threatened, settlement reached, or government order relating to such Hazardous Materials; and/or (iv) any violation of laws, orders, regulations, requirements, or demands of governmental authorities, or any policies or requirements of Mortgagee, which are based upon or in any way related to such Hazardous Materials, including without limitation, attorneys and consultant fees, investigation and laboratory fees, court costs, and litigation expenses. In the event this Mortgage is foreclosed, or Mortgagor tenders a deed in lieu of foreclosure, Mortgagor shall deliver the Mortgaged Property to Mortgagee free of any and all Hazardous Materials so that the condition of the Mortgaged Property shall conform with all applicable federal, state and local laws, ordinances, rules or regulations affecting the Mortgaged Property. For purposes of this Paragraph, “Hazardous Materials” includes without limitation, any flammable explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances or related materials defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended (42 U.S.C. Sections 1801, et seq.), the Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. Sections 2901, et seq.), and in the regulations adopted and publications promulgated pursuant thereto, or any other federal, state or local environmental laws, ordinances, rules, or regulations. The provisions of this Paragraph shall be in addition to any and all obligations and liabilities Mortgagor may have to Mortgagee at common law, and shall survive the transactions contemplated herein. Mortgagee in its sole discretion, in the event of any Event of Default under this Mortgage, may inspect the Mortgaged Property or retain others to inspect the Mortgaged Property and conduct whatever tests Mortgagee deems necessary to insure Mortgagor is in compliance with the warranties, covenants and representations contained in this Paragraph. In the event Mortgagee ascertains, with or without an inspection of the Mortgaged Property, that there are any violations of any warranties or covenants contained in this Paragraph or that any of Mortgagor’s representations contained herein are inaccurate, then Mortgagee may foreclose this Mortgage, although Mortgagee shall be under no obligation to do so, or Mortgagee may pursue any other remedies provided under the Loan Documents which Mortgagee is entitled to pursue as a result of a violation of the warranties and covenants of this Paragraph or as a result of any inaccurate or false representations contained in this Paragraph.

43.       Mortgagee shall have the right, at any time and from time to time, to order an appraisal of the Mortgaged Property at the expense of Mortgagor. Such an appraisal (the “Appraisal”) shall be rendered by an appraiser selected by Mortgagee and shall comply with the appraisal standards set forth in Section 34.44(a) of Subpart C of Part 34 of Title 12 of the Code of Federal Regulations. The Appraisal will be addressed to Mortgagee and will constitute Mortgagee’s property. If the Appraisal is approved by Mortgagee’s in-house review appraiser, Mortgagee will provide Mortgagor with a copy of such Appraisal upon written request by Mortgagor. Mortgagor hereby agrees to grant Mortgagee’s appraiser prompt access to the premises to be appraised and to cooperate with the appraiser in the preparation of the Appraisal.

44.       Mortgagor shall, within five (5) days after written demand by Mortgagee, execute in such form as shall be required by Mortgagee, an estoppel certificate duly acknowledged setting forth the amount of principal and interest unpaid hereunder and the general status of this Mortgage. Failure of Mortgagor to make and deliver the estoppel certificate within the required time shall constitute an Event of Default hereunder.

45.       Omitted

46.       Except for equipment leased by Mortgagor from unrelated third parties upon Mortgagee’s prior approval (not to be unreasonably withheld, conditioned or delayed), the lien of this Mortgage will automatically attach, without further act, to all after acquired property of any nature whatsoever attached to, located in, on, or used in the operation of the Mortgaged Property or any part thereof, owned by Mortgagor or in which Mortgagor has an interest, and Mortgagor covenants and warrants that it will have good and absolute title to all of the aforesaid after acquired property it acquires, free of any lien or encumbrance.

47.       The organizational documents of Mortgagor (including, without limitation, Operating Agreement, Partnership Agreement, Articles, Bylaws, and Shareholder’s Agreement, as applicable) shall not be changed, modified, canceled or altered in any manner without the prior written consent of Mortgagee (not to be unreasonably withheld, conditioned or delayed), and such organizational documents shall at all times be maintained in full force and effect and in good standing.

48.       Mortgagor and Mortgagee acknowledge and agree that in no event shall Mortgagee be deemed to be a partner or joint venturer with Mortgagor. Without limitation of the foregoing, Mortgagee shall not be deemed to be such a partner or joint venturer on account of its becoming a mortgagee in possession or exercising any rights pursuant to this Mortgage or pursuant to any other instrument or document evidencing or securing any of the indebtedness secured hereunder, or otherwise.

49.       Upon payment in full of all sums due under the Note and this Mortgage, Mortgagee shall, upon the request of, and at the cost of, Mortgagor, execute a proper satisfaction of this Mortgage; provided, however, Mortgagee may, in its sole and absolute discretion, regardless of consideration, cause the release of any part of the Mortgaged Property from the lien of this Mortgage without in any manner affecting or impairing the lien or priority of this Mortgage as to the remainder of that Mortgaged Property.

50.       Mortgagor represents and warrants that neither Mortgagor, nor any of its members or affiliates, is a prohibited person and Mortgagor and all of its members and affiliates are in full compliance with all applicable orders, rules, regulations and recommendations of The Office of Foreign Assets Control of the U.S. Department of the Treasury.

51.       If Mortgagor is more than one person, then all obligations of Mortgagor hereunder shall be joint and several.

52. MORTGAGEE (BY ITS ACCEPTANCE HEREOF) AND MORTGAGOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS MORTGAGE, AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR MORTGAGEE EXTENDING CREDIT TO MORTGAGOR.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be executed under seal as of the date first written above.

MORTGAGOR:
Hemispherx Biopharma, Inc.
By:	/s/ Thomas Equels
	Thomas Equels, Chief Executive Officer

STATE OF NEW JERSEY	)
	)ss.:
COUNTY OF	)

BE IT REMEMBERED that on this 12th day of May, 2017 before me, the subscriber, personally appeared Thomas Equels, who, being by me duly sworn on his oath, deposed and made proof to my satisfaction that he is the Chief Executive Officer of Hemispherx Biopharma, Inc., named in the attached Mortgage and Security Agreement, and he acknowledged that he signed and delivered the Mortgage and Security Agreement as the duly authorized by the board of directors pursuant to its bylaws.

________________________________

EXHIBIT A

LEGAL DESCRIPTION

EX-10.2

Exhibit 10.2

PROMISSORY NOTE

$4,000,000.00 May 12, 2017

FOR VALUE RECEIVED, the undersigned, Hemispherx Biopharma, Inc. (“Borrower”), promises to pay to the order of SW PARTNERS LLC, a Florida limited liability company (“Lender”), at the office of the Lender at 2700 North Military Trail, Suite 225, Boca Raton, FL 33431, or at such other place as the holder hereof may from time to time designate in writing, the maximum principal sum of FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00), together with interest thereon on the principal amount from time to time outstanding at an annual rate prior to maturity or default as hereinafter set forth. Interest shall be computed on the actual number of days elapsed and an assumed year of 360 days. Borrower and all endorsers, sureties and any other persons liable or to become liable with respect to the loan evidenced by this Promissory Note (the “Loan”) are each included in the term “Obligors” as used in this Promissory Note. Said principal and interest shall be payable in lawful money of the United States, on the dates and in the amounts specified below, to wit:

1. Interest Rate. Commencing with the execution date under this Promissory Note (“Note”) through the Initial Term (hereinafter defined) and prior to an “Event of Default” (hereinafter defined), interest under this Note shall accrue at an annual fixed rate equal to Twelve Percent (12%) (“Initial Interest Rate”). Interest will be charged on the outstanding principal balance of the Loan. On December 1, 2018 (the “Rate Change Date”), the annual interest rate will change to a rate equal to 800 basis points above the Prime Rate established by Citibank and be subject to quarterly resets during the remainder of the term of the loan. In no event will the interest rate be less than Twelve (12%) percent for the life of the loan. If that index is no longer available for reference, the Lender will choose another comparable index. Notwithstanding the foregoing, if an Event of Default occurs, then this Note shall bear interest at the Default Rate (hereinafter defined).

1.1 At the time of the closing of the Loan, Lender will set aside the sum of $200,000.00 into an interest escrow reserve account. The Lender shall advance such interest payments from an interest escrow reserve on the first day of every calendar month commencing on July 1, 2017 and shall continue until such time as the interest reserve account is depleted, at which time the Borrower shall make all monthly payments thereafter.

2. Term. The term of the loan shall be two (2) years. The indebtedness evidenced by this Note shall be due and payable in full on May 31, 2019 (the “Maturity Date”). The first eighteen (18) months of the term shall be the “Initial Term”.

3. Incremental Advances and Payment Terms. Lender’s initial advance under this Note will be $300,000.00 and on the 1^st day of June 2017 and on the 1^st day of every month thereafter, the Lender will make incremental advances of up to $300,000.00 for a total not to exceed $1,800,000.00 provided that (i) the Borrower has provided written request for such advance at least ten (10) days prior to the date of the incremental advance; and (ii) paid a drawer fee of $350.00; and (iii) has made all monthly payments timely; and (iv) has not incurred any late charges; and (v) has not defaulted in any of the terms and conditions of this Note or the Mortgage beyond any applicable notice, cure and/or grace period . Borrower shall pay monthly payments, without setoff or deduction, based on the Initial Interest Rate accruing during the term of this Note. Borrower shall make interest-only monthly payments to the Lender commencing on 1^st day July, 2017 (subject to Section1.1 herein) and continuing on the same day of each and every month thereafter until the Rate Change Date. Thereafter, the Borrower shall pay monthly payments, without setoff or deduction, based on then determined interest rate as set forth in Section 1 above, commencing on December 1^st, 2018 and continuing on the same day of each and every month thereafter until the Maturity Date. On the Maturity Date, all outstanding principal, accrued interest and any other charges due hereunder shall be due and payable in full.

