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 September 30, 2020

Commission File Number: 001-27072

AIM IMMUNOTECH 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.)

2117 SW Highway 484, Ocala FL 34473

(Address of principal executive offices) (Zip Code)

(352) 448-7797

(Registrant’s telephone number, including area code)

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).

[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.

[  ] Large accelerated filer	[  ] Accelerated filer
[X] 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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	AIM	NYSE American

40,686,482 shares of common stock were outstanding as November 11, 2020.

PART I- FINANCIAL INFORMATION

ITEM 1: Financial Statements

AIM IMMUNOTECH INC. AND SUBSIDIARIES

Consolidated Balance Sheets

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

(Unaudited)

	September 30, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	38,496		$	1,470
Marketable securities, short term		1,144			7,308
Funds receivable from sale of New Jersey net operating loss		—			776
Accounts receivable, net		26			44
Prepaid expenses and other current assets		91			848
Total current assets		39,757			10,446
Property and equipment, net		6,629			7,116
Right of use assets, net		188			152
Patent and trademark rights, net		1,407			1,151
Marketable securities, long term		14,836			—
Other assets		1,347			1,354
Total assets	$	64,164		$	20,219
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	205		$	472
Accrued expenses		322			403
Current portion of operating lease liabilities		42			38
Current portion of financing obligation		226			214
Total current liabilities		795			1,127
Long-term liabilities:
Operating lease obligation		146			114
Notes payable, net		—			3,910
Financing obligation arising from sale leaseback transaction (Note 14)		1,934			2,104
Redeemable warrants		177			57
Commitments and contingencies
Stockholders’ equity:
Series B Convertible Preferred Stock, stated value $1,000 per share, 8,000 shares designated, 733 and 778 shares issues and outstanding, respectively		733			778
Common stock, par value $0.001 per share, authorized 350,000,000 shares; issued and outstanding 40,685,282 and 10,386,754 respectively		41			10
Additional paid-in capital		398,925			340,228
Accumulated other comprehensive income		(12	)		—
Accumulated deficit		(338,575	)		(328,109	)
Total stockholders’ equity		61,112			12,907
Total liabilities and stockholders’ equity	$	64,164		$	20,219

See accompanying notes to consolidated financial statements.

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AIM IMMUNOTECH INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Loss

(in thousands, except share and per share data)

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019
Revenues:
Clinical treatment programs – United States	$	27		$	56		$	110		$	60
Clinical treatment programs - Europe		9			5			11			30
Total revenues		36			61			121			90
Costs and expenses:
Production costs		204			230			608			676
Research and development		1,102			1,190			3,445			3,214
General and administrative		2,085			1,846			6,070			5,555
Total costs and expenses		3,391			3,266			10,123			9,445
Operating loss		(3,355	)		(3,205	)		(10,002	)		(9,355	)
Interest and other income		69			8			131			44
Interest expense and other finance costs		(51	)		(193	)		(617	)		(537	)
Extinguishment of notes payable		—			—			142			(250	)
Convertible note valuation adjustment		—			(4	)		—			12
Settlement of litigation		—			—			—			260
Redeemable warrants valuation adjustment		31			446			(120	)		1,485
Net loss		(3,306	)		(2,948	)		(10,466	)		(8,341	)
Other comprehensive income (loss):
Unrealized loss on marketable securities		(75	)		—			(12	)		—
Net comprehensive loss	$	(3,381	)	$	(2,948	)	$	(10,478	)	$	(8,341	)
Basic and diluted loss per share	$	(0.08	)	$	(1.13	)	$	(0.36	)	$	(4.41	)
Weighted average shares outstanding, basic and diluted		38,907,546			2,603,854			28,826,283			1,891,782

See accompanying notes to consolidated financial statements.

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AIM IMMUNOTECH INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Stockholders’ Equity

For the Nine Months Ended September 30, 2020 and 2019

(in thousands except share data)

(Unaudited)

	Series B Preferred			Common Stock Shares		Common Stock		Additional Paid-in Capital		Accumulated other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity
Balance December 31, 2019	$	778			10,386,754	$	10	$	340,228	$	—		$	(328,109	)	$	12,907
Shares issued for:
Common stock issuances		—			30,287,007		31		58,035		—			—			58,066
Warrant modification		—			—		—		46		—			—			46
Equity-based compensation		—			—		—		596		—			—			596
Shares issued to pay accounts payable		—			6,407		—		20		—			—			20
Series B preferred shares converted to common shares		(45	)		5,114		—		—		—			—			(45	)
Net comprehensive loss		—			—		—		—		(12	)		(10,466	)		(10,478	)
Balance September 30, 2020	$	733			40,685,282	$	41	$	398,925	$	(12	)	$	(338,575	)	$	61,112

	Series B Preferred			Common Stock Shares		Common Stock		Additional Paid-in Capital			Accumulated other Comprehensive Income (Loss)		Accumulated Deficit			Total Stockholders’ Equity
Balance December 31, 2018	$	—			1,107,607	$	1	$	323,749		$	—	$	(318,576	)	$	5,174
Shares issued for:
Common stock issuance, net of costs		—			4,243,390		5		16,939			—		—			16,944
Convertible note origination shares		—			204,246		—		1,473			—		—			1,473
Deemed dividends		—			—		—		(135	)		—		—			(135	)
Equity-based compensation		—			1,932		—		649			—		—			649
Redeemable warrants		—			—		—		(2,787	)		—		—			(2,787	)
Shares issued to pay accounts payable		—			25,459		—		84			—		—			84
Series B preferred shares issued, net of offering costs		5,312			—		—		—			—		—			5,312
Series B preferred shares converted to common shares		(4,529	)		514,659		—		—			—		—			(4,529	)
Net comprehensive loss		—			—		—		—			—		(8,341	)		(8,341	)
Balance September 30, 2019	$	783			6,097,293	$	6	$	339,972		$	—	$	(323,917	)	$	13,844

See accompanying notes to consolidated financial statements.

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AIM IMMUNOTECH INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2020 and 2019

(in thousands)

(Unaudited)

	2020			2019
Cash flows from operating activities:
Net loss	$	(10,466	)	$	(8,341	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment		500			557
Redeemable warrants valuation adjustment		120			(1,485	)
Fair value of convertible note adjustment		—			(12	)
Change in convertible debt – refinancing		—			20
Extinguishment of notes payable		142			345
Warrant modification		46			—
Amortization of patent, trademark rights		41			53
Changes in ROU assets		(36	)		26
Equity-based compensation		596			649
Realized (loss) gain on sale of marketable securities		(12	)		—
Amortization of finance and debt issuance costs		77			303
Change in assets and liabilities:
Accounts receivable and other receivables		794			1,032
Prepaid expenses and other current assets		764			49
Lease liability		36			(25	)
Accounts payable		(265	)		24
Accrued interest expense		230			—
Accrued expenses		(81	)		27
Net cash used in operating activities		(7,514	)		(6,778	)
Cash flows from investing activities:
Proceeds from sale of marketable securities		8,497			—
Purchase of marketable securities		(17,169	)		(588	)
Purchase of property and equipment		(13	)		(68	)
Purchase of patent and trademark rights		(297	)		(202	)
Net cash used in investing activities		(8,982	)		(858	)
Cash flows from financing activities:
Payment of note payable		(4,279	)		—
Financing obligation payments		(265	)		(254	)
Proceeds from note payable, net of issuance costs		—			1,900
Proceeds from sale of stock, net of issuance costs		58,066			15,307
Net cash provided by financing activities		53,522			16,953
Net increase in cash and cash equivalents		37,026			9,317
Cash and cash equivalents at beginning of period		1,470			299
Cash and cash equivalents at end of period	$	38,496		$	9,616
Supplemental disclosures of non-cash investing and financing cash flow information:
Unrealized loss on marketable securities	$	(12	)	$	—
Conversion of Series B preferred		45			4,529
Conversion of note payable into shares		—			1,474
Stock issued to settle accounts payable	$	20		$	84
Operating lease – right of use assets	$	65		$	188

See accompanying notes to consolidated financial statements.

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AIM IMMUNOTECH INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Business and Basis of Presentation

AIM ImmunoTech Inc. and its subsidiaries (collectively, “AIM” or “Company”) are an immuno-pharma company headquartered in Ocala, Florida and focused on the research and development of therapeutics to treat multiple types of cancers, various viruses and immune-deficiency disorders. The Company has established a strong foundation of laboratory, pre-clinical and clinical data with respect to the development of nucleic acids and natural interferon to enhance the natural antiviral defense system of the human body and to aid the development of therapeutic products for the treatment of certain cancers and chronic diseases.

AIM’s flagship products include Ampligen® (rintatolimod), a first-in-class drug of large macromolecular RNA (ribonucleic acid) molecules, and Alferon N Injection® (Interferon Alfa-N3). A first-in-class drug is also known as a new molecular entity that contains an active moiety. Ampligen has not been approved by the FDA or marketed in the US.

A global pandemic due to a novel strain of coronavirus (COVID-19) has occurred. Since the late 2019 outbreak of SARS-CoV-2, the novel virus that causes COVID-19, the Company has been actively engaged in determining whether Ampligen could be an effective treatment for this virus or could be part of a vaccine. The Company believes that Ampligen has the potential to be both an early-onset treatment for and prophylaxis against SARS-Cov-2. Ampligen is also being researched as part of a potential COVID-19 vaccine strategy that combines Ampligen as an immune enhancer seeking to boost the efficacy of the vaccine and also convey cross-reactivity and cross-protection against future mutations. The Company believes that prior studies of Ampligen in SARS-CoV-1 animal experimentation may predict similar protective effects against the new virus.

In February 2020, AIM filed three provisional patent applications related to Ampligen in the Company’s efforts toward joining the global health community in the fight against the deadly coronavirus. The Company’s three provisional patent applications include: 1) Ampligen as a therapy for the coronavirus; 2) Ampligen as part of a proposed intranasal universal coronavirus vaccine that combines Ampligen with inactivated coronavirus, conveying immunity and cross-protection and; 3) a high-volume manufacturing process for Ampligen. Under the Patent Cooperation Treaty of 1970, which provides international protections for patents, the three provisional patent applications can be converted to international patent applications based on the date of their filings.

In early April 2020, the Company entered into a Material Transfer Agreement with Shenzhen Smoore Technologies located in Shenzhen China, the world’s largest manufacturer of inhalation devices. Pursuant to this agreement, the Company is providing Smoore with Ampligen and Smoore will be conducting in vitro tests using its porous ceramic atomizer technology. Initial testing will include evaluation of Ampligen with regard to safety and characterization of the inhaler vapor properties. Additional testing will study the particle size of various Ampligen concentrations in aqueous solutions obtainable using Smoore’s technology. The goal of these studies is to establish a reproducible method to obtain an Ampligen-containing atomized mist that can deliver biologically active Ampligen deep into the lung airways of humans. Ampligen is scheduled to be shipped to Smoore for testing, pending resolution of various China inbound import regulatory requirements. AIM and Smoore are working to identify and navigate any and all regulatory obligations. The Company will provide additional updates as they become available.

Beginning in April 2020, the Company entered into confidentiality and non-disclosure agreements with numerous companies for the potential outsourcing of the production of polymer, enzyme, placebo as well as Ampligen, and one Contract Research Organization, Amarex Clinical Research LLC (“Amarex”), which will provide regulatory support, including managing a clinical trial testing Ampligen’s potential as a COVID-19 prophylaxis via intranasal delivery.

In addition, the Company has joined with ChinaGoAbroad (CGA) to facilitate the entry of Ampligen into the People’s Republic of China (PRC) for use as a prophylactic/early-onset therapeutic against COVID-19. CGA is a member-based online information platform and offline advisory firm serving to facilitate two-way international transactions relating to the PRC in collaboration with the China Overseas Development Association. The relationship with ChinaGoAbroad is ongoing.

5

On May 11, 2020, the FDA authorized an IND for Roswell Park Comprehensive Cancer Institute (“Roswell Park”) to conduct a Phase 1/2a study of a regimen of Ampligen and interferon alpha in cancer patients with mild or moderate COVID-19 infections. This new clinical trial, sponsored by the Roswell Park in collaboration with the Company, will test the safety of this combination regimen in patients with cancer and mild to moderate COVID-19, and the extent to which this therapy will promote clearance of the SARS-CoV-2 virus from the upper airway. It is planned that the phase 1/2a study will enroll up to 44 patients in two stages. Phase 1 will see 12-24 patients receiving both Ampligen and interferon alfa-2b at escalating doses. Once that initial phase is complete, further study participants will be randomized to two arms: one receiving the two-drug combination and a control group who will not receive Ampligen or interferon alfa but will receive best available care. The Company intends to be a financial sponsor of the study and will provide Ampligen at no charge for this study.

In March 2020, the Japanese National Institute of Infectious Diseases (“NIID”) initiated preliminary laboratory testing of Ampligen as a potential treatment for COVID-19. On July 1, 2020, we entered into a trilateral material transfer and research agreement with the NIID and Shionogi & Co., Ltd. (“Shionogi”), one of Japan’s premier pharma companies to test the Company’s drug Ampligen as a potential vaccine adjuvant for COVID-19. Under the agreement, we have and will continue to provide Ampligen samples for various research projects. Per this agreement, the details of all preclinical and clinical results will remain confidential until released by NIID and Shionogi.

On July 6, 2020, we entered into a clinical trial agreement with Roswell Park pursuant to which Roswell Park will conduct a Phase 1/2a trial of Ampligen (rintatolimod) in combination with Intron-A (interferon alfa-2b), in cancer patients with COVID-19, the disease caused by the SARS-CoV-2 coronavirus.

Recently, the Company also entered into a material transfer agreement with the University of Rochester which is planning a series of in vitro experiments in which it will be testing the direct antiviral activity of Ampligen on SARS-CoV-2, as well as the mechanism of action. The Company also entered into a specialized services agreement with Utah State University that has supplied Ampligen to support the University’s Institute for Viral Research in its research into SARS-CoV-2. The Utah State results show that Ampligen was able to decrease SARS-CoV-2 infectious viral yields by 90% at clinically achievable intranasal Ampligen dosage levels.

In June 2020, AIM filed a provisional patent application for, among other discoveries, the use of Ampligen® as a potential early-onset therapy for the treatment of COVID-19 induced chronic fatigue.