3.1 Future Advances. The Lender, may in its sole and absolute discretion, make additional advances (“Additional Advances”) to the Borrower in an amount not to exceed $2,000,000.00. The incremental advances as set forth in Section 3 above and the Additional Advances as set forth herein shall not exceed $4,000,000.00. In the event that the Lender approves any Additional Advances in excess of $2 million, then Borrower shall pay a 2% origination fee on any such Additional Advance.

4. Prepayment Terms. This Note may be prepaid in full at any time upon fifteen (15) days prior written notice. If the Note is prepaid prior to six (6) months from the date hereof, the Borrower will pay a prepayment premium of six (6) months interest based on the greater of a minimum Loan of One Million ($1,000,000.00) Dollars less the actual interest previously paid to the Lender and the Borrower will also pay the current principal balance of the Loan, less the actual interest previously paid to the Lender. If the Note is prepaid after the first six (6) months from the date hereof, there will be no prepayment fee, however the Borrower will agree to pay the fifteen (15) days’ of interest owed, due to the fifteen (15) day notice requirement.

5. Late Charges. Borrower shall pay Lender a late charge of five percent (5%) of any installment not received by the Lender within five (5) days (except there will be no grace period for any installment of principal and/or interest due on the Maturity Date) after the installment is due unless the Default Rate has already been applied. Further, Lender’s failure to collect a late payment at any time shall not constitute a waiver of Lender’s rights to thereafter, at any time and from time to time (including, without limitation, upon acceleration of this Note or upon payment in full of all sums evidenced by this Note) collect such previously uncollected late payments or to collect subsequent accruing late payments.

6. Loan Documents and Obligations. This Note is secured by and is subject to all of the terms and conditions of, inter alia, a Mortgage and Security Agreement (“Mortgage”) from Borrower to Lender encumbering the property described therein (“Property”) which are being executed of even date herewith. All of the foregoing obligations, including but not limited to the obligation to pay the indebtedness due under this Note, shall be referred to as the “Obligations” and this Note, the Mortgage, and any other documents executed by Borrower in connection with the Loan, are collectively referred to as the “Loan Documents”. The terms and conditions of the Loan Documents are incorporated herein by reference and made a part hereof to the same extent and with the same force and effect as if fully set forth herein. Terms not otherwise defined herein shall have the meaning ascribed to them in the Loan Agreement. Lender is not obligated to enforce payment of the sums due hereunder from the collateral securing this Note.

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7. Default. The occurrence of any one or more of the following events, circumstances, or conditions shall constitute a default hereunder (each, an “Event of Default”): (a) failure of Borrower or any Obligor to pay to Lender, within five (5) days of the date when the same shall become due and payable (except there will be no grace period for Borrower failing to pay all principal and all accrued but unpaid interest on the Maturity Date), any portion of the Obligations including, but not limited to, any installment of principal or of interest due under this Note or any other instrument evidencing or securing the Obligations or any fees owing to Lender; (b) a default by Borrower or Obligor in the performance or observance of, or shall occur under, any covenant, agreement or provision contained in this Note (other than as described in clause (a) above) and such default shall continue for ten (10) or more days following the occurrence of such default provided if such default is not reasonably curable within such ten (10) day period, Borrower shall have such additional time as reasonably necessary to complete same provided Borrower has commenced such cure and diligently prosecutes same to completion; (c) the occurrence of a default under any of the other Loan Documents, or a default under any other agreement between Lender and Borrower or between Lender and Obligor which default is not cured after any applicable notice and/or grace period; or (d) a default by Borrower or Obligor under any other loan or loans outstanding between Borrower and/or Obligor and Lender.

8. Remedies. At any time after the occurrence of an Event of Default, the indebtedness evidenced by this Note and/or any note(s) or other obligation(s) which may be taken in renewal, extension, substitution or modification of all or any part of the indebtedness evidenced hereby or thereby and all other obligations of Borrower to Lender howsoever created and existing under the Loan Documents shall, at the option of Lender, immediately become due and payable without demand upon or notice to Borrower, and Lender shall be entitled to exercise the other remedies set forth in the Loan Documents or as provided by law. Lender may also exercise any and all rights and remedies for such Event of Default at law, equity or under the other Loan Documents. The remedies of Lender as provided herein and in the Loan Documents shall be cumulative and concurrent and may be pursued singly, successively, or together at the sole discretion of Lender and may be exercised as often as occasion therefor shall arise.

9. Setoff. Upon the occurrence of an Event of Default, Lender is authorized, without notice to Borrower (the giving of notice being expressly waived by Borrower) to setoff and apply any indebtedness owing by Lender to Borrower against the indebtedness evidenced by this Note, although then contingent or unmatured. In addition to all liens upon and rights of setoff against the money, securities, or other property of Borrower given to Lender that may exist under applicable law, upon the occurrence of an Event of Default under the Loan Documents, Lender shall have and Borrower hereby grants to Lender a lien upon and a right of setoff against all money, securities, and other property of Borrower, now or hereafter in possession of or on deposit with Lender, whether held in a general or special account or deposit, for safe-keeping or otherwise, and every such lien and right of setoff may be exercised without demand upon or notice to Borrower. No lien or right of setoff shall be deemed to have been waived by any act or conduct on the part of Lender, or by any neglect to exercise such right of setoff or to enforce such lien, or by any delay in so doing, and every right of setoff and lien shall continue in full force and effect until such right of setoff or lien is specifically waived or released by an instrument in writing executed by Lender.

Lender shall endeavor to notify Borrower after any such setoff and application, provided, however, the failure to give such notice shall not affect the validity of such setoff and application; and Lender shall be deemed to have exercised such right of setoff and to have made a charge against any such money immediately upon the occurrence of an Event of Default even though such charge is made or entered on the books of Lender subsequent thereto. The rights of Lender under this section are in addition to any other rights and remedies which Lender may have.

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10. Default Rate. From and after an Event of Default, and regardless of whether the Lender also elects to accelerate the maturity of this Note, the entire principal remaining unpaid hereunder shall bear an augmented annual interest rate equal to the lesser of (i) twenty-four percent (24%) per annum, or (ii) the highest applicable lawful rate (“Default Rate”). Nothing contained in this Note or any other instrument between the parties hereto shall be deemed to establish or require the payment of a rate of interest in excess of the rate (whether limited or unlimited) that may legally be charged on loans or extensions of credit made by any Lender and/or Lender or creditor under the laws (whether codified or not) of the State of New Jersey or of the United States whichever is applicable and higher as such rate (or the absence thereof) now exists or may hereafter be increased (or the ceiling, if any on the legal rate of interest eliminated) by legislation or otherwise. In the event that the rate of interest so contracted to be paid should exceed the maximum interest rate permitted by applicable law, whether as a result of its fluctuation, acceleration of the maturity hereof or otherwise, the rate of interest to be paid hereunder shall be automatically reduced to such limit and so much of any interest reserved, charged or taken as would cause the same to exceed the Default Rate shall be deemed not to be a credit against interest but rather a prepayment on account of and be automatically credited against outstanding principal evidenced hereby regardless of how the same may appear on Lender’s or Borrower’s books or records or any memoranda of whatever nature evidencing the same; provided, however, no such application shall operate to cure or as a waiver of any Event of Default occasioning acceleration.

Upon the occurrence of an Event of Default, at Lender’s option, interest shall accrue under this Note on the outstanding principal balance at the Default Rate per annum. Lender may, in determining the Default Rate in effect from time to time, take advantage of any law, rule or regulation in effect from time to time available to Lender which exempts Lender from any limit upon the rate of interest it may charge or grants to Lender the right to charge a higher rate of interest than that permitted by any applicable New Jersey Statutes.

11. Replacement and Corrective Documents. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of such Note or other Loan Document, Borrower shall issue, in lieu thereof, a replacement Note or other Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note or other Loan Document in the same principal amount thereof and otherwise of like tenor, together, if lost, with an affidavit that such Note or other Loan Document has not been transferred. Borrower hereby consents and agrees that in the event that any of the Loan Documents misstate or inaccurately reflect the true and correct terms and provisions of the Loan and said misstatement or inaccuracy is due to the unilateral mistake on the part of Lender or mutual mistake on the part of any of Lender and Borrower or clerical error, then in such event Borrower shall, within thirty (30) days after written request of Lender and in order to correct such misstatement or inaccuracy, execute such new documents as Lender may deem necessary to remedy said inaccuracy or mistake.

4

12. Miscellaneous.

(a) Borrower shall pay all amounts owing under this Note in full when due without set-off, counterclaim deduction or withholding for any reason whatsoever. If any payment falls due on a day other than a day on which Lender is open for business (a “Business Day”), then such payment shall instead be made on the next succeeding Business Day, and interest shall accrue accordingly. Any payment received by Lender after 1:00 p.m. shall not be credited against the indebtedness under this Note until at least the next succeeding Business Day.

(b) Lender may transfer this Note and deliver to the transferee(s) all or any of the property then held by Lender as security for the indebtedness evidenced by this Note and the transferee(s) shall thereupon become vested with all the powers and rights herein given to Lender with respect thereto; and Lender shall thereafter be forever relieved and fully discharged from any liability or responsibility in the matter, but Lender shall retain all rights, powers and obligations hereby given with respect to any property not so transferred. The Lender shall provide Borrower with a courtesy notice of such transfer by Lender provided that failure to provide such notice shall in no way affect or impair the transfer by Lender.

(c) Borrower and/or any Obligor hereby waive the right to bring any counterclaims, cross-claims or other actions, other than those which are considered compulsory by applicable law and do further waive presentment for payment, demand, notice of acceleration, notice of dishonor, protest, extension of time without notice and/or any and all requirements necessary to hold each of them jointly and severally liable as makers, sureties, and endorsers and agree that (i) any collateral, lien and/or right of setoff securing any indebtedness evidenced by this Note may, from time to time, in whole or in part, be exchanged or released, and any person liable on or with respect to this Note may be released all without notice to or further reservations of rights against Borrower, any endorser or surety and all without in any way affecting or releasing the liability of the Borrower, any endorser or surety, and (ii) none of the terms or provisions hereof may be waived, altered, modified or amended except as the Lender and Borrower may agree in writing. Borrower and each Obligor agree that they are jointly and severally liable for the payment of all indebtedness evidenced by this Note.

(d) Borrower hereby agrees jointly and severally with any Obligor, to pay all costs and expenses, including reasonable attorneys’ fees, paralegals’ fees and legal assistants’, incurred by Lender in the collection of the indebtedness evidenced by this Note or in enforcing any of the rights, powers, remedies, and privileges of Lender hereunder. As used in this Note, the term “attorneys’ fees” shall mean reasonable charges and expenses for legal services rendered to or on behalf of Lender in connection with the collection of the indebtedness evidenced by this Note at any time whether prior to the commencement of judicial proceedings and/or thereafter at the trial and/or appellate level and/or in pre and post judgment or bankruptcy proceedings.

(e) Both principal and interest evidenced by this Note shall be payable in lawful currency of the United States of America to the Lender at its address set forth above or at such other place designated by Lender in writing, in immediately available (same day) funds without deduction for or on account of any present or future taxes, duties or other charges levied or imposed on this Note, the proceeds hereof, or on Borrower or the holder hereof by any government, or any instrumentality, authority or political subdivision thereof. Borrower agrees, upon the request of Lender, to pay all such taxes (other than taxes on or measured by the income of the holder hereof), duties, and other charges in addition to the principal and interest evidenced by this Note.

5

(f) The Obligors jointly and severally agree to pay all filing fees and similar charges and all costs incurred by Lender in collecting or securing or attempting to collect or secure the Loan, including attorney’s fees, whether or not involving litigation and/or appellate, administrative or bankruptcy proceedings. The Obligors jointly and severally agree to pay any taxes (except for federal or New Jersey franchise or income taxes based on Lender’s net income) which may now or hereafter apply to this Note or the Loan or any security therefor, and the Obligors jointly and severally agree to indemnify and hold Lender harmless from and against any liability, costs, attorney’s fees, penalties, interest or expenses relating to any such taxes, as and when the same may be incurred. The Obligors jointly and severally agree to pay on demand, and to indemnify and hold Lender harmless from and against, any and all present or future taxes, levies, imposts, deductions, charges and withholdings imposed in connection with the Loan by the laws or governmental authorities of any jurisdiction or the United States of America, and all payments to Lender under this Note shall be made free and clear thereof and without deduction therefor.

(g) Any default by Borrower hereunder shall constitute a default under any other loan or loans outstanding between Borrower and Lender and shall entitle Lender to exercise all the rights and remedies which may be stated in the loan documentation governing such loans, including specifically, but without limitation, the right of acceleration and foreclosure of all property which is collateralized to the Lender.

(h) Borrower agrees that this Note shall be deemed to have been made under and shall be governed by the laws of the State of New Jersey in all respects (except as to interest rates which are or may be preempted by the laws of the United States), including matters of construction, validity, and performance. If any provision of this Note shall be deemed unenforceable under applicable law, such provision shall be ineffective, but only to the extent of such unenforceability, without invalidating the remainder of such provision or the remaining provisions of this Note. All of the terms and provisions of this Note shall be applicable to and be binding upon each and every maker, endorser, surety, or all other persons who are or may become liable for the payment hereof and their heirs, personal representatives, successors or assigns. Borrower consents that jurisdiction and venue of any dispute arising from this Note shall be in United States District Court for the State of New Jersey or the Superior Court of New Jersey, Hudson County, New Jersey. Time is of the essence in the payment and performance of all obligations under this Note.

(i) Except as otherwise required by law or by the provisions of this Note or any other Loan Document, payments received by Lender hereunder shall be applied first against expenses and indemnities, next against interest accrued on the Loan, and next in reduction of the outstanding principal balance of the Loan, except that from and after any default under this Note, Lender may apply such payments in any order of priority determined by Lender in its exclusive judgment. Borrower shall receive immediate credit on payments only if made in the form of either a federal wire transfer of cleared funds or a check drawn on an account maintained with Lender containing sufficient available funds. Otherwise, Borrower shall receive credit on payments after clearance, which shall be no sooner than the first Business Day after receipt of payment by Lender. For purposes of determining interest accruing under this Note, principal shall be deemed outstanding on the date payment is credited by Lender.

6

(j) Lender may grant participations in all or any portion of, and may assign all or any part of Lender’s rights under, this Note and the Loan Documents. Lender may disclose to any such participant or assignee any and all information held by or known to Lender at any time with respect to any Obligor.

(k) No act of omission or commission of the Lender, including specifically any failure to exercise any right, remedy or recourse shall be effective unless it is set forth in a written document executed by the Lender and then only to the extent specifically recited therein. The acceptance by Lender of any payment under this Note which is less than the amount then due or the acceptance of any amount after the due date thereof, shall not be deemed a waiver of any right or remedy available to Lender nor nullify the prior exercise of any such right or remedy by Lender. None of the terms or provisions of this Note may be waived, altered modified or amended except by a written document executed by Lender and the Borrower, and then only to the extent specifically recited therein. No course of dealing or conduct shall be effective to waive, alter, modify or amend any of the terms or provisions hereof. The failure or delay to exercise any right or remedy available to Lender shall not constitute a waiver of the right of the Lender to exercise the same or any other right or remedy available to Lender at that time or at any subsequent time.

(l) Borrower shall (a) ensure that no person who owns a controlling interest in or otherwise controls the Borrower or any subsidiary of the Borrower is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders, (b) not use or permit the use of the proceeds of the Loan to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, and (c) comply, and cause any of its subsidiaries to comply, with all applicable Lender Secrecy Act laws and regulations, as amended.

(m) Borrower represents and warrants to Lender that it is a business or commercial organization and that the Loan was made and transacted solely for the purpose of carrying on or acquiring a business or commercial enterprise.

(n) All notices, demands, requests and other communications made hereunder shall be in writing and shall be properly given and deemed delivered on the date of delivery if sent by personal delivery or nationally recognized overnight courier and on the third business day following mailing if sent by certified or registered mail, postage prepaid, return receipt requested, to the address of such party on the first page of the Mortgage. Either party may change the address to which any such notice, report, demand or other instrument is to be delivered or mailed by furnishing written notice in accordance herewith of such change to the other party, but no such notice of change shall be effective unless and until received by such other party.

LENDER AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER EXTENDING CREDIT TO BORROWER. FURTHER, BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER, NOR LENDER’S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.

[SIGNATURE PAGE FOLLOWS]

7

BORROWER:
Hemispherx Biopharma, Inc.
By:	/s/Thomas Equels
	Thomas Equels, Chief Executive Officer

STATE OF NEW JERSEY	)
	)ss.:
COUNTY OF	)

BE IT REMEMBERED that on this 12th day of May, 2017 before me, the subscriber, personally appeared Thomas Equels, who, being by me duly sworn on his oath, deposed and made proof to my satisfaction that he is the Chief Executive Officer of Hemispherx Biopharma, Inc., named in the attached Promissory Note, and he acknowledged that he signed and delivered the Promissory Note as the duly authorized by the board of directors pursuant to its bylaws.

________________________________

8

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Thomas K. Equels certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Hemispherx Biopharma, Inc. (the “Registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.	The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: May 15, 2017
	/s/ Thomas K. Equels
	Thomas K. Equels, Esq.
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Adam Pascale, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Hemispherx Biopharma, Inc. (the “Registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.	The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: May 15, 2017
	/s/ Adam Pascale
	Adam Pascale
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hemispherx Biopharma, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas K. Equels, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: May 15, 2017
	/s/ Thomas K. Equels
	Thomas K. Equels, Esq.
	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hemispherx Biopharma, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Adam Pascale, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: May 15, 2017
	/s/ Adam Pascale
	Adam Pascale
	Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Mar. 01, 2017
Document And Entity Information
Entity Registrant Name	HEMISPHERX BIOPHARMA INC
Entity Central Index Key	0000946644
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		26,461,072
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2017

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 776	$ 2,408
Marketable securities	2,973	3,460
Accounts receivable	41
Assets held for sale	764	764
Prepaid expenses and other current assets	636	309
Total current assets	5,190	6,941
Property and equipment, net	9,257	9,514
Patent and trademark rights, net	870	872
Other assets	1,546	1,546
Total assets	16,863	18,873
Current liabilities:
Accounts payable	927	887
Accrued expenses	1,709	1,548
Total current liabilities	2,636	2,435
Redeemable warrants	1,279	940
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock, par value $0.01 per share, authorized 5,000,000; issued and outstanding; none
Common stock, par value $0.001 per share, authorized 350,000,000 shares; issued and outstanding 26,186,998 and 24,202,921, respectively	26	24
Additional paid-in capital	316,238	315,980
Accumulated other comprehensive income (loss)	6	(5)
Accumulated deficit	(303,322)	(300,501)
Total stockholders' equity	12,948	15,498
Total liabilities and stockholders' equity	$ 16,863	$ 18,873

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	350,000,000	350,000,000
Common stock, shares issued	26,186,998	24,202,921
Common stock, shares outstanding	26,186,998	24,202,921

XML

Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues:
Total revenues	$ 84	$ 39
Costs and expenses:
Production costs	270	268
Research and development	1,391	1,002
General and administrative	1,664	2,448
Total costs and expenses	3,325	3,718
Operating loss	(3,241)	(3,679)
Interest and other income	26	61
Redeemable warrants valuation adjustment	393
Gain (loss) on sales of short term marketable securities	1	(107)
Gain from sale of income tax net operating losses and research credits		1,561
Net loss	(2,821)	(2,164)
Other comprehensive income:
Reclassification adjustments for loss on sales of short term marketable securities included in net loss	(1)	107
Unrealized gain on marketable securities	12	40
Net comprehensive loss	$ (2,810)	$ (2,017)
Basic and diluted loss per share	$ (0.11)	$ (0.10)
Weighted average shares outstanding, basic and diluted	25,341,068	20,630,328
US [Member]
Revenues:
Clinical treatment programs	$ 23	$ 39
Europe [Member]
Revenues:
Clinical treatment programs	$ 61