Many survivors of the first SARS-CoV-1 epidemic in 2003 continued to report chronic fatigue, difficulty sleeping and shortness of breath months after recovering from the acute illness. These patients are commonly referred to as “Long Haulers.” Now there is increasing evidence that patients with COVID-19 can develop a similar, ME/CFS-like illness. In October 2020, AIM received Institutional Review Board (IRB) approval for the expansion of the AMP-511 Expanded Access Program (EAP) clinical trial for Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS) to include patients previously diagnosed with SARS-CoV-2, but who still demonstrate chronic fatigue-like symptoms.

On November 2, 2020, AIM announced the publication of statistically significant data detailing how Ampligen could have a considerable positive impact on people living with ME/CFS when administered in the early stages of the disease. The data were published in PLOS ONE, a peer-reviewed open access scientific journal published by the Public Library of Science. AIM researchers found that the TLR3 agonist Ampligen substantially improved physical performance in a subset of ME/CFS patients. The findings potentially carry special importance for COVID-19 “Long Haulers,” who are uniquely situated to potentially benefit from Ampligen as an early onset therapy for subjects who have recovered from acute COVID-19, but then experience chronic fatigue-like symptoms.

The COVID-19 pandemic has significantly impacted the economic conditions in the U.S., accelerating during the first half of March. The ultimate impact of the pandemic on the Company’s results of operations, financial position, liquidity, or capital resources cannot be reasonably estimated at this time.

AIM 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 its drug, Ampligen, and its approved drug, Alferon N Injection.

6

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, 2019 and 2018, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed on March 30, 2020.

On May 29, 2019, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split at a ratio in the range of 1-for-20 to 1-for-50. The Company’s Board of Directors approved the implementation of the reverse stock split at a ratio 1-for-44 which took effect on June 10, 2019. All share and per share amounts for prior periods have been revised to give retroactive effect to this reverse stock split.

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 8,017 and 5,893,040 and 534,283 and 6,733,420 are excluded from the calculation of diluted net loss per share for the three months and nine months ended September 30, 2020 and 2019, respectively, since their effect is antidilutive due to the net loss.

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. Options granted in the nine months ended September 30, 2020 and 2019 were 400,000 and 39,267, respectively.

Stock option for employees’ activity during the nine months ended September 30, 2020 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, 2020		127,747		$	29.61		6.41	$	—
Granted		300,000			3.07		9.83		—
Forfeited		(2,483	)		19.50		—		—
Expired		(568	)		348.48		—		—
Outstanding September 30, 2020		424,696		$	10.50		8.64	$	—
Vested and expected to vest September 30, 2020		424,696		$	20.50		8.64	$	—
Exercisable September 30, 2020		125,321		$	11.18		6.13	$	—

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Unvested stock option activity for employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Unvested January 1, 2020		68,283		$	23.79		7.48	$	—
Granted		300,000			3.07		9.83		—
Vested		(68,908	)		6.26		—		—
Unvested September 30, 2020		299,375		$	7.06		9.68	$	—

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, 2020		66,675		$	24.09		5.47	$	—
Granted		100,000			2.77		9.83		—
Forfeited		—			—		—		—
Expired		(104	)		104.29		—		—
Outstanding September 30, 2020		166,571		$	7,19		7.19	$	—
Vested and expected to vest September 30, 2020		166,571		$	7.19		7.19	$	—
Exercisable September 30, 2020		31,661		$	7.76		9.13	$	—

Unvested stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Unvested January 1, 2020		66,675		$	12.80		5.59	$	—
Granted		100,000			2.77		9.83		—
Expired		—			—		—		—
Vested		(31,765	)		7.75		—		—
Unvested September 30, 2020		134,910		$	6.56		7.90	$	—

Stock-based compensation expense was approximately $596,000 and $649,000 for the nine months ended September 30, 2020 and 2019 resulting in an increase in general and administrative expenses, respectively.

As of September 30, 2020, and 2019, respectively, there was approximately $1,080,000 and $877,000 of unrecognized equity-based compensation cost related to options granted under the Equity Incentive Plan.

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Note 4: Inventories

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

Commercial sales of Alferon in the U.S. will not resume until new batches of commercial filled and finished product are produced and released by the U.S. Food and Drug Administration (“FDA”). While the facility is approved by the FDA under the Biologics 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. 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 in excess of one year, the Company reclassified Alferon work in process inventory of $1,095,000 to other assets within our balance sheet as of September 30, 2020 and December 31, 2019 and due to the high cost estimates to bring the facility back online. Prior to completing validation, the Company plans on modernizing the manufacturing process to make it lower-cost and higher volume. If, following modernization, the Company is unable to gain the necessary FDA approvals related to the manufacturing process and/or final product of new Alferon inventory, its operations most likely will be materially and/or adversely affected. Considering 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.

The Alferon work in process is currently compliant with our internal protocols and is stored in a controlled state. All of these factors contribute to the potential sale of the Alferon work in process, after validation lots have been produced and including a successful pre-approval inspection.

Note 5: Marketable Securities

Marketable securities consist of mutual funds and debt securities. As of September 30, 2020, and December 31, 2019, it was determined that none of the marketable securities had an other-than-temporary impairment. At September 30, 2020 and December 31, 2019, all securities were measured as Level 1 instruments of the fair value measurements standard (see Note 13: Fair Value). As of September 30, 2020, and December 31, 2019 the Company held $15,980,000 and $7,308,000 in debt and equity securities, respectively.

Debt securities classified as available for sale consisted of:

September 30, 2020
(in thousands)

Securities	Amortized Cost		Gross Unrealized Gains /(Losses)		Gross Unrealized Gains /(Losses)			Fair Value		Marketable Securities
U.S. Treasury notes	$	5,641	$	—	$	(23	)	$	5,618	$	5,618
U.S. Government mortgage backed securities		4,748		—		(27	)		4,721		4,721
Corporate bonds		5,603		—		38			5,641		5,641
Totals	$	15,992	$	—	$	(12	)	$	15,980	$	15,980

As of December 31, 2019 the Company held no debt securities.

9

The following presents available-for-sale securities’ gross unrealized losses and fair value aggregated by the short- and long-term maturity.

September 30, 2020
(in thousands)

	Less than 12 Months				12 Months or More					Total
Securities	Fair Value		Gross Unrealized Gains		Fair Value		Gross Unrealized Gains			Fair Value		Gross Unrealized Gains
U.S. Treasury notes	$	1,008	$	—	$	4,610	$	(23	)	$	5,618	$	(23	)
U.S. Government mortgage backed securities		—		—		4,721		(27	)		4,721		(27	)
Corporate bonds		136		—		5,505		38			5,641		38
Totals	$	1,144	$	—	$	14,836	$	12		$	15,980	$	(12	)

Note 6: Accrued Expenses

Accrued expenses consist of the following:

	(in thousands)
	September 30, 2020		December 31, 2019
Compensation	$	89	$	94
Professional fees		116		73
Clinical trial expenses		—		56
Other expenses		117		180
	$	322	$	403

Note 7: Property and Equipment

	(in thousands)
	September 30, 2020			December 31, 2019
Land, buildings and improvements	$	10,547		$	10,547
Furniture, fixtures, and equipment		5,127			5,114
Total property and equipment		15,674			15,661
Less: accumulated depreciation		(9,045	)		(8,545	)
Property and equipment, net	$	6,629		$	7,116

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, ranging from three to thirty-nine years.

On March 16, 2018, the Company sold land and a building for $4,080,000 and concurrently entered into an agreement to lease the property back for ten years. The lease payments are initially $408,000 per year for two years through March 31, 2020 and will escalate in subsequent years. (See Note 14: Financing Obligation Arising from Sale Leaseback Transaction for more details on the sale leaseback of the property and equipment).

10

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. Of our authorized preferred stock, 250,000 shares have been designated as Series A Junior Participating Preferred Stock and 8,000 shares have been designated as Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock has a stated value $1,000 per share.

The Company is authorized to issue 8,000 Series B Convertible Preferred Stock, no par value, stated value $1,000 per share. As of September 30, 2020, and December 31, 2019, the Company had 733 and 783 shares of Series B Convertible Preferred Stock outstanding, respectively. Each such Preferred Share is convertible into 114 shares of common stock.

Pursuant to a registration statement relating to a rights offering declared effective by the SEC on February 14, 2019, AIM distributed to its holders of common stock and to holders of certain options and warrants as of February 14, 2019, at no charge, one non-transferable subscription right for each share of common stock held or deemed held on the record date. Each right entitled the holder to purchase one unit, at a subscription price of $1,000 per unit, consisting of one share of Series B Convertible Preferred Stock with a face value of $1,000 (and immediately convertible into common stock at an assumed conversion price of $8.80) and 114 warrants with an assumed exercise price of $8.80. The warrants are exercisable for five years after the date of issuance. The net proceeds realized from the rights offering were approximately $4,700,000. During the nine months ending September 30, 2020, 45 shares of Series B Convertible Preferred Stock were converted into common stock.

(b) Common Stock

The Company has authorized shares of 350,000,000 with specific limitations and restrictions on the usage of 8,000,000 of the 350,000,000 authorized shares.

In June 2019, the Company effected a 44-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. All references herein to shares of common stock, options, warrants and preferred stock have been adjusted to give effect to this reverse stock.

On June 11, 2019, 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. As of September 30, 2019, the Company has issued 67,767 shares of its common stock at prices between $4.03 and $4.37 for a total of $274,000. This plan expired August 19, 2019. On September 27, 2019, the Company closed an public offering underwritten by A.G.P./Alliance Global Partners, LLC (the “Offering”) of (i) 1,740,550 shares of Common Stock; (ii) pre-funded warrants exercisable for 7,148,310 shares of Common Stock (the “Pre-funded Warrants”), and (iii) warrants to purchase up to an aggregate of 8,888,860 shares of Common Stock (the “Warrants”). In conjunction with the Offering, a Representative’s Warrant to purchase up to an aggregate of 266,665 shares of common stock (the “Representative’s Warrant”). The shares of Common Stock and Warrants were sold at a combined Offering price of $0.90, less underwriting discounts and commissions. Each Warrant sold with the shares of Common Stock represents the right to purchase one share of Common Stock at an exercise price of $0.99 per share. The Pre-Funded Warrants and Warrants were sold at a combined Offering price of $0.899, less underwriting discounts and commissions. The Pre-Funded Warrants were sold to purchasers whose purchase of shares of Common Stock in the Offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% of the Company’s outstanding Common Stock immediately following the consummation of the Offering, in lieu of shares of Common Stock. Each Pre-Funded Warrant represents the right to purchase one share of Common Stock at an exercise price of $0.001 per share. The Pre-Funded Warrants are exercisable immediately and may be exercised at any time until the Pre-Funded Warrants are exercised in full. A registration statement on Form S-1, relating to the Offering was filed with the SEC and was declared effective on September 25, 2019, the net proceeds were approximately $7,200,000. During the nine months ended September 30, 2020, 1,870,000 of the Pre-funded Warrants were exercised and 8,873,860 Warrants were exercised. In addition, on March 25, 2020, the Representative’s Warrant was amended to permit exercise of such warrant to commence on March 30, 2020. These warrants were exercised on March 31, 2020 and an aggregate of 266,665 shares were issued upon exercise of this warrant for gross proceeds of approximately $264,000 and a $46,000 expense for the warrant modification.

11

On May 2, 2019, the Company entered into a modification agreement with certain redeemable warrant holders of the August 23, 2017 and April 20, 2018, respectively. The warrant exercise price was reduced to $6.60 and 103,410 warrants were exercised, reducing the liability attributed to the warrants by approximately $404,000, and the Company realized about $682,000 in net proceeds, resulting in an addition to stockholders’ equity of approximately $1,086,000, offset by a deemed dividend of $135,000.

On July 19, 2019, the Company entered into a new Equity Distribution Agreement (the “2019 EDA”) with Maxim, pursuant to which it may sell from time to time, shares of its Common Stock through Maxim, as agent (the “Offering”). The 2019 EDA replaced the EDA with Maxim. On July 19, 2019, the Company filed a prospectus supplement with the SEC in connection with the offering under the 2019 EDA under its existing Registration Statement on Form S-3 (File No 333-226059) related to the sale of shares of its common stock having an aggregate offering price of up to $4,508,244, the maximum number of Shares permitted to be sold under the 2019 EDA at that time. As of December 31, 2019, the Company had sold 905,869 shares under the 2019 EDA for gross proceeds of $2,553,079 which includes a 3.5% fee to Maxim of $89,358. On March 3, 2020, the Company filed a new prospectus supplement with SEC increasing the aggregate offering price of shares of common stock it could sell under the 2019 EDA to $10,867,245. On March 10, 2020, the Company filed another prospectus supplement with SEC increasing the aggregate offering price under the 2019 EDA to $18,833,739. During the nine months ended September 30, 2020, the Company sold 18,990,367 shares under the 2019 EDA for total gross proceeds of $50,692,287, which includes a 3.5% fee to Maxim of $1,774,230. On June 15, 2020, the Company filed another prospectus supplement with SEC increasing the aggregate offering price under the 2019 EDA to $19,406,552. On August 18, 2020, the Company filed another prospectus supplement with SEC increasing the aggregate offering price under the 2019 EDA to $19,004,095. During the quarter ended September 30, 2020, the Company sold 6,409,441 shares under the 2019 EDA for total gross proceeds of $17,813,884, which includes a 3.5% fee to Maxim of $623,486. The actual number of shares, that the Company can sell, and the proceeds to be received therefrom under the 2019 EDA are dependent upon the market price of its Common Stock.

The 2018 Equity Incentive Plan, effective September 12, 2018, authorizes the grant of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards. Initially, a maximum of 7,000,000 shares of Common Stock is reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. Unless sooner terminated, the 2018 Equity Incentive Plan will continue in effect for a period of 10 years from its effective date. On October 17, 2018, the Board of Directors issued 26,324 options to the officers and directors at the exercise price of $9.68 expiring in 10 years, and on November 14, 2018, the Board of Directors issued 23 options to each employee, officer and director at the exercise price of $9.68 expiring in ten years. On January 28, 2019, 27,570 options were issued to each of these officers with an exercise price of $9.68 for a period of ten years with a vesting period of one year. In August, 2020, 400,000 options were issued to each of these officers with a exercise price range of of $2.77 to $3.07 for a period of ten years with a vesting period of one year.

As of September 30, 2020, and December 31, 2019, there were 40,685,282 and 10,386,754 shares outstanding, respectively.

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 June 2016, the FASB issued ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments, and subsequent amendments to the guidance, ASU 2018-19 in November 2018 and ASU 2020-02 in February 2020. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. The amendment will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2018-19 clarifies that receivables arising from operating leases are accounted for using lease guidance and not as financial instruments. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. This ASU will be effective for us beginning the first day of our 2023 fiscal year. Early adoption is permitted. We are evaluating the impact of adoption of this ASU on our financial condition, results of operations and cash flows, and, as such, we are not able to estimate the effect the adoption of the new standard will have on our financial statements.

12

Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

Note 11: Convertible Note Payable

On September 28, 2018, the Company entered into a $3,170,000 10% Secured Convertible Promissory Note (the “IR Note”) with Iliad Research and Trading, L.P. (the “Holder”), which was issued to the Holder in conjunction with 500,000 shares of common stock (the “Origination Shares”). The Company collected $3,000,000 in cash from the Holder during September 2018 and the remainder $170,000 was retained by the Holder for the Holder’s legal fees of $20,000 for the issuance of the IR Note and the Original Issue Discount of $150,000. The Company incurred $210,000 in third-party fees directly attributed to the issuance of the IR Note. The Company promised to pay the principal amount, together with guaranteed interest at the annual rate of 10%, with principal and accrued interest on the IR Note due and payable on September 28, 2019, unless converted under terms and provisions as set forth within the IR Note. The IR Note provides the Holder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company’s common stock at a conversion price of $0.30 per share. In addition, beginning on March 28, 2019, the IR Note also provides the Holder with the right to redeem all or any portion of the IR Note (“Redemption Amount”). The payments of each Redemption Amount may be made, at the option of the Company, in cash, by converting such Redemption Amount into shares of common stock (“Redemption Conversion Shares”), or a combination thereof. The number of Redemption Conversion Shares equals the portion of the applicable Redemption Amount being converted divided by the lesser of $0.30 or 80% of the lowest Volume Weighted Average Price (“VWAP”) during the ten (10) trading days immediately preceding the applicable measurement date (the “Market Price”). The Purchase Agreement requires the Company to reserve at least 8,900,000 shares of common stock from its authorized and unissued common stock to provide for all issuances of common stock under the IR Note. However, the IR Note provides that the aggregate number shares of common stock issued to the Holder under the IR Note and Purchase Agreement shall not exceed 19.99% of the total number of shares of common stock outstanding as of the closing date unless the Company has obtained stockholder approval of the issuance. The Origination Shares were to be returned to the Company in the event that the Company could provide within 30 days of the closing of the transaction certain requested assets as security for repayment of the IR Note. The security was not provided so the Origination Shares remained with the Holder.

The Company determined the IR Note should be recorded at fair value with subsequent changes in fair value recorded in earnings. This conclusion is based on the redemption conversion feature, which allows the Holder to trigger the redemption of the IR Note for cash or conversion of the IR Note for common shares prior to its maturity date at a price of the lesser of $0.30 per share or the Market Price as defined within the IR Note. The choice of cash redemption or conversion of the IR Note for common shares is at the option of the Company. This feature may require the Company to issue a variable number of common shares to settle the IR Note which was determined to have a predominantly fixed monetary value at inception.

On March 13, 2019, the Company amended the Purchase Agreement pursuant to which it issued the Convertible IR Note (the “Amendment”). The Amendment extends the maturity of the IR Note to September 28, 2020. In addition, the redemption conversion rates were revised to a price to be determined by mutual agreement between the Company and the Holder. In the event that the Company and the Holder are unable to reach a mutually agreeable price, the Company will be required to pay the applicable redemption amount in cash. The maximum amount of the IR Note the Lender will be able to redeem in any given calendar month is $300,000.

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The Company evaluated the Amendment in accordance with ASC 470, Debt (“ASC 470”) and determined the Amendment is considered an extinguishment of the existing debt and issuance of net debt. As a result, the Company derecognized the liability and recorded a loss on the extinguishment of debt of $345,000 in 2019 which was equal to the difference between the reacquisition price of the debt and the net carrying amount (amount due at maturity, adjusted for unamortized discounts) of the extinguished debt. Subsequently, the amended note was recorded in accordance with ASC 480 at the fair value that the note was issued with changes in fair value recorded through earnings at each reporting period.

There were a series of debt conversions during 2019 which partially converted $1,400,000 of the $3,408,000 convertible debt, as amended, into stockholders’ equity, adding approximately $1,400,000 to stockholders’ equity. The number of shares issued in these conversions were 204,246 shares. In October 2019 and November 2019 respectively, the lender redeemed $300,000 pursuant to the terms of the modification. In connection with the IR Note, the Company recorded a gain equal to $127,000 for the year-end December 31, 2019. See Note 12: Long Term Debt.

Interest expense associated with the IR Note was $0 for September 30, 2020 and $94,000 for the nine months ended September 30, 2019.

Note 12: Long-Term Debt

On August 5, 2019, the Company issued a Secured Promissory Note (the “CV Note”) with Chicago Venture Partners, L.P. (the “CV”). The Note has an original principal amount of $2,635,000, bears interest at a rate of 10% per annum and will mature in 24 months, unless earlier paid in accordance with its terms. The Company received proceeds of $1,900,000 after an original issue discount and payment of Lender’s legal fees. Pursuant to a Security Agreement between the Company and the Lender, repayment of the Convertible Note is secured by substantially all of our assets other than its intellectual property.

During the quarter ending June 30, 2020, the Holder made redemptions of $650,000 reducing the principal to $1,985,000. On May 29, 2020, the Company paid off the outstanding CV note consisted of principal of $1,985,000, and accrued interest payable of $220,000. The net payment of $1,795,000, less the write off of the origination discount of $369,000 and issuance costs of $6,000, resulted in a gain on extinguishment of $66,000.

On December 5, 2019, the Company issued a secured Promissory Note (the “AS Note”) to Atlas Sciences L.P. (“AS”). The AS Note has an original principal amount of $2,175,000, bears interest at a rate of 10% per annum and will mature in 24 months, unless earlier paid in accordance with its term. In conjunction with the AS Note, the Company utilized $1,650,000 of the net proceeds from the AS Note to pay off in full our obligation to Iliad, an entity with affiliations to AS, pursuant to the IR Note.

The Company evaluated the IR Note transaction in accordance with ASC 470, Debt (“ASC 470”) and determined the exchange is considered an extinguishment of the existing debt and issuance of new debt. As a result, the Company derecognized the liability and recorded a loss on the extinguishment of debt of $250,000 which was equal to the difference between the reacquisition price of the debt and the net carrying amount (amount due at maturity, adjusted for unamortized discounts) of the extinguished debt. Subsequently, the AS Note was recorded in accordance with ASC 470 whereby the Company will record a liability equal to the proceeds received on December 5, 2019.

On June 19, 2020, the Company paid off the outstanding AS note consisted of original principal of $2,175,000, and accrued interest payable of $122,000 less origination discount of $376,000 and issuance costs of $7,000, with a net note payable of $1,838,000, including a gain on extinguishment of $76,000.

In, conjunction with the financing, the Company used the proceeds to pay the outstanding IR Note. See Note 11: Convertible Note Payable.

Interest expense associated with the CV Note and AS Note for the period ended September 30, 2020 was approximately $116,000 and $106,000, respectively.

Note 13: Fair Value

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

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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, namely (1) a merger or consolidation with another person; (2) sale of substantially all of its assets; (3) holders of common stock sell 50% or more of outstanding shares; (4) the Company effects an exchange of all its securities for other securities, cash or property, and (5) the Company effects a stock purchase agreement or business combination for more than 50% of outstanding shares. The fair value of the redeemable warrants (“Warrants”) related to the Company’s August 2016, February 2017, June 2017, August 2017, April 2018 and March 2019 common stock warrant issuances, 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:

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	82.50		$	82.50
Risk-free interest rate		0.12	%		1.58	%
Expected holding period		0.92			1.67
Expected volatility		125	%		96	%
Expected dividend yield		-			-

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

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	30.25 – 33.00		$	30.25-33.00
Risk-free interest rate		0.13	%		1.60	%
Expected holding period		1.84 – 1.85			2.59-2.60
Expected volatility		125	%		89	%
Expected dividend yield		-			-

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

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	27.50		$	27.50
Risk-free interest rate		0.13	%		1.60	%
Expected holding period		1.67			2.42
Expected volatility		130	%		91	%
Expected dividend yield		-			-

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

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share		19.80		$	19.80
Risk-free interest rate		0.12	%		1.59	%
Expected holding period		1.43			2.18
Expected volatility		140	%		94	%
Expected dividend yield		-			-

15

The Company utilized the following assumptions to estimate the fair value of the April 2018 Warrants:

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	17.16		$	17.16
Risk-free interest rate		0.06 – 0.16	%		1.59%-1.65	%
Expected holding period		0.07 – 3.07			0.82-3.82
Expected volatility		100% - 105	%		86%-124	%
Expected dividend yield		-			-

The Company utilized the following assumptions to estimate the fair value of the March 2019 Warrants:

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	8.80		$	8.80
Risk-free interest rate		0.19	%		1.66	%
Expected holding period		3.44			4.19
Expected volatility		100	%		87	%
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 $0.00 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 18 months at the earliest;
b.	The Company flagship product is approved only in Argentina for Severely Debilitated Chronic Fatigue Syndrome patients;
c.	The Company may have to perform additional clinical trials for FDA approval of its flagship product;
d.	Industry and global market conditions continue to include uncertainty, adding risk to any transaction;
e.	Available capital for a potential buyer in a cash transaction continues to be limited;
f.	The nature of a life science company is heavily dependent on future funding and high costs, including research & development;
g.	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
h.	The Company’s Rights Agreement and Executive Agreements make it less attractive to a potential buyer.

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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 stated above, the Company used a discrete uniform probability distribution over the Expected Holding Period to model 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., using historical stock prices), the numbers input change from period to period (e.g., the actual historical prices input for the relevant period).

The Company applies FASB ASC 820 that defines fair value, establishes a framework for measuring fair value in U.S. GAAP, 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 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 certain U.S. and government agency debt and equity securities that are traded in an active market.

● Level 2 – Observable inputs other than Level 1 prices such as quoted 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 September 30, 2020, 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.

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The table below presents the balances of assets and liabilities measured at fair value on a recurring basis by level within the hierarchy as:

	(in thousands) As of September 30, 2020
	Total		Level 1		Level 2		Level 3
Assets:
U. S. Treasury notes	$	5,618	$	5,618	$	—	$	—
U.S. Government mortgage backed Securities		4,721		4,721		—		—
Corporate bonds		5,641		5,641		—		—
Marketable Securities	$	15,980	$	15,980	$	—	$	—
Liabilities:
Redeemable warrants	$	177	$	—	$	—	$	177

	(in thousands) As of December 31, 2019
	Total		Level 1		Level 2		Level 3
Assets:
Mutual Fund	$	7,308	$	7,308	$	—	$	—
Liabilities:
Redeemable warrants	$	57	$	—	$	—	$	57

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

Redeemable warrants:
Balance at December 31, 2019	$	57
Fair value adjustment		120
Balance at September 30, 2020	$	177

Note 14: Financing Obligation Arising from Sale Leaseback Transaction

On March 16, 2018, the Company sold land and a building for $4,080,000 and concurrently entered into an agreement to lease the property back for ten years at $408,000 per year for two years through March 31, 2020. The lease payments will increase 2.5% per year for the next three years through March 31, 2023 and the lease payments will increase 3% for the remaining five years through March 31, 2028. The sale of the property includes an option to repurchase the property at fair value which does not permanently transfer all the risks and rewards of ownership to the buyer. The option to repurchase the property also would be at a higher price than the sales price and is considered likely based upon the Company’s plans going forward. Because the sale of the property includes the option to repurchase the property and includes the above attributes, the transaction was accounted for as a financing transaction whereby the Company debited cash for the amount of cash received and credit financing obligation. The Company will continue to report the property as an asset and the property will continue to be depreciated. The fair value repurchase option is accounted for similar to a share appreciation mortgage. Accordingly, the guidance in ASC 470-30 related to participating mortgage loans would be applied to the liability. If the option expires unused, the sale is recognized at that time. The gain on the sale would be the excess of the liability (current fair value of the property) over its carrying amount. As part of the sale of this building, warrants were provided to the buyer for the purchase of up to 73,314 shares of Company common stock for a period of five years at an exercise price of $17.05 per share, 125% of the closing price of the common stock on the NYSE American on the date of execution of the letter of intent for the purchase. The warrants cannot be exercised to the extent that any exercise would result in the purchaser owning in excess of 4.99% of our issued and outstanding shares of common stock.

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The Property and Equipment in Note 7 above are the property and equipment involved in this transaction. Depreciation on the building will continue until a sale has been recognized.

Future minimum payments required under the Financing Obligation and the balance of the Finance Obligation as of September 30, 2020 are as follows:

During the year:

	(in thousands)
2020	$	105
2021		426
2022		437
2023		449
2024		463
Thereafter		1,567
Total of payments		3,447
Less deferred issuance costs		(199	)
Less discount on debt instrument		(852	)
Less imputed interest		(236	)
Total balance		2,160
Less current portion		(226	)
Long term portion	$	1,934

Interest expense relating to this financing agreement was $46,000 for the nine months ended September 30, 2020 and $51,000 for the nine months ended September 30, 2019.

Note 15: Leases

In February 2016, the FASB established Topic 842, Leases, by issuing ASU No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; ASU No. 2018-11, Targeted Improvements; and ASU No. 2018-20, Narrow-Scope Improvements for Lessors. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The new standard was effective for the Company on January 1, 2019, with early adoption permitted. A modified retrospective transition approach was required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. We adopted the new standard on January 1, 2019 and used the effective date as our date of initial application. Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.

The new standard provides several optional practical expedients in transition. We elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We elected all the new standard’s available transition practical expedients other than the use-of hindsight.

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The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components for leases of office equipment.

This standard had a material effect on our financial statements. The most significant effect related to the recognition of new ROU assets and lease liabilities on our balance sheet for our real estate and equipment operating leases and providing significant new disclosures about our leasing activities.

The Company entered into a Lease Agreement for a term of five years commencing on September 14, 2020 with Fraser Advanced Information Systems, pursuant to which the Company agreed to lease two Sharp copiers. The base of $1,415 per month.