XML

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2016	$ 24	$ 315,980	$ (5)	$ (300,501)	$ 15,498
Balance, shares at Dec. 31, 2016	24,202,921
Equity-based compensation		52			52
Equity-based compensation, shares	40,105
Redeemable warrants		(734)			(734)
Common stock issuance, net of costs	$ 2	873			875
Common stock issuance, net of costs, shares	1,818,185
Stock issued for accounts payable		67			67
Stock issued for accounts payable, shares	125,787
Net comprehensive income (loss)			11	(2,821)	(2,810)
Balance at Mar. 31, 2017	$ 26	$ 316,238	$ 6	$ (303,322)	$ 12,948
Balance, shares at Mar. 31, 2017	26,186,998

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net loss	$ (2,821)	$ (2,164)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment	261	300
Redeemable warrants valuation adjustment	(393)
Amortization and abandonment of patent and trademark rights	13	30
Equity-based compensation	52	52
Realized loss on sale of marketable securities	(1)	107
Change in assets and liabilities:
Accounts receivable	(41)
Prepaid expenses and other current assets	(327)	(28)
Accounts payable	103	182
Accrued expenses	161	478
Net cash used in operating activities	(2,993)	(1,043)
Cash flows from investing activities:
Sale of marketable securities	500
Purchase of property, equipment and construction in progress	(3)
Lease deposit refund		2
Additions to patent and trademark rights	(11)	(62)
Net cash provided by (used in) investing activities	486	(60)
Cash flows from financing activities:
Payments on capital leases		(1)
Proceeds from sale of stock, net of issuance costs	875	2
Net cash provided by financing activities	875	1
Net decrease in cash and cash equivalents	(1,632)	(1,102)
Cash and cash equivalents at beginning of period	2,408	2,115
Cash and cash equivalents at end of period	776	1,013
Supplemental disclosures of non-cash investing and financing cash flow information:
Unrealized gain on marketable securities	12	147
Stock issued for accounts payable	67
Fair value of redeemable warrants granted	$ 734

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Note 1: Basis of Presentation

The consolidated financial statements include the financial statements of Hemispherx Biopharma, Inc. and its wholly-owned subsidiaries (“Company”). The Company has two domestic subsidiaries: BioPro Corp. and BioAegean Corp., both of which are incorporated in Delaware and are dormant. The Company also has a foreign subsidiary, Hemispherx Biopharma Europe N.V./S.A., which was established in Belgium in 1998. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company has incurred numerous years of substantial operating losses as it pursued its clinical and pre-clinical development activities and appropriate regulatory approval processes before any such products can be sold and marketed. As of March 31, 2017, our accumulated deficit was approximately $303,000,000. The Company has not yet generated significant revenues from our products and may incur substantial losses in the future. The Company evaluated these conditions and events that may raise substantial doubt about the Company’s ability to continue as a going concern; however, the Company believes that it has alleviated the substantial doubt by implementing certain actions. The Company reexamined its fundamental priorities in terms of direction, corporate culture and its ability to fund operations. As a result, there were significant changes at the Company including the Company restructuring its executive management team, initiating the pursuit of international sales of clinical grade materials, and implementing a cost saving program which assisted the Company in gained efficiencies and eliminated redundancies within its workforce. In addition, the Company is in the process of selling an underutilized building adjacent to its New Jersey manufacturing facility site. Also, the Company is committed to a focused business plan oriented toward finding senior co-development partners with the capital and expertise needed to commercialize the many potential therapeutic aspects of our experimental drugs and our approved drug Alferon N. Lastly, the Company plans to access the public equity markets to raise further capital.

In the opinion of Management, all adjustments necessary for a fair presentation of such 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, 2016 and 2015, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

XML

Net Loss Per Share

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Net Loss Per Share

Note 2: Net Loss Per Share

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 10,881,033 and 15,504,000 shares for the three months ended March 31, 2017 and 2016, respectively, are excluded from the calculation of diluted net loss per share since their effect is anti-dilutive.

XML

Equity-Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity-Based Compensation

Note 3: Equity-Based Compensation

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. There were no options or equity warrants granted in the three months ended March 31, 2017 and 2016.

Stock option for employees’ activity during the three months ended March 31, 2017 is 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, 2017		836,256		$	16.82		4.47	$	—
Granted		—			—		—		—
Forfeited		(5,048	)		25.47		—		—
Outstanding March 31, 2017		831,208		$	16.77		4.24	$	—
Vested and expected to vest March 31, 2017		831,208		$	16.77		4.24	$	—
Exercisable March 31, 2017		786,936		$	16.54		3.24	$	—

Unvested stock option activity for employees:

	Number of Options			Weighted Average Exercise Price		Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		90,625		$	1.72		9.33	$	—
Granted		—			—		—		—
Vested		(46,354	)		1.58		—		—
Forfeited		—			—		—		—
Outstanding March 31, 2017		44,271		$	1.87		8.91	$	—

Stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		271,500		$	10.41		4.66	$	—
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited		(5,590	)		15.08		—		—
Outstanding March 31, 2017		265,910		$	10.31		4.41	$	—
Vested and expected to vest March 31, 2017		265,910		$	10.31		4.41	$	—
Exercisable March 31, 2017		254,104		$	10.69		4.11	$	—

 Unvested stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		26,389		$	1.65		8.61	$	—
Granted		—			—		—		—
Vested		(11,771	)		1.64		—		—
Forfeited		(2,812	)		1.68		—		—
Outstanding March 31, 2017		11,806		$	1.65		9.41	$	—

The impact on the Company’s results of operations of recording equity-based compensation for the three months ended March 31, 2017 and 2016 was to increase costs and expenses by approximately $52,000 and $52,000, respectively, which had no impact on earnings per share.

As of March 31, 2017 and 2016, respectively, there was $135,000 and $168,000 of unrecognized equity-based compensation cost related to options granted under the Equity Incentive Plan.

On January 26, 2016, the Board, based on the recommendation of its Compensation Committee, established two programs - the 2016 Senior Executive Deferred Cash Performance Award Plan for Dr. William A. Carter and Thomas K. Equels, the Company’s two primary executive officers, and the 2016 Voluntary Incentive Stock Award Plan for Company employees and Board members other than Dr. Carter and Mr. Equels. Both Plans include a Base Pay Supplement provision.

The Company maintains a record of the number of shares of stock represented by each Incentive Right issued out of the 2016 Voluntary Incentive Stock Award Plan. During the three months ended March 31, 2016, the Company granted rights to 53,051 incentive shares associated with the Plan and recorded $21,000 in equity-based compensation. There were no incentive shares issued during the quarter ended March 31, 2017.

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Inventories

3 Months Ended

Mar. 31, 2017

Inventory Disclosure [Abstract]

Inventories

Note 4: Inventories

The Company uses the lower of first-in, first-out (“FIFO”) cost or market method of accounting for inventory.

Inventories consist of the following:	(in thousands)
	March 31, 2017		December 31, 2016
Inventory work-in-process, January 1	$	—	$	1,326
Production		—		—
Transfer to other assets		—		(1,326	)
Spoilage		—		—
Inventory work-in-process, end of period	$	—	$	—

Commercial sales of Alferon® will not resume until new batches of commercial filled and finished product are produced and released by the FDA. The Company is continuing the validation of Alferon® production and production of new Alferon® API inventory commenced in February 2015. While the facility is approved by the FDA under the Biological License Application (“BLA”) for Alferon®, this status will need to be reaffirmed by an FDA pre-approval inspection. The Company will also need the FDA’s approval to release commercial product once it has submitted satisfactory stability and quality release data. Due to the Company extending the timeline of Alferon® production to an excess of one year, the Company reclassified Alferon® Work-In-Process inventory to other assets within the Company’s balance sheet.

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Marketable Securities

3 Months Ended

Mar. 31, 2017

Marketable Securities [Abstract]

Marketable Securities

Note 5: Marketable Securities

Marketable securities consist of mutual funds. For the three months ended March 31, 2017 and 2016, it was determined that none of the marketable securities had other-than-temporary impairments. At March 31, 2017 and December 31, 2016, all securities were classified as available for sale investments and were measured as Level 1 instruments of the fair value measurements standard.

Securities classified as available for sale consisted of:

March 31, 2017

(in thousands)

Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Investments		Long Term Investments
Mutual Funds	$	2,967	$	6	$	—	$	2,973	$	2,973	$	—
Totals	$	2,967	$	6	$	—	$	2,973	$	2,973	$	—

December 31, 2016

(in thousands)

Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Short-Term Investments		Long Term Investments
Mutual Funds	$	3,465	$	—	$	(5	)	$	3,460	$	3,460	$	—
Totals	$	3,465	$	—	$	(5	)	$	3,460	$	3,460	$	—

Unrealized losses on investments

Investments with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values were as follows:

There were no investments in a loss position as of March 31, 2017.

December 31, 2016

(in thousands)

	Total		Less Than 12 Months					12 Months or Greater				Totals
Securities	Number In Loss Position		Fair Values		Unrealized Losses			Fair Values		Unrealized Losses		Total Fair Value		Total Unrealized Losses
Mutual Funds		1	$	1,853	$	(13	)	$	—	$	—	$	1,853	$	(13	)
Totals		1	$	1,853	$	(13	)	$	—	$	—	$	1,853	$	(13	)

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Accrued Expenses

3 Months Ended

Mar. 31, 2017

Payables and Accruals [Abstract]

Accrued Expenses

Note 6: Accrued Expenses

Accrued expenses consist of the following:

	(in thousands)
	March 31, 2017		December 31, 2016
Compensation	$	277	$	297
Professional fees		528		604
Clinical trial expenses		393		158
Other expenses		511		489
	$	1,709	$	1,548

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Property and Equipment

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment

Note 7: Property and Equipment

	(in thousands)
	March 31, 2017			December 31, 2016
Land, buildings and improvements	$	10,530		$	10,530
Furniture, fixtures, and equipment		5,625			5,630
Total property and equipment		16,155			16,160
Less: accumulated depreciation and amortization		(6,898	)		(6,646	)
Property and equipment, net	$	9,257		$	9,514

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 thirty-nine years. The Company also reclassified an underutilized building as an asset held for resale totaling $764,000 adjacent to its New Jersey manufacturing facility site that it is in the process of selling.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Stockholders' Equity

Note 8: Stockholders’ Equity

(a) Preferred Stock

The Company is authorized to issue 5,000,000 shares of $0.01 par value preferred stock with such designations, rights and preferences as may be determined by the Board of Directors. There were no Preferred Shares issued and outstanding as of March 31, 2017 and December 31, 2016.