On June 13, 2018, the Company entered into a Lease Agreement for a term of six years commencing on July 1, 2018 with SML FL Holdings LLC, pursuant to which the Company agreed to lease approximately 3,000 rentable square feet. The base rent increases by 3% each year, and ranges from $2,100 per month for the first year to $2,785 per month for the sixth year.

On May 1, 2019, the Company entered into a Lease Agreement for a term of three years commencing on May 1, 2019 with 604 Associates LLC, pursuant to which the Company agreed to lease approximately 3,000 rentable square feet. The base rent is $1,500 per month for the term of the lease.

The expected lease term includes both contractual lease periods and, when applicable, cancelable option periods when it is reasonably certain that the Company would exercise such options. The Company’s leases have remaining lease terms between 6 months and 4 years. As of September 30, 2020, the weighted-average remaining term is 2.17 years. The Company has determined that the incremental borrowing rate is 10% as of December 31, 2018 based upon the recently completed financing transaction in September 2018.

Below are the lease commitments for the next 5 years and thereafter.

Year-Ending September 30,
	(in thousands)
2020	$	48
2021		52
2022		46
2023		42
Thereafter		21
Less Imputed Interest		(21	)
Total	$	188

As of September, 30, 2020, the balance of the right of use assets was $188,000 and the corresponding lease liability balance was $188,000. Total rent expense was $41,000 for the nine months ended September 30, 2020 and $44,000 for the nine months end September 30, 2019.

Note 16: Subsequent Events

On November 10, 2020, the Company entered into a five year employment agreement with Thomas K. Equels, President, CEO and Executive Vice Chairman of the Board. Compensation is divided into both short- and long-term compensation. Short term (cash) compensation will consist of a base salary of $850,000 and a year-end target bonus of $350,000 based on performance and goals established by the Compensation Committee. Long term compensation will be provided by 300,000 non-qualified yearly stock options with one-year vesting on November 30,2021, and each anniversary date thereafter. On November 11, 2020, the Company issued to Mr. Equels 10 year options to purchase 300,000 shares of the Company’s common stock. The exercise price of these options is $1.96 per share, the closing price of the common stock on the NYSE American on the trading date immediately preceding the date of issuance. The options will vest one year after their issuance. These options were issued pursuant to the terms of Mr. Equels’ employment agreement.

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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 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 are based on our management’s current beliefs, expectations and assumptions about future events, conditions and results and on information currently available to us. Discussions containing these forward-looking statements may be found, among other places, in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section; Part II, Item 1 “Legal Proceedings”; and Part II, Item 1A “Risk Factors”.

All statements, other than statements of historical fact, included or incorporated herein regarding our strategy, future operations, financial position, future revenues, projected costs, plans, prospects and objectives are forward-looking statements. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “think,” “may,” “could,” “will,” “would,” “should,” “continue,” “potential,” “likely,” “opportunity” and similar expressions or variations of such words are intended to identify forward-looking statements but are not the exclusive means of identifying 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 as we will need additional funding to proceed with our objectives, 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.

With the outbreak of the COVID-19 coronavirus and our prior research into Ampligen’s antiviral activity against Severe Acute Respiratory Syndrome, or SARS, we are now expanding our clinical/business focus to include the potential of Ampligen to serve as a protective prophylaxis and an early-onset therapeutic for the virus SARS-CoV-2, the cause of COVID-19 and as part of a vaccine. Significant testing and trials will be required to determine whether Ampligen will be effective in the treatment of the COVID-19 coronavirus in humans and no assurance can be given that it will be the case. Our beliefs rely on a number of previous studies related to SARS-CoV-1. No assurance can be given that future studies will not result in findings that are different from those reported in the studies to which we refer. Results obtained in animal models do not necessarily predict results in humans. Some of the world’s largest pharmaceutical companies and medical institutions are racing to find a treatment for COVID-19. Even if Ampligen proves effective in combating the virus, no assurance can be given that our actions toward proving this will be given first priority or that another treatment that eventually proves capable will not negate our current and future efforts. The pandemic is disrupting world health and world economies and most likely will continue to do so for a long time. While we are able to continue to operate, we –like all businesses — are unable to gauge exactly how this pandemic will affect our operations in the future. We are reaching out, directly and indirectly, to the U.S. government, numerous foreign governments and entities related to the COVID-19 coronavirus and, if successful, will be working in these countries.

In this regard, we are working with Japan’s National Institute of Infectious Diseases (“NIID”) to test Ampligen as a potential treatment for COVID-19 coronavirus. In March 2020, the NIID initiated preliminary laboratory testing of Ampligen as a potential treatment for COVID-19. On July 1, 2020, we entered into a trilateral material transfer and research agreement with the NIID and Shionogi & Co., Ltd. (“Shionogi”), one of Japan’s premier pharma companies to test the Company’s drug Ampligen as a potential vaccine adjuvant for COVID-19. Under the agreement, we have and will continue to provide Ampligen samples for various research projects. Per the agreement, the details of all preclinical and clinical results will remain confidential until released by NIID and Shionogi.

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In addition, Shenzhen Smoore Technology Limited has agreed to run preliminary tests in China to the efficacy of Smoore’s inhalation delivery device using Ampligen. Ampligen is scheduled to be shipped to Smoore for testing, pending resolution of various China inbound import regulatory requirements. AIM and Smoore are working to identify and navigate any and all regulatory obligations. Assuming Ampligen proves an effective COVID-19 treatment, significant testing will be required to determine whether the Smoore device will be able to safely deliver Ampligen in an appropriate dose without diminishing its efficacy against COVID-19. Operating in foreign countries carries with it a number of risks, including potential difficulties in enforcing intellectual property rights. We cannot assure that our potential operations in foreign countries will not be adversely affected by these risks. We have filed provisional patent applications related to the COVID-19 coronavirus. However, these filings do not assure that patents will ultimately be granted. We recently contracted Amarex Clinical Research LLC (“Amarex”) to act as our Clinical Research Organization and provide regulatory support with regard to a clinical trial testing Ampligen’s potential as a COVID-19 prophylaxis via intranasal delivery. Testing is subject to obtaining IND authorization from the FDA. No assurance can be given that the IND will be obtained or that the testing will be successful. Should it prove promising, additional testing will be required.

On July 6, 2020, the Company entered into a clinical trial agreement (CTA) with Roswell Park to support Roswell Park’s Phase 1/2a trial of Ampligen in combination with interferon alfa-2b, in cancer patients with mild to moderate COVID-19, the disease caused by the SARS-CoV-2 coronavirus. Funding for the clinical trial is provided, in part, through grants from the National Cancer Institute and AIM, as well as institutional support from Roswell Park. It is planned that the phase 1/2a study will enroll up to 44 patients in two stages. Phase 1 will see 12-24 patients receiving both Ampligen and interferon alfa-2b at escalating doses. Once that initial phase is complete, further study participants will be randomized to two arms: one receiving the two-drug combination and a control group who will not receive Ampligen or interferon alfa but will receive best available care. We are a financial sponsor of the study and will provide Ampligen at no charge for this study. Additional information on the clinical trial, which is recruiting patients, is available at clinicaltrials.gov.

Recently, the Company also entered into a material transfer agreement with the University of Rochester which is planning a series of in vitro experiments in which it will be testing the direct antiviral activity of Ampligen on SARS-CoV-2, as well as the mechanism of action. The Company also entered into a specialized services agreement with Utah State University and supplied Ampligen to support the University’s Institute for Viral Research in its research into SARS-CoV-2. The Utah State results show that Ampligen was able to decrease SARS-CoV-2 infectious viral yields by 90% at clinically achievable intranasal Ampligen dosage levels.

In February 2013, we received a Complete Response Letter from the Food and Drug Administration, or FDA, for our Ampligen New Drug Application, or NDA, for the treatment of CFS. The FDA communicated 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.

In August 2016, we received approval of our NDA from Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica, or ANMAT, for commercial sale of rintatolimod (U.S. tradename: Ampligen®) in the Argentine Republic for the treatment of severe CFS. The product will be marketed by GP Pharm, our commercial partner in Latin America. We believe, but cannot assure, that this approval provides a platform for potential sales in certain countries within the European Union under regulations that support cross-border pharmaceutical sales of licensed drugs. 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, or EAP, as discussed below and was used in Europe in pancreatic cancer. 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. In September 2019, we received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. We are currently working with GP Pharm on the commercial launch of Ampligen in Argentina. Commercialization in Argentina will require, among other things, an appropriate reimbursement level, appropriate marketing strategies, completion of manufacturing preparations for launch. Additionally, AIM has shipped Ampligen to Argentina for ANMAT’s release. Approval of rintatolimod for severe CFS in the Argentine Republic does not in any way suggest that the Ampligen NDA in the United States or any comparable application filed in the European Union or elsewhere will obtain commercial approval.

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In May 2016, we entered into a five-year agreement with myTomorrows, a Netherlands based company, for the commencement and management of an EAP in Europe and Turkey related to CFS. Pursuant to the agreement, myTomorrows, as our exclusive service provider and distributor in this territory, is performing EAP activities. In January 2017, the EAP was extended to pancreatic cancer patients beginning in the Netherlands. In February 2018, we signed an amendment to extend the territory to cover Canada to treat pancreatic cancer patients, pending government approval. In March 2018, we signed an amendment to which myTomorrows will be our exclusive service provider for special access activities in Canada for the supply of Ampligen for the treatment of CFS. No assurance can be given that we can sufficiently supply product should we experience an unexpected demand for Ampligen in our clinical studies, the commercial launch in Argentina or pursuant to the EAPs. No assurance can be given that Ampligen will prove effective in the treatment of pancreatic cancer.

Currently, six oncology Ampligen clinical trials are underway with a number of subjects enrolled at university cancer centers testing whether tumor microenvironments can be reprogrammed to increase the effectiveness of cancer immunotherapy, including checkpoint blockade. Four are at Roswell Park and the other two (one temporarily suspended with plans to be reactivated) are at the University of Pittsburgh Medical Center. No assurance can be given as to the results of these underway trials. Six additional cancer trials in collaboration with University Medical/Cancer Research Centers using Ampligen plus checkpoint blockade are in various pre-enrollment stages. No assurance can be given as to whether some or all of the planned additional oncology clinical trials will occur and they are subject to many factors including lack of regulatory approval(s), lack of study drug, or a change in priorities at the sponsoring universities or cancer centers. Even if these additional clinical trials are initiated, as we are not the sponsor, we cannot assure that these clinical studies or the six studies underway will be successful or yield any useful data. In addition, initiation of planned clinical trials may not occur secondary to many factors including lack of regulatory approval(s) or lack of study drug. Even if these clinical trials are initiated, the Company cannot assure that the clinical studies will be successful or yield any useful data or require additional funding. The Company recognizes that all cancer centers, like all medical facilities, must make the pandemic their priority. Therefore, there is the potential for delays in clinical trial enrollment and reporting in ongoing studies in cancer patients because of the COVID-19 medical emergency.

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 for 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 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 strived to maximize the outsourcing of 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 are investigating utilizing contract manufactures for the Alferon process. We cannot provide any guarantee that the facility or current or potential contract manufacturers will pass an FDA pre-approval inspection for Alferon manufacturing.

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Commercial sales of Alferon in the U.S. 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 Biologics License Application (“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. Prior to completing validation, we plan on modernizing the manufacturing process to make it lower-cost and higher volume. If, following modernization, 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. Considering 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.

We believe, and are investigating, Ampligen’s potential role in enhancing the activity of influenza vaccines. While certain studies involving rodents, non-human primates (monkeys) and healthy human subjects indicate that Ampligen may enhance the activity of influenza vaccines by conferring increased cross-reactivity or cross-protection, further studies will be required and no assurance can be given that Ampligen will assist in the development of a universal vaccine for influenza or other viruses.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

This Report also refers to estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk.

Overview

General

AIM ImmunoTech Inc. and its subsidiaries (collectively, “AIM”, “Company”, “we” or “us”) are an immuno-pharma company headquartered in Ocala, Florida and focused on the research and development of therapeutics to treat multiple types of cancers, various viruses and immune-deficiency disorders. We have established a strong foundation of laboratory, pre-clinical and clinical data with respect to the development of nucleic acids and natural interferon to enhance the natural antiviral defense system of the human body and to aid the development of therapeutic products for the treatment of certain cancers and chronic diseases.

AIM’s flagship products include Ampligen® (rintatolimod), a first-in-class drug of large macromolecular RNA (ribonucleic acid) molecules, and Alferon N Injection® (Interferon Alfa-N3). A first-in-class drug is also known as a new molecular entity that contains an active moiety. Ampligen has not been approved by the FDA or marketed in the US.

Since the outbreak of SARS-CoV-2, the novel virus that causes COVID-19, we have been actively engaged in determining whether Ampligen could be an effective treatment for this virus or could be part of a vaccine. We believe that Ampligen has the potential to be both an early-onset treatment for and prophylaxis against SARS-CoV-2. Ampligen is also being researched as part of a potential COVID-19 vaccine strategy that combines Ampligen as an immune enhancer seeking to boost the efficacy of the vaccine and also convey cross-reactivity and cross-protection against future mutations. We believe that prior studies of Ampligen in SARS-CoV-1 animal experimentation may predict similar protective effects against the new virus.

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Beginning in April 2020, we entered into confidentiality and non-disclosure agreements with numerous companies for the potential outsourcing of the production of polymer, enzyme, placebo as well as Ampligen and one Contract Research Organization which may also assist with the planning, presentation and filing of documents with the FDA. These confidentiality and non-disclosure agreements are only the initial step in forging relationships with these entities to obtain contract manufacturers and research partners. No assurance can be given as to how many of these, initial explorations, if any, will result in definitive arrangements or, with regard to potential research partners, what research arrangements will develop and thereafter prove fruitful.

Ampligen® represents an RNA being developed for globally important cancers, viral diseases and disorders of the immune system. Ampligen® has in the clinic demonstrated the potential for standalone efficacy in a number of solid tumors. We have also seen success in increasing survival rates and efficacy in the treatment of animal tumors when Ampligen® is used in combination with checkpoint blockade therapies. This success in the field of immuno-oncology has guided our focus toward the potential use of Ampligen® as a combinational therapy for the treatment of a variety of solid tumor types. There are currently multiple Ampligen® clinical trials testing Ampligen in humans — both underway and planned — at major cancer research centers around the country. Ampligen ® was used as a monotherapy to treat pancreatic cancer patients in an Early Access Program (EAP) approved by the Inspectorate of Healthcare in the Netherlands at Erasmus Medical Center. In September, AIM reported receipt of statistically significantly results of positive survival benefit when using Ampligen in patients with locally advanced/metastatic pancreatic cancer after systemic chemotherapy. AIM will work with its Contract Research Organization, Amarex Clinical Research LLC, to seek FDA “fast-track” and possibly even FDA “breakthrough” designations and to obtain authorization to conduct a follow-up pancreatic cancer Phase 2/3 clinical trial with sites in the Netherlands at Erasmus MC under Prof. van Eijck, and also at major cancer research centers in the United States.