(b) Common Stock

The Company’s stockholders approved an amendment to the Company’s corporate Charter at the Annual Shareholder Meeting held in Philadelphia, PA that concluded on December 8, 2011. This amendment increased the Company’s authorized shares from 200,000,000 to 350,000,000 with specific limitations and restrictions on the usage of 75,000,000 of the 150,000,000 newly authorized shares.

On September 16, 2015, the Company’s stockholders removed the limitations and restrictions on 67,000,000 shares. The Company’s stockholders approved up to an additional 60,000,000 shares for use in capital raising transactions and 7,000,000 shares for use in the Equity Plan of 2009. On August 29, 2016, the Company effected a 12 to 1 reverse stock split of the outstanding shares, in order to become compliant with the NYSE regulations. This did not affect the number of authorized shares.

On July 23, 2012, the Company entered into an equity distribution agreement (the “Maxim EDA”) with Maxim Group LLC (“Maxim”) pursuant to which the Company could sell up to $75,000,000 worth of its shares of common stock from time to time through Maxim, as sales agent. Under the Maxim EDA, Maxim is entitled to a fixed commission rate of 4.0% of the gross sales price of Shares sold under the Maxim EDA, up to aggregate gross proceeds of $10,000,000, and thereafter, at a fixed commission rate of 3.0% of the gross sales price of Shares sold under the Maxim EDA. Sales of the Shares, if any, may be made in transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers’ transactions, including on the NYSE MKT, at market prices or as otherwise agreed with Maxim. The Company has no obligation to sell any of the Shares and may at any time suspend offers under the Maxim EDA or terminate the Maxim EDA. Up until August 4, 2015, the shares were being sold pursuant to the Company’s Universal Shelf Registration Statement on Form S-3, declared effective by the SEC on July 2, 2012. After August 4, 2015, the shares were sold pursuant to the Company’s Universal Shelf Registration Statement on Form S-3, declared effective by the SEC on August 4, 2015 (the “2015 Universal Shelf”). On August 4, 2015, the Company and Maxim Group LLC amended their July 23, 2012 EDA solely for the purpose of adding the registrant’s new registration statement on Form S-3 (File No 333-205228) to the definition of “registration statement” as the old registration statement expired. On December 15, 2015, the Company filed a Prospectus Supplement reducing all offerings pursuant to its existing equity distribution agreement with Maxim Group LLC to $0. No shares of common stock were sold through the Maxim EDA during the first quarter of 2017 or 2016.

On December 15, 2015, the Company entered into an Equity Distribution Agreement with Chardan Capital Markets, LLC (the “Chardan Agreement”) to create an at-the-market equity program under which it may sell shares of its common stock (the “Shares”) from time to time through Chardan Capital Markets, LLC, as sales agent (“Chardan”). Under the Chardan Agreement, Chardan will be entitled to a commission at a fixed commission rate of 3.0% of the gross sales price of Shares sold under the Chardan Agreement. Sales of the Shares, if any, under the Chardan Agreement may be made in transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers’ transactions, including on the NYSE MKT, at market prices or as otherwise agreed with Chardan. The Company has no obligation to sell any of the Shares, and may at any time suspend offers under the Chardan Agreement or terminate the Chardan Agreement. The Shares would be issued pursuant to the Company’s previously filed and effective Registration Statement on Form S-3 (File No. 333-205228). Effective August 26, 2016 the Company halted all future offers and sales of common stock under the Chardan Agreement reducing all offerings pursuant to its existing equity distribution agreement with Chardan to $0. No shares of common stock were sold through the Chardan Agreement during the first quarter of 2017 or 2016.

On February 1, 2017, the Company entered into Securities Purchase Agreements (each, a “February Purchase Agreement”) with certain investors for the sale by us of 1,818,185 shares of its common stock at a purchase price of $0.55 per share. Concurrently with the sale of the common stock, pursuant to the February Purchase Agreement, the Company also sold unregistered warrants to purchase 1,363,639 shares of common stock for aggregate net proceeds of approximately $875,000. The warrants have an exercise price of $0.75 per share, are exercisable six months after issuance, and will expire five years from the initial exercise date. Pursuant to an engagement agreement, the Company paid its placement agent an aggregate fee equal to 7% of the gross proceeds received by the Company from the sale of the securities in the offering and granted to its placement agent or its designees warrants to purchase up to 5% of the aggregate number of shares sold in the transactions amounting to 90,910 unregistered warrants. The placement agent warrants have substantially the same terms as the investor warrants, except that the placement agent warrants will expire on February 1, 2022 and have an exercise price equal to $0.6875 per share of common stock.

On September 6, 2016, the Company entered into Securities Purchase Agreements with certain investors for the sale by the Company of 3,333,334 shares of its common stock at a purchase price of $1.50 per share and sold warrants to purchase 2,500,000 shares of Common Stock for aggregate net proceeds of $4,520,000. Subject to certain ownership limitations, the warrants are initially exercisable six-month after issuance at an exercise price equal to $2.00 per share of Common Stock, subject to adjustments as provided under the terms of the warrants. The warrants are exercisable for five years from the initial exercise date. The Company received net proceeds from the foregoing transaction of approximately $4,520,000 after deducting certain fees due to the placement agent and the Company’s transaction expenses. The net proceeds received by the Company from tis offering will be used for preparation for technology transfer opportunities, expenses related to Ampligen® manufacturing, working capital and general corporate purposes. Pursuant to an engagement agreement, the Company paid its placement agent an aggregate fee equal to 7% of the gross proceeds received by the Company from the sale of the securities in the offering and granted to its placement agent or its designees warrants to purchase up to 5% of the aggregate number of shares sold in the transactions amounting to 166,667 unregistered warrants. The placement agent warrants have substantially the same terms as the investor warrants, except that the placement agent warrants will expire September 1, 2021 and have an exercise price equal to $1.875 per share of common stock.

The common stock issued in the above two offerings were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3, which was initially filed with the SEC on June 25, 2015 and subsequently declared effective on August 4, 2015 (File No. 333-205228) and the base prospectus dated as of August 4, 2015 contained therein. The Company filed a prospectus supplements related to these two offerings with the SEC on February 3, 2017 and September 1, 2016, respectively, in connection with the sale of the common stock.

The Equity Incentive Plan of 2009, effective June 24, 2009, as amended and giving effect to the 12 to 1 reverse stock split, authorizes the grant of non-qualified and incentive stock options, stock appreciation rights, restricted stock and other stock awards. A maximum of 22,000,000 shares of common stock is reserved for potential issuance pursuant to awards under the Equity Incentive Plan of 2009. Unless sooner terminated, the Equity Incentive Plan of 2009 will continue in effect for a period of 10 years from its effective date. For the three months ended March 31, 2017, there were no options granted by the Company.

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Cash and Cash Equivalents

3 Months Ended

Mar. 31, 2017

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents

Note 9: Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2017

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Note 10: Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Upon the Company realizing operating revenues from the sale of commercialized product, the Company’s adoption of this guidance may have an impact on the Company’s financial statement presentation or disclosures.

In January 2016, the (“FASB”) has issued Accounting Standards Update (ASU) No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance is intended to improve the recognition and measurement of financial instruments. The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance permits early adoption of the own credit provision. The Company believes that the adoption of the guidance may have an impact on the Company’s financial statement presentation or disclosures.

In February 2016, the FASB issued ASU 2016-02 - Leases, which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018, and early adoption of is permitted as of the standard’s issuance date. ASU 2016-02 allows a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company has not adopted ASU 2016-02 and believes such adoption may have an impact on the Company’s financial statement presentation or disclosures.

In August 2016, the FASB issued ASU 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The new guidance is intended to address the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this Update should be applied using a retrospective transition method to each period presented. The Company believes that the adoption of the guidance may not have a material impact on the Company’s financial statement presentation or disclosures.

In 2017, the FASB also issued Accounting Standards Updates (“ASU”) 2017-01 through 2017-08 These updates did not have a significant impact on the financial statements.

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Funds Received from Sale of Income Tax Net Operating Losses

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Funds Received from Sale of Income Tax Net Operating Losses

Note 11: Funds Received from Sale of Income Tax Net Operating Losses

As of December 31, 2016, the Company has approximately $174,000,000 of federal net operating loss carryforwards (expiring in the years 2018 through 2036) available to offset future federal taxable income. The Company also has approximately $36,000,000 of Pennsylvania state net operating loss carryforwards (expiring in the years 2018 through 2033) and approximately $8,000,000 of New Jersey state net operating loss carryforwards (expiring in 2036) available to offset future state taxable income.

In January 2016, the Company effectively sold $16,000,000 of its New Jersey state net operating loss carryforward for the year 2014 for approximately $1,320,000, and also sold New Jersey research and development credits for $241,000. In December 2016, the Company effectively sold $14,000,000 of its New Jersey state net operating loss carryforward for the year 2015 for approximately $1,120,000, and also sold New Jersey research and development credits for $189,000. The utilization of certain state net operating loss carry-forwards may be subject to annual limitations. With no tax due for the foreseeable future, the Company has determined that the accounting for interest or penalties related to the payment of tax is not necessary at this time.

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Fair Value

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value

Note 12: Fair Value

The Company is required under GAAP to disclose information about the fair value of all the Company’s financial instruments, whether or not these instruments are measured at fair value on the Company’s consolidated balance sheets.

The Company estimates that the fair values of cash and cash equivalents, other assets, accounts payable and accrued expenses approximate their carrying values due to the short-term maturities of these items. The Company also has certain warrants with a cash settlement feature in the unlikely occurrence of a Fundamental Transaction. The fair value of the redeemable warrants (“Warrants”) related to the Company’s August 2016 and February 2017 common stock and warrant issuance, are calculated using a Monte Carlo Simulation. While the Monte Carlo Simulation is one of a number of possible pricing models, the Company has determined it to be industry accepted and fairly presented the fair value of the Warrants. As an additional factor to determine the fair value of the Put’s liability, the occurrence probability of a Fundamental Transaction event was factored into the valuation.

The Company recomputes the fair value of the Warrants at the issuance date and the end of each quarterly reporting period. Such value computation includes subjective input assumptions that are consistently applied each period. If the Company were to alter its assumptions or the numbers input based on such assumptions, the resulting fair value could be materially different.

The Company utilized the following assumptions to estimate the fair value of the August 2016 Warrants:

	March 31, 2017		December 31, 2016
Underlying price per share		$0.55		$0.69
Exercise price per share		$1.88 - $2.00		$1.88 - $2.00
Risk-free interest rate		1.81%-1.86%		1.86%
Expected holding period		4.40		4.70
Expected volatility		85%		85%
Expected dividend yield		-		-

The Company utilized the following assumptions to estimate the fair value of the January 2017 Warrants:

	March 31, 2017		February 1, 2017
Underlying price per share		$0.55		$0.64
Exercise price per share		$0.69-$0.75		$0.69-$0.75
Risk-free interest rate		1.90%		1.86%-1.93%
Expected holding period		4.80-4.90		5.00
Expected volatility		85%		80%-85%
Expected dividend yield		-		-

The significant assumptions using the Monte Carlo Simulation approach for valuation of the Warrants are:

(i)	Risk-Free Interest Rate. The risk-free interest rates for the Warrants are based on U.S. Treasury constant maturities for periods commensurate with the remaining expected holding periods of the warrants.
(ii)	Expected Holding Period. The expected holding period represents the period of time that the Warrants are expected to be outstanding until they are exercised. The Company utilizes the remaining contractual term of the Warrants at each valuation date as the expected holding period.
(iii)	Expected Volatility. Expected stock volatility is based on daily observations of the Company’s historical stock values for a period commensurate with the remaining expected holding period on the last day of the period for which the computation is made.
(iv)	Expected Dividend Yield. Expected dividend yield is based on the Company’s anticipated dividend payments over the remaining expected holding period. As the Company has never issued dividends, the expected dividend yield is $-0- and this assumption will be continued in future calculations unless the Company changes its dividend policy.
(v)	Expected Probability of a Fundamental Transaction. The possibility of the occurrence of a Fundamental Transaction triggering a Put right is extremely remote. As discussed above, a Put right would only arise if a Fundamental Transaction 1) is an all cash transaction; (2) results in the Company going private; or (3) is a transaction involving a person or entity not traded on a national securities exchange. The Company believes such an occurrence is highly unlikely because:

a.	The Company only has one product that is FDA approved but which will not be available for commercial sales for at least approximately 18 months;
b.	The Company may have to perform additional clinical trials for FDA approval of its flagship product;
c.	Industry and market conditions continue to include a global market recession, adding risk to any transaction;
d.	Available capital for a potential buyer in a cash transaction continues to be limited;
e.	The nature of a life sciences company is heavily dependent on future funding and high fixed costs, including Research & Development;
f.	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
g.	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		0.5	%
Medium		1.0	%
High		5.0	%

The Monte Carlo Simulation has incorporated a 5.0% probability of a Fundamental Transaction to date for the life of the securities.

(vi)	Expected Timing of Announcement of a Fundamental Transaction. As the Company has no specific expectation of a Fundamental Transaction, for reasons elucidated above, the Company utilized a discrete uniform probability distribution over the Expected Holding Period to model in the potential announcement of a Fundamental Transaction occurring during the Expected Holding Period.
(vii)	Expected 100 Day Volatility at Announcement of a Fundamental Transaction. An estimate of future volatility is necessary as there is no mechanism for directly measuring future stock price movements. Daily observations of the Company’s historical stock values for the 100 days immediately prior to the Warrants’ grant dates, with a floor of 100%, were utilized as a proxy for the future volatility.
(viii)	Expected Risk-Free Interest Rate at Announcement of a Fundamental Transaction. The Company utilized a risk-free interest rate corresponding to the forward U.S. Treasury rate for the period equal to the time between the date forecast for the public announcement of a Fundamental Transaction and the Warrant expiration date for each simulation.
(ix)	Expected Time Between Announcement and Consummation of a Fundamental Transaction. The expected time between the announcement and the consummation of a Fundamental Transaction is based on the Company’s experience with the due diligence process performed by acquirers, and is estimated to be six months. The Monte Carlo Simulation approach incorporates this additional period to reflect the delay Warrant Holders would experience in receiving the proceeds of the Put.

While the assumptions remain consistent from period to period (e.g., utilizing historical stock prices), the numbers input change from period to period (e.g., the actual historical prices input for the relevant period). The carrying amount and estimated fair value of the above Warrants was approximately $1,279,000 at March 31, 2017 and 940,000 at December 31, 2016.

The Company applies FASB ASC 820 (formerly Statement No. 157 Fair Value Measurements) that defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The guidance does not impose any new requirements around which assets and liabilities are to be measured at fair value, and instead applies to asset and liability balances required or permitted to be measured at fair value under existing accounting pronouncements. The Company measures its warrant liability for those warrants with a cash settlement feature at fair value.

FASB ASC 820-10-35-37 (formerly SFAS No. 157) establishes a valuation hierarchy based on the transparency of inputs used in the valuation of an asset or liability. Classification is based on the lowest level of inputs that is significant to the fair value measurement. The valuation hierarchy contains three levels:

● 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.

● 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.

● 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 March, 2017, 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 these warrants.

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 March 31, 2017
	Total		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	2,973	$	2,973	$	-	$	-
Liabilities:
Redeemable warrants	$	1,279		-		-	$	1,279

	(in thousands) As of December 31, 2016
	Total		Level 1		Level 2		Level 3
Assets:
Marketable Securities	$	3,460	$	3,460	$	-	$	-
Liabilities:
Redeemable warrants		940		-		-		940

The changes in Level 3 Liabilities measured at fair value on a recurring basis are summarized as follows (in thousands):

Balance at December 31, 2016	$	940
Issuance of warrants		732
Fair value adjustments		(393	)
Balance at March 31, 2017	$	1,279

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Subsequent Events

3 Months Ended

Mar. 31, 2017

Subsequent Events [Abstract]

Subsequent Events

Note 13: Subsequent Events

The Board of Directors approved up to $500,000 for all directors, officers and employees to buy company shares from the company at the market price. Subsequent to March 31, 2017, the Company issued 328,020 shares of its common stock at prices between $0.50 and $0.69 per share directly to executives and employees, for $185,000 in a series of private transactions pursuant to stock purchase agreements. 

In May 2017, the Company entered into a mortgage and note payable agreement with a bridge funding company to obtain a two-year funding line of up to $4,000,000 secured by the property and assets located at 783 Jersey Ave., New Brunswick, New Jersey. Subject to the lender's approval, the Company will be able to request up to $1,800,000 of the line in monthly advances during the loan term of 24 months. The Company will be able to request future advances in excess of $2,000,000 at the lender's discretion and be payable in full upon maturity. The Company will pay interest on this note at a fixed rate of 12% per annum for the first 18 months and change to a rate equal to 800 basis points above the prime rate of interest during the remainder of the term; however, the interest rate will not be less than 12% for the entire term. The note will be interest only and payable monthly through the maturity. The Company is permitted to prepay the line without penalty commencing after six months.

The Company evaluated subsequent events through the date on which these financial statements were issued and determined that no subsequent event, other than the above, constituted a matter that required adjustment to the financial statements for the three months ended March 31, 2017.

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Equity-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Stock Option Activity

Stock option for employees’ activity during the three months ended March 31, 2017 is 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, 2017		836,256		$	16.82		4.47	$	—
Granted		—			—		—		—
Forfeited		(5,048	)		25.47		—		—
Outstanding March 31, 2017		831,208		$	16.77		4.24	$	—
Vested and expected to vest March 31, 2017		831,208		$	16.77		4.24	$	—
Exercisable March 31, 2017		786,936		$	16.54		3.24	$	—

Stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		271,500		$	10.41		4.66	$	—
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited		(5,590	)		15.08		—		—
Outstanding March 31, 2017		265,910		$	10.31		4.41	$	—
Vested and expected to vest March 31, 2017		265,910		$	10.31		4.41	$	—
Exercisable March 31, 2017		254,104		$	10.69		4.11	$	—

Schedule of Unvested Stock Option Activity

Stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		271,500		$	10.41		4.66	$	—
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited		(5,590	)		15.08		—		—
Outstanding March 31, 2017		265,910		$	10.31		4.41	$	—
Vested and expected to vest March 31, 2017		265,910		$	10.31		4.41	$	—
Exercisable March 31, 2017		254,104		$	10.69		4.11	$	—

Unvested stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2017		26,389		$	1.65		8.61	$	—
Granted		—			—		—		—
Vested		(11,771	)		1.64		—		—
Forfeited		(2,812	)		1.68		—		—
Outstanding March 31, 2017		11,806		$	1.65		9.41	$	—

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Inventories (Tables)

3 Months Ended

Mar. 31, 2017

Inventory Disclosure [Abstract]

Schedule of Inventories

The Company uses the lower of first-in, first-out (“FIFO”) cost or market method of accounting for inventory.