Ampligen® is also being evaluated for the treatment of myalgic encephalomyelitis/chronic fatigue syndrome (ME/CFS). AIM is currently sponsoring an expanded access program for ME/CFS patients in the U.S. In August 2016, we received approval of our NDA from Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica (ANMAT) for commercial sale of Ampligen® in the Argentine Republic for the treatment of severe CFS. With regulatory approval in Argentina, Ampligen® is the world’s only approved therapeutic for ME/CFS. On June 10, 2020, we received import clearance from ANMAT to import the first shipment of commercial grade vials of Ampligen® to Argentina. The next steps in the commercial launch of Ampligen® include ANMAT conducting a final inspection of the product and release tests before granting final approval to begin commercial sales. AIM has supplied GP Pharm with the Ampligen required for testing and ANMAT release. Once final approval by ANMAT is obtained, GP Pharm will begin distributing Ampligen® in Argentina. We continue to pursue our Ampligen New Drug Application, or NDA, for the treatment of CFS with the FDA.

Alferon N Injection® is approved for a category of sexually transmitted diseases infection and patients that are intolerant to recombinant interferon in Argentina. Alferon is the only natural-source, multi-species alpha interferon currently approved for sale in the U.S. for the intralesional treatment of refractory (resistant to other treatment) or recurring external condylomata acuminata/genital warts (GW) in patients 18 years of age or older. Certain types of human papilloma viruses cause GW. AIM also has approval from ANMAT for the treatment of refractory patients that failed or were intolerant to treatment with recombinant interferon in Argentina.

We operate a 30,000 sq. ft. facility in New Brunswick, NJ with the objective of producing Ampligen® and Alferon®. 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 Ampligen® and our FDA-approved drug Alferon® N.

OUR PRODUCTS

Our primary pharmaceutical product platform consists of Ampligen®, a first-in-class drug of large macromolecular double-stranded (ds) RNA (ribonucleic acid) molecules, and our FDA-approved natural alpha-interferon product, Alferon N Injection®.

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Ampligen®

Ampligen® is approved for sale in Argentina for severe Chronic Fatigue Syndrome (CFS) and is an experimental drug in the United States currently undergoing clinical development for the treatment of certain cancers and ME/CFS. Over its developmental history, Ampligen® has received various designations, including Orphan Drug Product Designation (FDA and European Medicines Agency (“EMA”)), 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) dsRNA 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 designed to act at the molecular level for treatment of many human diseases. There are two forms of nucleic acids, deoxyribonucleic acid (“DNA”) and ribonucleic acid (“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 and is a selective TLR3 agonist that is 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).

EAP/clinical trials of Ampligen® that have been conducted or that are ongoing include studies of the potential treatment of patients with renal cell carcinoma, malignant melanoma, non-small cell lung, ovarian, breast, colorectal, urothelial, prostate and pancreatic cancer, ME/CFS, Hepatitis B and HIV.

We have received approval of our NDA from ANMAT for commercial sale of rintatolimod (U.S. tradename: Ampligen®) in the Argentine Republic for the treatment of severe CFS. The product will be marketed by GP Pharm, our commercial partner in Latin America. On September 19, 2019, AIM received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. We are currently working with GP Pharm on the commercial launch of Ampligen in Argentina. Commercialization in Argentina will require, among other things, GP Pharm to establish disease awareness, medical education, creation of an appropriate reimbursement level, design of marketing strategies and completion of manufacturing preparations for launch.

The FDA has authorized an open-label expanded access treatment protocol, (“AMP-511”), allowing patient access to Ampligen® 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 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 that the FDA requested in a complete response letter. The FDA approved the increase reimbursement level from $200 to $345 per 200 mg vial of Ampligen, due to increased production costs; which was re-authorized in 2020. At this time, we do not plan on passing this adjustment along to the patients in this program. As of September 30, 2020, there are 10 patients enrolled in this open-label expanded access treatment protocol. In October 2020, AIM received Institutional Review Board (IRB) approval for the expansion of the AMP-511 Expanded Access Program (EAP) clinical trial for Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS) to include patients previously diagnosed with SARS-CoV-2 following clearance of the virus, but who still demonstrate chronic fatigue-like symptoms.

In May 2016, we entered into a five-year agreement with 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, as amended, myTomorrows also will manage all Early Access Programs and Special Access Programs in Europe, Canada and Turkey to treat pancreatic cancer and ME/CFS patients.

In April 2018, we completed data analysis of an intranasal human safety study of Ampligen® plus FluMist® known as AMP-600. The study was previously closed after the US Centers for Disease Control and Prevention (“CDC”) recommended against the use of FluMist®. Intranasal Ampligen® in combination with FluMist® was generally well-tolerated in the study.

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In June 2018, Ampligen® was cited as outperforming two other TLR3 agonists, poly IC and natural double stranded RNA, in creating an enhanced tumor microenvironment for checkpoint blockage therapy in the journal of Cancer Research (http://cancerres.aacrjournals.org/content/early/2018/05/31/0008-5472.CAN-17-3985). In a head-to-head study in explant culture models, Ampligen® activated the TLR3 pathway and promoted an accumulation of killer T cells but, unlike the other two TLR3 agonists, it did so without causing regulatory T cell (Treg) attraction. These findings were considered important because they indicate that Ampligen® selectively reprograms the tumor microenvironment by inducing the beneficial aspects of tumor inflammation (attracting killer T cells), without amplifying immune suppressive elements such as regulatory T cells. The study was conducted at the University of Pittsburgh and Roswell Park as a part of the NIH-funded P01 CA132714 and Ovarian Cancer Specialized Program of Research Excellence (SPORE). Based upon these findings AIM and Roswell Park expanded their existing scientific collaboration to advance the clinical development of Ampligen® which has shown promise in preclinical studies when combined with checkpoint inhibitors (CPIs). The parties executed a Memorandum of Understanding (“MOU”) designed to further assess the clinical potential of Ampligen® in treating certain cancers. This phase I/II study will evaluate the potential of Ampligen® to enhance the immune mediated effects of CPIs in patients with advanced solid tumors including bladder, melanoma and renal cell carcinoma.

In 2018, we completed production of two commercial-size batches of more than 16,000 vials of Ampligen®, following its “Fill & Finish” at the Contract Manufacturing Organization. These lots passed all required testing for regulatory release for human use and are being used for multiple programs including the treatment of ME/CFS, the pancreatic cancer EAP in the Netherlands, and will continue to be used for ongoing and future clinical studies in oncology. Additionally, two lots of Ampligen were manufactured in December 2019 and January 2020 at Jubilant. The current manufactured lots of Ampligen have been fully tested and released for commercial product launch in Argentina and for clinical trials.

Alferon N Injection®

Alferon N Injection® is the registered trademark for our injectable formulation of natural alpha interferon. Alferon® is the only natural-source, multi-species alpha interferon currently approved for sale in the U.S. and Argentina 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. Alferon® is also approved in Argentina for the treatment of refractory patients that failed or were intolerant to treatment with recombinant interferons. Certain types of human papilloma viruses (“HPV”) cause genital warts, a sexually transmitted disease (“STD”). According to the CDC, HPV is the most common sexually transmitted infection, with approximately 79 million Americans — most in their late teens and early 20s — infected with HPV. In fact, the CDC states that “HPV is so common that nearly all sexually active men and women get the virus 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.

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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 of treatment, 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®.

COVID-19

Following the SARS-CoV-1 outbreak in 2002-03, Ampligen exhibited excellent antiviral properties and protective survival effect in NIH-contracted studies of SARS-infected mice, which is very similar to SARS-CoV-2, the novel virus that causes COVID-19.

● The Barnard 2006 study (https://journals.sagepub.com/doi/abs/10.1177/095632020601700505) found that Ampligen reduced virus lung levels to below detectable limits.

● The Day 2009 study (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2787736/) found that, instead of 100% mortality, there was 100% protective survival.

AIM compared key transcription regulatory sequences of SARS-CoV-1 to SARS-CoV-2 and found significant similarities, suggesting highly probable extension of the antiviral effects of Ampligen in the earlier NIH-contracted SARS experiments to COVID-19.

The SARS-CoV-2 virus – which causes COVID-19 – shares important genomic and pathogenic similarities with SARS-CoV-1 (hence its name). Since Ampligen has shown antiviral activity against more distantly related coronaviruses, there was a reasonable probability that the antiviral effects of Ampligen against SARS-CoV-1 will likely extend to SARS-CoV-2, as discussed below, recently, Ampligen has demonstrated in vitro antiviral activity against SARS-CoV-2. We believe that this creates a compelling case for clinical trials to evaluate Ampligen as a potential tool in the fight against COVID-19.

Since the late 2019 outbreak of SARS-CoV-2, we have been actively engaged in determining whether Ampligen could be an effective treatment for this virus or could be part of a vaccine. We believe that Ampligen has the potential to be both an early-onset treatment for and prophylaxis against SARS-Cov-2. Ampligen is also being researched as part of a potential COVID-19 vaccine strategy that combines Ampligen as an immune enhancer seeking to boost the efficacy of the vaccine and also convey cross-reactivity and cross-protection against future mutations. We believe that prior studies of Ampligen in SARS-CoV-1 animal experimentation may predict similar protective effects against the new virus.

In February 2020, we filed three provisional patent applications related to Ampligen in our efforts toward joining the global health community in the fight against the deadly coronavirus (See: https://aimimmuno.com/press-release/aim-immunotech-files-provisional-patent-application-for-the-use-of-ampligenr-as-a-potential-therapy-for-covid-19-induced-chronic-fatigue/). Our three provisional patent applications include: 1) Ampligen as a therapy for the coronavirus; 2) Ampligen as part of a proposed intranasal universal coronavirus vaccine that combines Ampligen with inactivated coronavirus, conveying immunity and cross-protection and; 3) a high-volume manufacturing process for Ampligen. Under the Patent Cooperation Treaty of 1970, which provides international protections for patents, the three provisional patent applications can convert to international patent applications based on the date of their filings.

In early April 2020, we entered into a Material Transfer Agreement with Shenzhen Smoore Technologies located in Shenzhen China, the world’s largest manufacturer of inhalation devices. Pursuant to this agreement, Smoore has agreed to run preliminary tests in China to the efficacy of Smoore’s inhalation delivery device using Ampligen. Initial testing will include evaluation of Ampligen with regards to safety and characterization of the inhaler vapor properties. Additional testing will study the particle size of various Ampligen concentrations in aqueous solutions obtainable using Smoore’s technology. The goal of these studies is to establish a reproducible method to obtain an Ampligen-containing atomized mist that can deliver biologically active Ampligen deep into the lung airways of humans. The Ampligen is scheduled to be shipped to Smoore for testing, pending resolution of various China inbound import regulatory requirements. AIM and Smoore are working to identify and navigate any and all regulatory obligations.

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On August 6, 2020, we contracted Amarex Clinical Research LLC (“Amarex”) to act as our Clinical Research Organization and provide regulatory support with regard to a clinical trial testing Ampligen’s potential as a COVID-19 prophylaxis via intranasal delivery. For Phase I we anticipate providing approximately $514,000 to Amarex. For the subsequent Phase II we anticipate providing approximately an additional $650,000. Additional costs expected to be incurred by us for the clinical trial are estimated at $4.5 million. We expect that Phase I will consist of 24 test subjects and that Phase II will consist of 150 test subjects.

Beginning in April 2020, we entered into confidentiality and non-disclosure agreements with numerous companies for the potential outsourcing of the production of polymer, enzyme, placebo as well as Ampligen, and one Contract Research Organization, Amarex, which will provide regulatory support related to a clinical trial testing Ampligen’s potential as a COVID-19 prophylaxis via intranasal delivery.

In addition, we have joined with ChinaGoAbroad (CGA) to facilitate the entry of Ampligen into the People’s Republic of China (PRC) for use as a prophylactic/early-onset therapeutic against COVID-19. CGA is a member-based online information platform and offline advisory firm serving to facilitate two-way international transactions relating to the PRC in collaboration with the China Overseas Development Association (CODA). The relationship with ChinaGoAbroad is ongoing.

On May 11, 2020, the FDA authorized an IND for Roswell Park to conduct a Phase 1/2a study of a regimen of Ampligen and interferon alpha in cancer patients with mild or moderate COVID-19 infections. This new clinical trial, sponsored by the Roswell Park in collaboration with us, will test the safety of this combination regimen in patients with cancer and mild to moderate COVID-19, and the extent to which this therapy will promote clearance of the SARS-CoV-2 virus from the upper airway. It is planned that the phase 1/2a study will enroll up to 44 patients in two stages. Phase 1 will see 12-24 patients receiving both Ampligen and interferon alfa-2b at escalating doses. Once that initial phase is complete, further study participants will be randomized to two arms: one receiving the two-drug combination and a control group who will not receive Ampligen or interferon alfa but will receive best available care. We intend to be a financial sponsor of the study and will provide Ampligen at no charge for this study.

On July 6, 2020, we entered into a clinical trial agreement with Roswell Park pursuant to which Roswell Park will conduct a Phase 1/2a trial of Ampligen (rintatolimod) in combination with interferon alfa, in cancer patients with COVID-19, the disease caused by the SARS-CoV-2 coronavirus. The National Cancer Institute and AIM are supporting this trial. AIM reported in September that recruitment in the trial had begun. See: clinicaltrials.gov/NCT04379518.

Recently, we also entered into a material transfer agreement with the University of Rochester which is planning a series of in vitro experiments in which it will be testing the direct antiviral activity of Ampligen on SARS-CoV-2, as well as the mechanism of action. We also entered into a specialized services agreement with Utah State University and has supplied Ampligen to support the University’s Institute for Viral Research in its research into SARS-CoV-2. The Utah State results show that Ampligen was able to decrease SARS-CoV-2 infectious viral yields by 90% at clinically achievable intranasal Ampligen dosage levels.