Inventories consist of the following:	(in thousands)
	March 31, 2017		December 31, 2016
Inventory work-in-process, January 1	$	—	$	1,326
Production		—		—
Transfer to other assets		—		(1,326	)
Spoilage		—		—
Inventory work-in-process, end of period	$	—	$	—

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Marketable Securities (Tables)

3 Months Ended

Mar. 31, 2017

Marketable Securities [Abstract]

Schedule of Available for Sale

Securities classified as available for sale consisted of:

March 31, 2017

(in thousands)

Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Investments		Long Term Investments
Mutual Funds	$	2,967	$	6	$	—	$	2,973	$	2,973	$	—
Totals	$	2,967	$	6	$	—	$	2,973	$	2,973	$	—

December 31, 2016

(in thousands)

Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Short-Term Investments		Long Term Investments
Mutual Funds	$	3,465	$	—	$	(5	)	$	3,460	$	3,460	$	—
Totals	$	3,465	$	—	$	(5	)	$	3,460	$	3,460	$	—

Schedule of Investments with Continuous Unrealized Losses

There were no investments in a loss position as of March 31, 2017.

December 31, 2016

(in thousands)

	Total		Less Than 12 Months					12 Months or Greater				Totals
Securities	Number In Loss Position		Fair Values		Unrealized Losses			Fair Values		Unrealized Losses		Total Fair Value		Total Unrealized Losses
Mutual Funds		1	$	1,853	$	(13	)	$	—	$	—	$	1,853	$	(13	)
Totals		1	$	1,853	$	(13	)	$	—	$	—	$	1,853	$	(13	)

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Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2017

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses consist of the following:

	(in thousands)
	March 31, 2017		December 31, 2016
Compensation	$	277	$	297
Professional fees		528		604
Clinical trial expenses		393		158
Other expenses		511		489
	$	1,709	$	1,548

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Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

	(in thousands)
	March 31, 2017			December 31, 2016
Land, buildings and improvements	$	10,530		$	10,530
Furniture, fixtures, and equipment		5,625			5,630
Total property and equipment		16,155			16,160
Less: accumulated depreciation and amortization		(6,898	)		(6,646	)
Property and equipment, net	$	9,257		$	9,514

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Schedule of Assumptions to Estimate the Fair Value of Warrants

The Company utilized the following assumptions to estimate the fair value of the August 2016 Warrants:

	March 31, 2017		December 31, 2016
Underlying price per share		$0.55		$0.69
Exercise price per share		$1.88 - $2.00		$1.88 - $2.00
Risk-free interest rate		1.81%-1.86%		1.86%
Expected holding period		4.40		4.70
Expected volatility		85%		85%
Expected dividend yield		-		-

The Company utilized the following assumptions to estimate the fair value of the January 2017 Warrants:

	March 31, 2017		February 1, 2017
Underlying price per share		$0.55		$0.64
Exercise price per share		$0.69-$0.75		$0.69-$0.75
Risk-free interest rate		1.90%		1.86%-1.93%
Expected holding period		4.80-4.90		5.00
Expected volatility		85%		80%-85%
Expected dividend yield		-		-

Schedule of Range of Probabilities

the Company estimated the range of probabilities related to a Put right being triggered as:

Range of Probability	Probability
Low		0.5	%
Medium		1.0	%
High		5.0	%

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

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 March 31, 2017
	Total		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	2,973	$	2,973	$	-	$	-
Liabilities:
Redeemable warrants	$	1,279		-		-	$	1,279

	(in thousands) As of December 31, 2016
	Total		Level 1		Level 2		Level 3
Assets:
Marketable Securities	$	3,460	$	3,460	$	-	$	-
Liabilities:
Redeemable warrants		940		-		-		940

Schedule of Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis

The changes in Level 3 Liabilities measured at fair value on a recurring basis are summarized as follows (in thousands):

Balance at December 31, 2016	$	940
Issuance of warrants		732
Fair value adjustments		(393	)
Balance at March 31, 2017	$	1,279

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Basis of Presentation (Details Narrative) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($) Number	Dec. 31, 2016 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of domestic subsidiaries	2
Number of foreign subsidiaries	1
Accumulated deficit | $	$ 303,322	$ 300,501

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Net Loss Per Share (Details Narrative) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Stock Option And Warrants [Member]
Anti-dilutive shares excluded from diluted net loss	10,881,033	15,504,000

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Equity-Based Compensation (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Equity based compensation	$ 52	$ 52
Unrecognized equity-based compensation	$ 135	168
2016 Voluntary Incentive Stock Award Plan [Member]
Equity based compensation		$ 21
Granted rights to incentive shares		53,051

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Equity-Based Compensation - Schedule of Stock Option Activity (Details)	3 Months Ended
	Mar. 31, 2017 USD ($) $ / shares shares
Employees [Member]
Number of Options Outstanding, beginning of year | shares	836,256
Granted | shares
Exercised | shares
Forfeited | shares	(5,048)
Number of Options Outstanding, end of year | shares	831,208
Number of Options Vested and expected to vest | shares	831,208
Number of Options Exercisable at end of year | shares	786,936
Weighted Average Exercise Price Outstanding, beginning of year	$ 16.82
Weighted Average Exercise Price Granted
Weighted Average Exercise Price Exercised
Weighted Average Exercise Price Forfeited	25.47
Weighted Average Exercise Price Outstanding, end of year	16.77
Weighted Average Exercise Price Vested and expected to vest	16.77
Outstanding, end of year	$ 16.54
Weighted Average Remaining Contracted Term Outstanding, beginning of year	4 years 5 months 19 days
Weighted Average Remaining Contracted Term Granted	0 years
Weighted Average Remaining Contracted Term Exercised	0 years
Weighted Average Remaining Contracted Term Forfeited	0 years
Weighted Average Remaining Contracted Term Outstanding, end of year	4 years 2 months 27 days
Weighted Average Remaining Contracted Term Vested and expected to vest	4 years 2 months 27 days
Weighted Average Remaining Contracted Term Exercisable at end of year	3 years 2 months 27 days
Aggregate Intrinsic Value Outstanding, beginning of year | $
Aggregate Intrinsic Value Granted
Aggregate Intrinsic Value Exercised | $
Aggregate Intrinsic Value Forfeited
Aggregate Intrinsic Value Outstanding, end of year | $
Aggregate Intrinsic Value Vested and expected to vest | $
Aggregate Intrinsic Value Exercisable at end of year | $
Non-Employees [Member]
Number of Options Outstanding, beginning of year | shares	271,500
Granted | shares
Exercised | shares
Forfeited | shares	(5,590)
Number of Options Outstanding, end of year | shares	265,910
Number of Options Vested and expected to vest | shares	265,910
Number of Options Exercisable at end of year | shares	254,104
Weighted Average Exercise Price Outstanding, beginning of year	$ 10.41
Weighted Average Exercise Price Granted
Weighted Average Exercise Price Exercised
Weighted Average Exercise Price Forfeited	15.08
Weighted Average Exercise Price Outstanding, end of year	10.31
Weighted Average Exercise Price Vested and expected to vest	10.31
Outstanding, end of year	$ 10.69
Weighted Average Remaining Contracted Term Outstanding, beginning of year	4 years 7 months 28 days
Weighted Average Remaining Contracted Term Granted	0 years
Weighted Average Remaining Contracted Term Exercised	0 years
Weighted Average Remaining Contracted Term Forfeited	0 years
Weighted Average Remaining Contracted Term Outstanding, end of year	4 years 4 months 28 days
Weighted Average Remaining Contracted Term Vested and expected to vest	4 years 4 months 28 days
Weighted Average Remaining Contracted Term Exercisable at end of year	4 years 1 month 10 days
Aggregate Intrinsic Value Outstanding, beginning of year | $
Aggregate Intrinsic Value Granted
Aggregate Intrinsic Value Exercised | $
Aggregate Intrinsic Value Forfeited
Aggregate Intrinsic Value Outstanding, end of year | $
Aggregate Intrinsic Value Vested and expected to vest | $
Aggregate Intrinsic Value Exercisable at end of year | $

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Equity-Based Compensation - Schedule of Unvested Stock Option Activity (Details)	3 Months Ended
	Mar. 31, 2017 USD ($) $ / shares shares
Employees [Member]
Number of Options Outstanding, beginning of year | shares	90,625
Number of Options, Granted | shares
Number of Options, Vested | shares	(46,354)
Number of Options, Forfeited | shares
Number of Options Outstanding, end of year | shares	44,271
Weighted Avrage Exercise Price Outstanding, beginning of year | $ / shares	$ 1.72
Weighted Avrage Exercise Price, Granted | $ / shares
Weighted Avrage Exercise Price, Vested | $ / shares	1.58
Weighted Avrage Exercise Price, Forfeited | $ / shares
Weighted Avrage Exercise Price Outstanding, end of year | $ / shares	$ 1.87
Average Remaining Contractual Term Outstanding, beginning of year	9 years 3 months 29 days
Average Remaining Contractual Term, Granted	0 years
Average Remaining Contractual Term, Vested	0 years
Average Remaining Contractual Term, Forfeited	0 years
Average Remaining Contractual Term Outstanding, end of year	8 years 10 months 28 days
Aggregate Intrinsic Value Outstanding, beginning of year | $
Aggregate Intrinsic Value, Granted | $
Aggregate Intrinsic Value, Vested | $
Aggregate Intrinsic Value, Forfeited | $
Aggregate Intrinsic Value Outstanding, end of year | $
Non-Employees [Member]
Number of Options Outstanding, beginning of year | shares	26,389
Number of Options, Granted | shares
Number of Options, Vested | shares	(11,771)
Number of Options, Forfeited | shares	(2,812)
Number of Options Outstanding, end of year | shares	11,806
Weighted Avrage Exercise Price Outstanding, beginning of year | $ / shares	$ 1.65
Weighted Avrage Exercise Price, Granted | $ / shares
Weighted Avrage Exercise Price, Vested | $ / shares
Weighted Avrage Exercise Price, Forfeited | $ / shares	1.64
Weighted Avrage Exercise Price Outstanding, end of year | $ / shares	$ 1.68
Average Remaining Contractual Term Outstanding, beginning of year	8 years 7 months 10 days
Average Remaining Contractual Term, Granted	0 years
Average Remaining Contractual Term, Vested	0 years
Average Remaining Contractual Term, Forfeited	0 years
Average Remaining Contractual Term Outstanding, end of year	9 years 4 months 28 days
Aggregate Intrinsic Value Outstanding, beginning of year | $
Aggregate Intrinsic Value, Granted | $
Aggregate Intrinsic Value, Vested | $
Aggregate Intrinsic Value, Forfeited | $
Aggregate Intrinsic Value Outstanding, end of year | $