Cancer

We have been working with the University of Pittsburgh’s chemokine modulation research initiative which includes the use of Ampligen® as a potential adjuvant to modify the tumor microenvironment (TME) with the goal of increasing anti-tumor responses to check point inhibitors (CPI). As part of this collaboration, AIM has supplied Ampligen® (rintatolimod) to the University. The study, under the leadership of Robert P. Edwards, MD, chair of gynecologic services at Magee-Women’s Hospital of the University of Pittsburgh School of Medicine, and Professor of Surgery Pawel Kalinski, M.D., Ph.D., at Roswell Park, Buffalo, N.Y., 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 1st quarter of 2017, Dr. Kalinski relocated to Roswell Park in Buffalo, NY and has established a cancer program which will continue to require a supply of Ampligen®.

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In October 2018, we signed a clinical trial agreement with Roswell Park to evaluate Ampligen® in combination with checkpoint inhibitors (CPIs). The Phase IIa clinical trial will evaluate the immune-mediated effects of cytokine modulation in combination with CPIs in patients with primary resistance to CPI therapy. The protocol will seek to evaluate the combination of Ampligen® and CPIs in patients with advanced urothelial carcinoma, renal cell carcinoma and melanoma. Ampligen® is our investigational immune-enhancing TLR3 agonist that has demonstrated a robust anti-cancer effect in preclinical models when combined with CPIs. This new agreement expands the extensive prior clinical and preclinical work into the clinical checkpoint blockade arena and offers the opportunity to begin evaluation of this combination therapy in patients with a variety of solid tumors where large numbers of patients do not respond or progress following treatment with standard CPI-based therapy.

Currently, six Ampligen® clinical trials are underway at university cancer centers testing whether tumor microenvironments can be reprogrammed to increase the effectiveness of cancer immunotherapy, including checkpoint inhibitors:

● Advanced Recurrent Ovarian Cancer - Phase 1 / 2 study of intraperitoneal chemo-immunotherapy in advanced recurrent ovarian cancer; Phase 1 portion establishes intraperitoneal safety. Awaiting publication of Phase I results. https://clinicaltrials.gov/ct2/show/NCT02432378

● Advanced Recurrent Ovarian Cancer - A follow-up Phase 2 study of advanced recurrent ovarian cancer using cisplatin, pembrolizumab, plus Ampligen; up to 45 patients to be enrolled; enrollment has commenced, and the numerous patients have commenced treatment. https://clinicaltrials.gov/ct2/show/NCT03734692

● Stage 4 Metastatic Triple Negative Breast Cancer - Phase 2 study of metastatic triple-negative breast cancer using chemokine modulation therapy, including Ampligen and pembrolizumab. All patients have been treated or are in treatment. https://www.clinicaltrials.gov/ct2/show/NCT03599453

● Stage 4 Colorectal Cancer Metastatic to the Liver - Phase 2a study of Ampligen as component of chemokine modulatory regimen on colorectal cancer metastatic to liver; the majority of the 12 planned patients enrolled and treated. https://clinicaltrials.gov/ct2/show/NCT03403634

● Early-Stage Prostate Cancer - Phase 2 study investigating the effectiveness and safety of aspirin and Ampligen with or without interferon-alpha 2b (Intron A) compared to no drug treatments in a randomized three-arm study of patients with prostate cancer before undergoing radical prostatectomy. Patient enrollment has been initiated in this study designed for up to 45 patients. https://clinicaltrials.gov/ct2/show/NCT03899987

● Early-Stage Triple Negative Breast Cancer - Phase 1 study of chemokine modulation plus neoadjuvant chemotherapy in patients with early-stage triple negative breast cancer has received FDA authorization; the objective of this study is to evaluate the safety and tolerability of a combination of Ampligen, celecoxib with or without Intron A, when given along with chemotherapy; the goal of this approach is to increase survival. This study is recruiting patients designed for up to 24 patients. https://clinicaltrials.gov/ct2/show/NCT04081389

Six Ampligen clinical trials are planned for initiation in 2020/21:

● Brain-Metastatic Breast Cancer — Phase 2 study to assess the effectiveness of a three-pronged strategy combining distinct immunotherapy approaches, including Ampligen. Roswell Park and Moffitt Cancer Center have both received “Breakthrough Awards” from the U.S. Department of Defense (DOD). Together, these separate but parallel proposed clinical trials are receiving approximately $15 million in DOD funding to study Ampligen. Roswell Park is currently working on its draft of the IND, which its study and Moffitt’s study require before next steps can be taken.

● Stage 4 Refractory Metastatic Colorectal Carcinoma — Phase 2 study that will evaluate Ampligen in combination with pembrolizumab in refractory metastatic colorectal carcinoma at Roswell Park. Up to 25 patients to be enrolled. This is expected to be funded by grants, testing Ampligen and pembrolizumab. See: https://www.clinicaltrials.gov/show/NCT04119830

● Refractory Melanoma — Phase 2 study that will evaluate polarized dendritic cell vaccine, interferon alpha-2, Ampligen and celecoxib for the treatment of HLA-A2+ refractory melanoma at Roswell Park. Up to 24 patients to be enrolled. See: https://www.clinicaltrials.gov/show/NCT04093323

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● Stage 4 Urothelial, Melanoma and Renal Cell Carcinoma — Phase 2 study of advanced urothelial (bladder), melanoma and renal cell carcinoma, resistant to checkpoint blockade, that will evaluate Ampligen in combination with a checkpoint blockade therapy at Roswell Park. Protocol design and funding currently being finalized.

● Non-Small Cell Lung Cancer — First-line therapy for non-small cell lung cancer with SOC chemotherapy that will evaluate Ampligen in combination with pembrolizumab at University of Nebraska Medical Center. Dr. V. Ernani, PI. Study design and budget being developed. However, we now anticipate an extended delay, as other studies with funding have moved ahead of the Ampligen project. Roswell Park is exploring a pilot study to establish proof of concept.

● Advanced Pancreatic Cancer — Phase 2 study in advanced pancreatic cancer using checkpoint blockade plus Ampligen at University of Nebraska Medical Center and Erasmus University. Protocol and budget being developed. This proposed study may be based on data from our Dutch EAP (see below) and UNMC animal experiments showing synergy between Ampligen and checkpoint therapy. A second confirmatory animal trial has been completed; while it did not replicate the previous survival results, it did demonstrate a significant anti-tumor effect.

In addition, the National Cancer Institute awarded $14.5 million to Roswell Park to study Ampligen as part of five Roswell Park-led chemokine modulation clinical trials in melanoma, colorectal and ovarian cancers

In January 2017, the EAP through our agreement with myTomorrows designed to enable access of Ampligen® to ME/CFS patients was 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. In February 2018, the agreement with myTomorrows was extended to cover Canada to treat pancreatic cancer patients, pending government approval. There have been no physician requests to date that would cause the program to move forward with the approval process.

As of December 31, 2019, 42 pancreatic cancer patients have received treatment with Ampligen® immuno-oncology therapy under the EAP program at Erasmus University in the Netherlands. Supervised by Prof. Casper van Eijck, MD, a world-renowned specialist in this dread malignancy, and Diba Latifi, MD, the team at Erasmus is making progress. Early progress was reported in a published abstract from Erasmus, and a copy of the abstract can be found at http://ir.aimimmuno.com/Events_Presentations. The abstract was part of a larger original report covering a variety of medical topics, which can be found at https://www.pancreasclub.com/wp-content/uploads/2018/06/Poster-Abstracts.pdf.

In September, AIM reported receipt of statistically significant results of positive survival benefit when using Ampligen in patients with locally advanced/metastatic pancreatic cancer after systemic chemotherapy versus matched historical controls. AIM will work with its Contract Research Organization, Amarex Clinical Research LLC, to seek FDA “fast-track” and possibly even FDA “breakthrough” designations and to obtain IND authorizations to conduct a follow-up pancreatic cancer Phase 2/3 clinical trial with sites in the Netherlands at Erasmus MC under Prof. van Eijck, and also at major cancer research centers in the United States.

Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (“ME/CFS”)

Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (“ME/CFS”), also known as Chronic Fatigue Immune Dysfunction Syndrome (“CFIDS”) and Chronic Fatigue Syndrome (“CFS”), is a serious and debilitating chronic illness and a major public health problem. ME/CFS is recognized by both the government and private sector as a significant unmet medical need, including the U.S. National Institutes of Health (“NIH”), FDA and the CDC. The CDC states on its website at https://www.cdc.gov/me-cfs/ that “Myalgic encephalomyelitis/chronic fatigue syndrome (ME/CFS) is a serious, long-term illness that affects many body systems. People with ME/CFS are often not able to do their usual activities. At times, ME/CFS may confine them to bed. People with ME/CFS have severe fatigue and sleep problems. ME/CFS may get worse after people with the illness try to do as much as they want or need to do. This symptom is known as post-exertional malaise (PEM). Other symptoms can include problems with thinking and concentrating, pain, and dizziness.”

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Many severe ME/CFS patients become completely disabled or totally bedridden and are afflicted with severe pain and mental confusion even at rest. ME/CFS is characterized by incapacitating fatigue with profound exhaustion and extremely poor stamina, sleep difficulties and problems with concentration and short-term memory. It is also accompanied by flu-like symptoms, pain in the joints and muscles, tender lymph nodes, sore throat and new headaches. A distinctive characteristic of the illness is a worsening of symptoms following physical or mental exertion, which do not subside with rest.

In October 2016, an analysis of a subset of CFS patients from the AMP-516 Phase 3 study was performed and presented at the IACFS/ME annual meeting in Fort Lauderdale, FL. The ITT Population (n=208) was separated into two subsets based primarily on baseline CFS symptom duration (2-8 years (n=75) and <2 years plus >8 years (n=133)). Responder analyses of the ITT Population and both subsets were performed. Responder analyses of Ampligen® vs. placebo patients improving ET duration from baseline by ≥25% shows over twice the percentage of patients with clinical enhancement in ET effect in the Ampligen® cohort compared to placebo for the 2-8-year subset vs. the ITT population. This subset may assist in the design of future clinical studies of Ampligen® in the treatment for ME/CFS patients.

The high number of younger people being hospitalized for COVID-19 suggests considerable numbers of people in the prime of their lives may have a COVID-induced ME/CFS-like illness in their future. Individuals with CFS lost an estimated $20,000 in 2002, implying a total societal loss of $9.1 billion. Twenty-five percent ($2.3 billion) resulted from lost household productivity, and the remaining 75% ($6.8 billion) from lost labor force productivity.

In June of 2020, AIM filed a provisional patent application for, among other discoveries, the use of Ampligen® as a potential early-onset therapy for the treatment of COVID-19 induced chronic fatigue.

Many survivors of the first SARS-CoV-1 epidemic in 2003 continued to report chronic fatigue, difficulty sleeping and shortness of breath months after recovering from the acute illness. “After one year, 17% of patients had not returned to work and 9% more had not returned to their pre-SARS work levels” (Simmaron Research). Now there is increasing evidence that patients with COVID-19 can develop a similar, ME/CFS-like illness. These patients are commonly referred to as “Long Haulers.” http://simmaronresearch.com/2020/04/will-covid-19-leave-an-explosion-of-me-cfs-cases-in-its-wake/

In October 2020, AIM received Institutional Review Board (IRB) approval for the expansion of the AMP-511 Expanded Access Program (EAP) clinical trial for Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS) to include patients previously diagnosed with SARS-CoV-2 following clearance of the virus, but who still demonstrate chronic fatigue-like symptoms.

On November 2, 2020, AIM announced the publication of statistically significant data detailing how Ampligen could have a considerable positive impact on people living with ME/CFS when administered in the early stages of the disease. The data were published in PLOS ONE, a peer-reviewed open access scientific journal published by the Public Library of Science. AIM researchers found that the TLR3 agonist Ampligen substantially improved physical performance in a subset of ME/CFS patients.

Other Diseases

In Europe, the EMA has approved the Orphan Medicinal Products Designation for rintatolimod (Ampligen®) as a potential treatment of Ebola virus disease and for Alferon® N Injection, also known as interferon alfa-n3, as a potential treatment of MERS.

We concluded our series of collaborations designed to determine the potential effectiveness of Ampligen® and Alferon® N 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.

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Manufacturing

In January 2017, AIM approved a quote and provided a purchase order commitment with Jubilant Hollister-Stier LLC (“Jubilant”) pursuant to which Jubilant will manufacture commercial size batches of Ampligen®. Additional orders will be placed upon approved quotes and purchase orders provided by AIM to Jubilant. Jubilant was approved by the FDA as a manufacture of Ampligen by the successful completion of a previous preapproval inspection by the agency. The Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica (ANMAT) in Argentina has approved Ampligen for commercial distribution for the treatment of Chronic Fatigue Syndrome (CFS). Shipment of the drug product to Argentina was initiated in 2018 to complete the release testing by ANMAT needed for commercial distribution. On September 19, 2019, AIM received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. We are currently working with GP Pharm on the commercial launch of Ampligen in Argentina.

Jubilant Hollister-Stier (Jubilant) is AIM’s authorized CMO for Ampligen for our approval in Argentina. Since the 2017 engagement of Jubilant to manufacture Ampligen, two lots of Ampligen consisting of more than 16,000 units have been manufactured and released in year 2018. These lots passed all required testing for regulatory release for human use and are being used for multiple programs including the treatment of ME/CFS, the pancreatic cancer EAP in the Netherlands, and will continue to be used for ongoing and future clinical studies in oncology. The production of additional polymer (Ampligen intermediates) took place in 2019 at our New Brunswick facility. Additionally, two lots of Ampligen were manufactured in December 2019 and January 2020 at Jubilant. The current manufactured lots of Ampligen have been fully tested and released by Jubilant for commercial product launch in Argentina and for clinical trials.

Alferon® is approved by the FDA for commercial sales in the U.S. for the treatment of genital warts. It is also approved by ANMAT in Argentina for commercial sales for the treatment of genital warts and in patients who are refractory to treatment with recombinant interferons. While the AIM facility in New Brunswick is approved by the FDA under the Biologic License Application (BLA) for Alferon®, this status will need to be reaffirmed by an FDA pre-approval inspection which will not occur until new batches of commercial filled and finished product are produced and released by the FDA.

Licensing/Collaborations/Joint Ventures

To maximize the availability of Ampligen® to patients on a worldwide basis, we have embarked on a strategy to license the product and/or to collaborate and/or create a joint venture with companies that have the demonstrated capabilities and commitment to successfully gain approval and commercialize Ampligen® in their respective territories of the world. Ideal partners would have the following characteristics: well established global and regional experience and coverage, robust commercial infrastructure, strong track record of successful development and registration of in-licensed products, as well as a therapeutic area fit (ME/CFS, immuno-oncology, etc.).

Marketing/Distribution

In May 2016, we entered into a five-year exclusive Renewed Sales, Marketing, Distribution and Supply Agreement (the “Agreement”) with GP Pharm. Under this Agreement, GP Pharm was responsible for gaining regulatory approval in Argentina for Ampligen® to treat severe 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.

In January 2017, the ANMAT granted a five-year extension to a previous approval to sell and distribute Alferon N Injection® (under the brand name “Naturaferon”) in Argentina. This extends the approval until 2022. In February 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.

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In May 2016, we entered into a five-year agreement (the “Impatients Agreement”) with Impatients, N.V. (“myTomorrows”), a Netherlands based company, for the commencement and management of an EAP in Europe and Turkey (the “Territory”) related to ME/CFS. Pursuant to the agreement, myTomorrows, as our exclusive service provider and distributor in the Territory, is performing EAP activities. 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. We believe 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 five and fifteen 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 January 2017, 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 the Territory and will manage all EAP activities relating to the pancreatic cancer extension of the program.

In February 2018, we signed an amendment to the EAP with myTomorrows. This amendment extended the territory to cover Canada to treat pancreatic cancer patients, pending government approval.

In March 2018, we signed an amendment to the EAP with myTomorrows, pursuant to which myTomorrows will be our exclusive service provider for special access activities in Canada for the supply of Ampligen® for the treatment of ME/CFS.

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 nine months ended September 30, 2020, 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, 2019.

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RESULTS OF OPERATIONS

Three months ended September 30, 2020 versus three months ended September 30, 2019

Net Loss

Our net loss was approximately $3,306,000 and $2,948,000 for the three months ended September 30, 2020 and 2019, respectively, representing an increase in loss of approximately $358,000 or 12% when compared to the same period in 2019. This increase in loss for these three months was primarily due to the following:

● an increase in general and administrative (G&A) expense of $239,000 or 13%;

● an increase in interest income of $61,000; offset by

● a decrease of $415,000 from the 2019 quarterly reevaluation of certain redeemable warrants in;

● a decrease in production costs of $26,000;

● a decrease in research and development expenses of $88,000; and

● a decrease interest expense and other finance cost of $142,000

Net loss per share was $(0.08) and $(1.13) for the three months ended September 30, 2020 and 2019, respectively. The weighted average number of shares of our common stock outstanding as of September 30, 2020 was 38,907,546 as compared to 2,603,854 as of September 30, 2019.

Revenues

Revenues from our Ampligen® Cost Recovery Program were $36,000 and $61,000 for the quarters ended September 30, 2020 and 2019, respectively. There was a decrease in revenues of $25,000. The change in revenue is related to timing of orders and shipments in the three months ending September 30, 2020. The 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 $204,000 and $230,000, respectively, for the three months ended September 30, 2020 and 2019, representing a decrease of $26,000 in production costs in the current period. These costs primarily represent production expenses related to Ampligen produced in 2019.

Research and Development Costs

Research and Development (“R&D”) costs for the quarter ended September 30, 2020 were approximately $1,102,000 as compared to $1,190,000 for the quarter ended September 30, 2019 reflecting a decrease of approximately $88,000. The reason for the decrease in research and development costs was due to decreases in Ampligen polymer production cost of $350,000, Ampligen compliance and stability of $64,000 and maintenance and engineering of $35,000 offset by and an increate in cost recovery of $25,000 and an increase in clinical research of $268,000.

General and Administrative Expenses

General and Administrative (“G&A”) expenses for the quarters ended September 30, 2020 and 2019 were approximately $2,085,000 and $1,846,000, respectively, reflecting an increase of approximately $239,000 or 13%. The increase in G&A expenses during the current period was mainly due to an increase in professional fees of $236,000 and public relations of $34,000.

Other Income-Expenses

Interest and other finance costs decreased $142,000 in the three months ended September 30, 2020 mostly due to the costs associated with the long-term debt which were not in effect in the three months ended September 30, 2020. The long-term debt was extinguished in the second quarter of 2020. Interest income increased $61,000 in the three months ended September 30, 2020 from the investments from the proceeds from stock sales and exercised warrants.

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Redeemable Warrants

The quarterly revaluation of certain redeemable warrants resulted in a non-cash adjustment to the redeemable warrants liability for the three months ended September 30, 2020 which amounted to a gain of approximately $31,000 compared to a gain of $446,000 for September 30, 2019 (see Note 13: Fair Value - for the various factors considered in the valuation of redeemable warrants).

Nine months ended September 30, 2020 versus nine months ended September 30, 2019

Net Loss

Our net loss was approximately $10,466,000 and $8,341,000 for the nine months ended September 30, 2020 and 2019, respectively, representing an increase in loss of approximately $2,125,000 or 25% when compared to the same period in 2019. This increase in loss for these nine months was primarily due to the following:

● an increase in G&A expense of $515,000 or 9%;

● an increase in research and development expenses of $231,000;

● an increase of $392,000 from the extinguishment of notes payable;

● a change of $120,000 for the quarterly revaluation of certain redeemable warrants in 2020 compared to a credit of $1,485,000 in 2019;

● a decrease in an insurance settlement of $260,000 in 2019;

● an increase in interest and finance costs of $80,000 related to long term debt; offset by

● an increase in interest income of $87,000; and

● a decrease in production costs of $68,000.

Net loss per share was $(0.36) and $(4.41) for the nine months ended September 30, 2020 and 2019, respectively. The weighted average number of shares of our common stock outstanding as of September 30, 2020 was 28,826,283 as compared to 1,891,782 as of September 30, 2019.

Revenues

Revenues from our Ampligen® Cost Recovery Program were $121,000 and $90,000 for the nine months ended September 30, 2020 and 2019, respectively. There was an increase in revenues of $31,000. The change in revenue is related to timing of orders and shipments in the nine months ending September 30, 2020. The 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 $608,000 and $676,000, respectively, for the nine months ended September 30, 2020 and 2019, representing a decrease of $68,000 in production costs in the current period. These costs primarily represent production expenses related to Ampligen produced in 2019.

Research and Development Costs

Research and Development (“R&D”) costs for the nine months ended September 30, 2020 were approximately $3,445,000 as compared to $3,214,000 for the nine months ended September 30, 2019 reflecting an increase of approximately $231,000. The primary reasons for the increase in research and development costs was due to an increase in abandoned patents of $129,000, a general increase in Ampligen compliance cost of $235,000 and outside lab fees of $110,000 and offset by a decrease in outside contractors of $239,000.

General and Administrative Expenses

General and Administrative (“G&A”) expenses for the nine months ended September 30, 2020 and 2019 were approximately $6,070,000 and $5,555,000, respectively, reflecting an increase of approximately $515,000 or 9%. The increase in G&A expenses during the current period was mainly due to increases in salaries & benefits, including bonuses of $304,000, professional and legal fees of $331,000 and warrant modification of $46,000 offset by decreases in public relations of $114,000 and stock market fees of $51,000.

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Other Income-Expenses

Interest and finance costs increased $80,000 in the nine months ended September 30, 2020 mostly due to the costs associated with the long-term debt which were not in effect in the nine months ended September 30, 2019. Interest income increased $87,000 in the nine months ended September 30, 2020 from the proceeds from stock sales and exercised warrants. There was gain on extinguishment of notes payable of $142,000 in the nine months ended September 30, 2020, in the same nine months ending September 30, 2019 there was a loss on extinguished debt of $250,000.

In June 2019 the was a gain from settlement proceeds of $260,000 which did not occur in 2020.

Redeemable Warrants

The quarterly revaluations of certain redeemable warrants resulted in a non-cash adjustment to the redeemable warrants liability for the nine months ended September 30, 2020 which amounted to a loss of approximately $120,000 compared to a gain of $1,485,000 for September 30, 2019 (see Note 13: Fair Value - for the various factors considered in the valuation of redeemable warrants).

Liquidity and Capital Resources

As of September 30, 2020, we had approximately $38,496,000 in cash and cash equivalents. As of December 31, 2019, we had approximately $1,470,000 in cash and cash equivalents. Cash used in operating activities for the nine months ended September 30, 2020 was $7,514,000 compared to $6,778,000. The primary reasons for the increase was the decrease in accounts receivable and other receivables which included the sale of New Jersey NOL in the period ended September 30, 2020.

Cash used in investing activities for the nine months ended September 30, 2020 was approximately $8,982,000 compared to $858,000 for the same period in 2019, representing an increase of $8,124,000. The primary reason for the increase during the current period is the purchase of marketable securities of $17,169,000 offset by the sale of marketable securities of $8,497,000.

Cash provided by financing activities for the nine months ended September 30, 2020 was approximately $53,522,000 compared to approximately $16,953,000 for the same period in 2019, an increase of $36,571,000. The primary reason for the increase in the nine months ended September 30, 2020 is our receipt of net proceeds of approximately $58,066,000 from the sale common stock pursuant to our 2019 EDA with Maxim Group and the exercise of warrants (see Note 8: Stockholders’ Equity) compared to $15,307,000 for the same period in 2019.

On August 6, 2020, we contracted Amarex to act as our Clinical Research Organization and provide regulatory support with regard to a clinical trial testing Ampligen’s potential as a COVID-19 prophylaxis via intranasal delivery. For Phase I we anticipate providing approximately $514,000 to Amarex. In Phase II we anticipate providing approximately an additional $650,000. Additional costs expected to be incurred by us for the clinical trial are estimated at $4,500,000. (see “Covid-19” above).

If we are unable to commercialize and sell Ampligen 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.

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 FDA approved drug Alferon.

The proceeds from our financings have been used to fund infrastructure growth including manufacturing, regulatory compliance and market development along with our efforts regarding the Ampligen manufacturing, Ampligen NDA. 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 $54,476,000 in cash, cash equivalents and marketable securities at September 30, 2020 as compared to $8,778,000 at December 31, 2019.

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 Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) 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 CEO and CFO concluded that the controls and procedures were effective as of September 30, 2020, to ensure that material information was accumulated and communicated to our management, including our CEO and CFO, is appropriate to allow timely decisions regarding required disclosure.

During the nine months ended September 30, 2020, 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.

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Part II – OTHER INFORMATION

ITEM 1: Legal Proceedings

We commenced an action against BioLife in December of 2017 for Breach of Contract. The amount of damages we are seeking in this matter are yet to be determined. Damages are not covered by insurance. BioLife, the defendant, has filed its Answer, Affirmative Defenses and a Counterclaim in the amount of $96,676 representing the invoices withheld after BioLife indicated that they were not intending to fulfill the balance of the contract. We have denied the allegations of the counterclaim. We conducted one mediation session to date but have been unable to resolve the matter. The parties are currently waiting to start discovery, which we believe will lead to an anticipated trial date. The scheduled dates for these events to transpire have yet to be determined, as they are dependent on the reopening of the Courts, which have been temporarily closed in connection with the declared state of emergency caused by the COVID-19 pandemic. Although it cannot be determined, we believe there is little chance for an unfavorable outcome in this matter.

ITEM 1A: Risk Factors

Please carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 30, 2020, which could materially affect our business, financial condition, or future results. The risks described in the above report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and operating results. Please also see “Special Note Regarding Forward-Looking Statements” above.

The COVID-19 coronavirus could adversely impact our business, including our clinical trials.

In December 2019, a novel strain of coronavirus, COVID-19, was first reported in China. The coronavirus has since spread to six continents and has been diagnosed in countries in which there are planned or active clinical trial sites studying Ampligen. As COVID-19 continues to spread, we could very well experience disruptions that could severely impact our business and clinical trials, including:

● delays or difficulties in enrolling patients in our clinical trials;

● delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

● diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

● interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others;

● limitations in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;

● delays in issuing reports, results and publishing papers;

● delays in receiving approval from local regulatory authorities to initiate our planned clinical trials;

● delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials;

● interruption in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in our clinical trials;

● changes in local regulations as part of a response to the COVID-19 coronavirus outbreak which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;

● delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and

● refusal of the FDA to accept data from clinical trials in affected geographies outside the United States.

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The global outbreak of the COVID-19 coronavirus continues to rapidly evolve. The extent to which the COVID-19 coronavirus may impact our business and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

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

On August 21, 2020 and September 3, 2020, we sold, respectively, 10,730 shares and 12,316 shares of our common stock in private transactions at purchase prices, respectively, of $2.33 and $2.03 per share. No commissions were paid with regard to these sales. The sales were made pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

ITEM 3: Defaults upon Senior Securities

None.

ITEM 4: Mine Safety Disclosures

Not Applicable.

ITEM 5: Other Information

On August 12, 2020, the Company granted to Thomas K. Equels, Chief Executive Officer, consistent with his employment agreement, 300,000 ten-year options to purchase common stock with an exercise price of $3.07 per share which vest in one year. The Company also granted to Dr. William Mitchell and Stewart Appelrouth, as compensation for their services as members of committees of the board of directors, each 50,000 ten-year options to purchase common stock with an exercise price of $2.77 per share which vest in one year.

On November 10, 2020, we entered into a five year employment agreement with Thomas Equels (the “Employment Agreement”). Pursuant to the Employment Agreement, Mr. Equels will continue to serve as our President, CEO and will serve as our Executive Vice Chairman of the Board of Directors. Mr. Equels will receive an annual base salary of $850,000 and is entitled to a year-end target bonus of $350,000 based upon performance goals established by the Board’s Compensation Committee. To incentivize Mr. Equels to advance our long term objectives, each year he will receive options (“Long Term Options”) to purchase 300,000 shares of our common stock, the first such Long Term Options to be issued on November 30, 2021. The exercise price of these options will be the closing price of our common stock on the NYSE American on the trading date immediately preceding the date of the award The Long Term Options will vest one year after their issuance.