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Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Inventory Disclosure [Abstract]
Inventory work-in-process, beginning		$ 1,326
Production
Transfer to other assets		(1,326)
Spoilage
Inventory work-in-process, end of period

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Marketable Securities (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Marketable Securities [Abstract]
Other than temporary impairments chagres

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Marketable Securities - Schedule of Available for Sale (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Amortized Cost	$ 2,967	$ 3,465
Gross Unrealized Gains	6
Gross Unrealized Losses		(5)
Fair Value	2,973	3,460
Short-Term Investments	2,973	3,460
Long Term Investments
Mutual Funds [Member]
Amortized Cost	2,967	3,465
Gross Unrealized Gains	6
Gross Unrealized Losses		(5)
Fair Value	2,973	3,460
Short-Term Investments	2,973	3,460
Long Term Investments

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Marketable Securities - Schedule of Investments with Continuous Unrealized Losses (Details) $ in Thousands	Dec. 31, 2016 USD ($) Number
Total number in loss position | Number	1
Less Than 12 Months, Fair Values	$ 1,853
Less Than 12 Months, Unrealized Losses	(13)
12 Months or Greater, Fair Values
12 Months or Greater, Unrealized Losses
Total Fair Values	1,853
Total Unrealized Losses	$ (13)
Mutual Funds [Member]
Total number in loss position | Number	1
Less Than 12 Months, Fair Values	$ 1,853
Less Than 12 Months, Unrealized Losses	(13)
12 Months or Greater, Fair Values
12 Months or Greater, Unrealized Losses
Total Fair Values	1,853
Total Unrealized Losses	$ (13)

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Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Compensation	$ 277	$ 297
Professional fees	528	604
Clinical Trial expenses	393	158
Other expenses	511	489
Accrued expenses	$ 1,709	$ 1,548

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Property and Equipment (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Assets held for sale	$ 764	$ 764
Minimum [Member]
Estimated useful life	3 years
Maximum [Member]
Estimated useful life	39 years

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Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Total property and equipment	$ 16,155	$ 16,160
Less: accumulated depreciation and amortization	(6,898)	(6,646)
Property and equipment, net	9,257	9,514
Land, Buildings and Improvements [Member]
Total property and equipment	10,530	10,530
Furniture, Fixtures and Equipment [Member]
Total property and equipment	$ 5,625	$ 5,630

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Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands							3 Months Ended
	Feb. 02, 2017	Sep. 06, 2016	Aug. 29, 2016	Dec. 15, 2015	Sep. 16, 2015	Jul. 23, 2012	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Dec. 08, 2011
Preferred stock, shares authorized							5,000,000		5,000,000
Preferred stock par value							$ 0.01		$ 0.01
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, shares authorized							350,000,000		350,000,000
Common stock,restrictions usage										75,000,000
Common stock, increase authorized										150,000,000
Common stock,unrestrictions usage					67,000,000
Reverse stock split description			12 to 1 reverse stock split on the outstanding shares
Maximum number of shares issued upon transaction, value							$ 875
Proceeds from sale of common stock, net of issuance costs							875	$ 2
Placement Agent [Member]
Proceeds from foregoing transaction							$ 4,520
Equity Distribution Agreement [Member] | Maxim Group LLC [Member]
Maximum number of shares issued upon transaction, value						$ 75,000
Proceeds from sale of equity						$ 10,000
Percentage of fixed commissions aggregate gross proceeds up to $10,000,000						4.00%
Percentage of fixed commissions aggregate gross proceeds after $10,000,000						3.00%
Equity Distribution Agreement [Member] | Chardan Capital Markets, LLC [Member]
Percentage of fixed commissions aggregate gross proceeds				3.00%
Prospectus Supplement New Equity Distribution Agreement [Member] | Maxim Group LLC [Member]
Maximum number of shares issued upon transaction, value				$ 0
February Purchase Agreement [Member] | Investors [Member]
Maximum number of shares issued upon transaction	1,818,185
Percentage of fixed commissions aggregate gross proceeds							7.00%
Shares issued price per share	$ 0.55
February Purchase Agreement [Member] | Investors [Member] | Warrant [Member]
Proceeds from sale of common stock, net of issuance costs	$ 875
Percentage of fixed commissions aggregate gross proceeds							5.00%
Shares issued price per share							$ 0.6875
Number of warrant to purchase shares of common stock	1,363,639
Warrant exercise price per share	$ 0.75
Warrant initially exercisable term	6 months
Warrant exercisable term	5 years
Warrant outstanding							90,910
Warrant expiry date							Feb. 01, 2022
Securities Purchase Agreement [Member] | Investors [Member]
Maximum number of shares issued upon transaction		3,333,334
Shares issued price per share		$ 1.50
Securities Purchase Agreement [Member] | Investors [Member] | Warrant [Member]
Proceeds from sale of common stock, net of issuance costs		$ 4,520
Number of warrant to purchase shares of common stock		2,500,000
Warrant exercise price per share		$ 2.00
Warrant initially exercisable term		6 months
Warrant exercisable term		5 years
Engagement Agreement [Member] | Placement Agent [Member]
Percentage of fixed commissions aggregate gross proceeds							7.00%
Engagement Agreement [Member] | Placement Agent [Member] | Warrant [Member]
Percentage of fixed commissions aggregate gross proceeds							5.00%
Shares issued price per share							$ 1.875
Warrant outstanding							166,667
Warrant expiry date							Sep. 01, 2021
Equity Incentive Plans 2009 [Member]
Maximum number of shares issued upon transaction					60,000,000
Number of additional authorized shares under plan					7,000,000
Reverse stock split description							12 to 1 reverse stock split
Maximum number of common stock reserved							22,000,000
Expiration period							10 years
Minimum [Member]
Common stock, shares authorized							200,000,000
Maximum [Member]
Common stock, shares authorized							350,000,000

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Funds Received from Sale of Income Tax Net Operating Losses (Details Narrative) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Jan. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Federal [Member]
Net operating loss carryforwards		$ 174,000
Description of operating loss carryforwards		expiring in the years 2018 through 2036
Pennsylvania Division of Tax [Member]
Net operating loss carryforwards	$ 36,000
Description of operating loss carryforwards	expiring in the years 2018 through 2033
New Jersey Division of Taxation [Member]
Net operating loss carryforwards	$ 8,000	$ 14,000	$ 16,000
Description of operating loss carryforwards	expiring in 2036
Approximate value of operating loss carryforwards				$ 1,120	$ 1,320
Research and development credits				$ 189	$ 241

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Fair Value (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Expected dividend yield	$ 0
Probability of fundamental transaction	5.00%
Floor rate used as proxy for future volatility percentage	100.00%
Fair Value of redeemable warrants	$ 734
Warrant [Member]
Fair Value of redeemable warrants	$ 1,279		$ 940

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Fair Value - Schedule of Assumptions to Estimate the Fair Value of Warrants (Details) - $ / shares		3 Months Ended	12 Months Ended
	Feb. 02, 2017	Mar. 31, 2017	Dec. 31, 2016
August 2016 Warrants [Member]
Underlying price per share		$ 0.55	$ 0.69
Risk-free interest rate			1.86%
Expected holding period		4 years 4 months 24 days	4 years 8 months 12 days
Expected volatility		85.00%	85.00%
Expected dividend yield
August 2016 Warrants [Member] | Minimum [Member]
Exercise price per share		$ 1.88	$ 1.88
Risk-free interest rate		181.00%
August 2016 Warrants [Member] | Maximum [Member]
Exercise price per share		$ 2.00	$ 2.00
Risk-free interest rate		186.00%
January 2017 Warrants [Member]
Underlying price per share	$ 0.64	$ 0.55
Risk-free interest rate		1.90%
Expected holding period	5 years
Expected volatility		85.00%
January 2017 Warrants [Member] | Minimum [Member]
Exercise price per share	$ 0.69	$ 0.69
Risk-free interest rate	1.86%
Expected holding period		4 years 9 months 18 days
Expected volatility	80.00%
January 2017 Warrants [Member] | Maximum [Member]
Exercise price per share	$ 0.75	$ 0.75
Risk-free interest rate	1.93%
Expected holding period		4 years 10 months 24 days
Expected volatility	85.00%

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Fair Value - Schedule of Range of Probabilities (Details)	3 Months Ended
	Mar. 31, 2017
Minimum [Member]
Percentage of probability	0.50%
Medium [Member]
Percentage of probability	1.00%
Maximum [Member]
Percentage of probability	5.00%

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Fair Value - Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Marketable Securities	$ 2,973	$ 3,460
Redeemable warrants	1,279	940
Level 1 [Member]
Marketable Securities	2,973	3,460
Redeemable warrants
Level 2 [Member]
Marketable Securities
Redeemable warrants
Level 3 [Member]
Marketable Securities
Redeemable warrants	$ 1,279	$ 940

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Fair Value - Schedule of Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Fair Value Disclosures [Abstract]
Balance at beginning	$ 940
Issuance of warrants	723
Fair value adjustments	(393)
Balance at ending	$ 1,279

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Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended
	May 30, 2017	Mar. 31, 2017
Maximum value of shares approved		$ 500,000
Stock issued during period, shares		328,020
Chief Executive Officer [Member]
Purchase price per share		$ 0.50
Executives and Employees [Member]
Maximum value of shares approved	$ 185,000
Purchase price per share		$ 0.69
Maximum funding line	4,000,000
Monthly advance in the line of credit	1,800,000
Amount of future advances	$ 2,000,000
Note interest rate	12.00%
Interest rate description	The Company will pay interest on this note at a fixed rate of 12% per annum for the first 18 months and change to a rate equal to 800 basis points above the prime rate of interest during the remainder of the term; however, the interest rate will not be less than 12% for the entire term.