Mr. Equels will be entitled to awards (“Event Awards”) equal to 3% of the “Gross Proceeds” from specific licensing agreements or individual acquisitions of a “therapeutic indication” (each, an “Event”). Gross Proceeds means those cash amounts paid to us by the other parties for each licensing agreement and specific therapeutic indication acquisition, and “specific therapeutic indication means a specific target organ pathologically recognized as a cancer indication, a vaccine enhancer for a specific infectious target, broad spectrum antiviral indications, or a medical entity associated with persistent severe fatigue. Mr. Equels also will be entitled to an award (an “Acquisition Award”) equal to 3% of the Gross Proceeds, upon the sale of our company or substantially all of our assets (an “Acquisition”). An Event Award or Acquisition Award shall be paid in cash within 90 days of our receipt of the Gross Proceeds.

Mr. Equels will receive customary allowances and fringe benefits as set forth in the Employment Agreement. The Employment Agreement runs for five years and, thereafter, automatically renews for three year periods unless either party informs the other in writing at least 180 days prior to the end of the then term of the Employment Agreement, that it does not intend to renew the Employment Agreement. In the event of a change in control of our company (excluding any Acquisition), the term of the Employment Agreement shall be extended for three years on the date of change in control.

We may terminate Mr. Equels’ employment with or without “Cause”. “Cause” means the willful engaging by Mr. Equels in illegal conduct, gross misconduct or gross violation of our Code of Ethics and Business Conduct, which is demonstrably and materially injurious to us. Mr. Equels shall not be deemed to have been terminated for Cause unless he receives notice that a majority of our Directors believes that he should be terminated for Cause. The matter shall be adjudicated by a retired Florida judge or a Florida certified mediator mutually acceptable to our Board and Mr. Equels, before whom Mr. Equels has been given the opportunity to be heard, and requires a finding that he was guilty of intentional and material misconduct according to the foregoing standards and utilizing the legal standard of beyond all reasonable doubt. Upon termination for Cause, Mr. Equels shall be entitled to his salary, bonus and Long Term Options through the last day of his actual employment by us subsequent to the foregoing proceeding. If we terminate him without Cause, Mr. Equels shall be entitled to his compensation through the last day of the then current term of the Employment Agreement. In the event Mr. Equels’ employment is terminated due to his death or disability, we shall pay to him or his estate, at the time of such termination, his base salary, applicable benefits, and all unvested Long Term Options shall immediate vest. In the event of his permanent disability, we will provide an additional two years of base salary.

The Compensation Committee, after reviewing a report from a compensation advisor, determined that Mr. Equels’ compensation was below that of certain peer pharmaceutical/biotechnology companies in certain compensation categories and noted that, due to substantial financial constraints, Mr. Equels had not received an increase in base salary in four years. The Compensation Committee also noted that, under Mr. Equels’ leadership, we had recovered from a distressed situation, which included insufficient funds for drug development, no adequate reserves of experimental drug product and the consequent inability to conduct clinical trials and a high burn rate. Under his tenure we have substantially reduced our burn rate through a series of moves to eliminate waste and inefficiency, raised significant capital to provide an operating reserve, initiated an oncology clinical program which now has multiple oncology clinical trials at academic centers underway, initiated a COVID-19 R&D program with clinical trials imminent and initiated multiple provisional Ampligen utility patent applications in COVID-19, oncology, endometriosis, and manufacturing. To compensate Mr. Equels for these accomplishments, we awarded him 300,000 options with the same terms as the Long Term Options.

The above summaries of the Employment Agreement is not complete and is qualified in its entirety by reference to the full text of the agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

ITEM 6: Exhibits

(a) Exhibits

10.1	November 10, 2020 employment agreement with Thomas K. Equels.*
10.2	July 1, 2020, Material Transfer and Research Agreement with the Japanese National Institute of Infectious Diseases and Shionogi & Co., Ltd. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10))**
10.3	July 6, 2020, Clinical Trial Agreement with Roswell Park Comprehensive Cancer Center. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10))**
10.4	August 6, 2020, Project Work Order with Amarex Clinical Research LLC. (Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10))**
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.INS	XBRL Instance Document * ***
101.SCH	XBRL Taxonomy Extension Schema Document * ***
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document * ***
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document * ***
101.LAB	XBRL Taxonomy Extension Label Linkbase Document * ***
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document * ***

* Filed herewith.

** Filed with the Securities and Exchange Commission as an exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020 filed August 14, 2020 and is hereby incorporated by reference.

*** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities and Exchange Act of 1934, as amended and otherwise are not subject to liability under those sections.

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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.

	AIM IMMUNOTECH INC.
	/s/ Thomas K. Equels
	Thomas K. Equels, Esq.
	Chief Executive Officer & President
	/s/ Ellen M. Lintal
	Ellen M. Lintal
	Chief Financial Officer
Date: November 12, 2020

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EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of the 10th day of November, 2020, between AIM ImmunoTech Inc., a Delaware corporation (the “Company”), and Thomas K. Equels, of Ocala, Florida (the “Employee” or “Equels”) and amends and restates in its entirety the prior Employment Agreements between the parties.

RECITALS

WHEREAS, the Company desires to continue to employ Equels as its President, CEO and Executive Vice Chairman of its Board of Directors;

WHEREAS, Equels was asked to become CEO in the Spring of 2016, at a time when the Company was in distress. Equels was under the aegis of an existing contract with the Company which is currently in effect;

WHEREAS, the Company under Equels’ leadership has recovered from a distressed situation, which included insufficient funds for drug development, no adequate reserves of experimental drug product and the consequent inability to conduct clinical trials, no progress with new clinical trials, a high burn rate, and a NYSE threat of delisting based on value of the Company stock. Since 2016, under his leadership and business plan, the Company has eliminated the threat of delisting, substantially reduced the burn rate through a series of moves to eliminate waste and inefficiency, raised significant capital to provide an operating reserve of over three years, initiated an oncology clinical program which now has multiple important oncology clinical trials at academic centers underway funded by respected third parties without giving up any development rights, initiated a COVID-19 R&D program with a clinical trial authorized by the FDA and others imminent. Equels initiated multiple provisional Ampligen utility patent applications in COVID-19, oncology, endometriosis, and manufacturing;

WHEREAS, the Compensation Committee deems Equels performance to be outstanding;

WHEREAS, the Compensation Committee of the Board commissioned Steven Hall & Partners to provide compensation comparisons of CEOs for six pharmaceutical/biotechnology companies in comparable fields with comparable clinical development programs. The comparisons provided by the consultant revealed that Mr. Equels has been significantly under compensated in both annual cash (6 of 7) and non-cash long term compensation (7 of 7). Moreover, Mr. Equels ownership percentage ranks 7 of 7 (0.8% vs 3.8% median);

WHEREAS, because of past financial circumstances of the Company which have been ameliorated, and despite his stellar performance, Equels has not had an increase in base salary for over four years;

WHEREAS, under Equels leadership the Company now enjoys a robust and stable financial status and significant clinical progress;

WHEREAS, the Company desires to rectify this condition and retain Mr. Equels to continue to provide demonstrated leadership in the Company’s clinical development, ethical business practices, legal responsibilities of a public company and to fairly compensate for these obligations;

WHEREAS, the Employee and the Company wish to state the terms and conditions of the Agreement herein;

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NOW, THEREFORE, the Company and the Employee, in consideration of the mutual covenants and promises set forth herein, agree the foregoing Recitals are true and correct and are incorporated into and made part of this Agreement, and hereby further agree as follows:

1. Duties of Employee. The Employee shall, during the Employment Period (as defined below), be designated as the President, CEO and Executive Vice Chairman of the Board. In the Employee’s capacity as such, he shall perform such duties and functions for the Company as are customarily performed by the Executive Vice Chairman of the Board, President and CEO of public corporations in the pharmaceutical research field at similar development status and pharmaceutical function. Mr. Equels’ duties include leadership of an Executive team consisting of a COO/Government Relations Officer, CFO, and Chief Scientific Officer/Medical Director, which provide factual status information to stockholders and potential investors, assume financial responsibility for the accuracy of financial disclosures, approval of all clinical trials and continuing contact with the PIs of each clinical trial as well as their institutional legal officers, and responsibility in conjunction with the company Disclosure Committee for the accuracy of all press releases and SEC filings. Mr. Equels will serve as Executive Vice Chairman of the Company Board of Directors.

2. Term. This Agreement shall commence on November 10, 2020, and shall terminate on December 31, 2025 (the “Initial Termination Date”) unless sooner terminated in accordance with Section 6 hereof or unless renewed as hereinafter provided (such period of employment together with any extension thereto hereinafter being called the “Employment Period”). This Agreement shall be automatically renewed for successive three (3) year periods after the initial Termination Date unless written notice of refusal to renew is given by one party to the other at least 180 days prior to the Initial Termination Date or the expiration date of any renewal period. In the event of a change in control (CIC) not triggered by a section 3(c) acquisition award, the term of this agreement shall be extended for three years on the date of CIC.

3. Compensation.

(a) As compensation for the services to be performed hereunder, the Company shall pay to the Employee a combination of short term (cash) and long term (options) compensation. Short term compensation will consist of a base salary ($850,000) and a year-end target bonus of $350,000 based on performance goals established by the Compensation Committee. Long term compensation will be provided by 300,000 non-qualified yearly stock options with one year vesting on November 30, 2021, and each anniversary date thereafter for advancing the long term objectives of the Company established by the Board of Directors with long-term performance goal evaluation by the Compensation Committee. The Employee, additionally, is hereby granted 300,000 non-qualified stock options with one-year vesting upon signing this agreement. The exercise price for options of common stock will be equal to 100% of the closing price of the Company stock on the NYSE Amex on the trading date immediately preceding the date of the award.

(b) The Company agrees that the amounts set-forth herein as yearly and long-term salary compensation will not be reduced during the term of the agreement. Increases will be reevaluated each year at the discretion of the Compensation Committee based upon excellent performance and using appropriate comparator biotechnology/pharmaceutical companies as a guide.

(c) Awards equal to 3% of Gross Proceeds will be made for significant events such as specific licensing agreements or individual acquisitions of a “therapeutic indication”. For purposes herein, Gross Proceeds shall mean those cash amounts paid to the Company by the other parties for each licensing agreement and specific “therapeutic indication” acquisition, which shall mean a specific target organ pathologically recognized as a cancer indication, a vaccine enhancer for a specific infectious target, broad spectrum antiviral indications, or a medical entity associated with persistent severe fatigue. Additionally, Employee shall be entitled to an Acquisition Award equal to 3% of the Gross Proceeds from any sale of the Company or substantially all of the Company assets. All such awards shall be paid in cash within 90 days of the receipt of the Gross Proceeds by the Company.

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In the event of termination without Cause the Employee shall be entitled to receive these One Time awards under the conditions provided by the Agreement and will be based upon Gross Proceeds received by the Company with respect to any joint ventures, corporate partnering , or acquisition arrangements entered into by the Company during the term of this Agreement.

4. Automobile Allowance. The Employer agrees to pay to the Employee, during the term of this Agreement and in addition to other salary and benefits herein provided, the sum of $18,000.00 per year payable monthly, as a vehicle allowance to be used to purchase, rent, lease, or own, operate and maintain a vehicle or vehicles in Florida (the “Area”). The Employee shall be responsible to maintain personal umbrella insurance in the yearly amount of $2M and shall further be responsible for all expenses attendant to the purchase, operation, maintenance, repair, and regular replacement of said vehicle. Rental Car expenses for business travel outside of the “Area” shall be reimbursable as a business expense.

5. Fringe Benefits.

(a) During the Employment Period, the Employee shall be entitled to receive such fringe benefits as shall be applicable from time to time to the Company’s executives generally, including but not limited to such 401(k), vacation (4 weeks/year, group life and health insurance, and disability benefit plans as may be maintained by the Company from time to time. Employee shall be entitled to four weeks paid vacation. Health Insurance for Employee and all eligible dependents shall be provided by the Company. Additionally, during the Employment Period, the Company shall pay, for the benefit of the Employee, the premiums for term life insurance policies in the aggregate face amount of $3,000,000 insuring the life of the Employee, with the Employee having the right to designate the beneficiary or beneficiaries thereof.

(b) The Employee acknowledges that the Company may become subject to the health care non-discrimination rules of Internal Revenue Code Section 105(h) as made applicable by Section 10101(d) of the Patient Protection and Affordable Care Act. If the Company determines that it is or will be subject to such non-discrimination rules and that the health care insurance benefit provided by this section would cause a violation of such rules, the parties shall execute an amendment to this Agreement modifying the health care insurance benefit in such a manner that the benefit does not cause a violation of such non-discrimination rules.

6. Termination.

(a) The Company may discharge the Employee for Cause at any time as provided herein. For purposes hereof, Cause shall mean the willful engaging by Employee in illegal conduct, gross misconduct or gross violation of the Company’s Code of Ethics and Business Conduct for Officers, which is demonstrably and materially injurious to the Company. For purposes of this Agreement, no act, or failure to act, on Employee’s part shall be deemed “willful” unless done intentionally by Employee. Notwithstanding the foregoing, Employee shall not be deemed to have been terminated for Cause unless and until the Company initiates the process by delivery to Employee a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the directors of the Board at a meeting of the Board called and held for such purpose specifying the grounds for termination. After reasonable notice to Employee and an opportunity for Employee, together with counsel, to be heard the issues shall be adjudicated by a retired Florida judge or a Florida certified mediator mutually acceptable to the Board of Directors and the Employee. Termination requires a finding that the Employee was guilty of intentional and material misconduct according to the standards set forth above, and specifying the particulars thereof in detail supported by legally admissible evidence and utilizing the legal standard of beyond reasonable doubt.

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(b) The employment of the Employee shall terminate upon the death or disability of the Employee. For purposes of this subsection (b), “disability” shall mean the inability of the Employee effectively to carry out substantially all of his duties hereunder by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.

7. Effect of Termination.

(a) In the event that the Employee’s employment is properly terminated for Cause pursuant to subsection 6(a) , the Company shall pay to the Employee, at the time of such termination, only the salary and benefits otherwise due and payable to him under Section 3a through the last day of his actual employment by the Company subsequent to said termination proceeding.

(b) In the event that the Employee is terminated at any time without Cause as defined in subsection 6(a), the Company shall pay to the Employee, at the time of such termination, the compensation and benefits otherwise due and payable to him under Sections 3 and 4 through the last day of the then current term of this Agreement.

(c) In the event the Employee’s employment is terminated by death or disability pursuant to 6(b), the Company shall pay to the Employee or his estate, at the time of such termination, the Base Salary, applicable benefits, and immediate vesting of stock options required by 7(b). In the event of permanent disability, the Company will provide an additional two years of base salary.

(d) Upon termination of Employee’s employment, with or without cause, in accordance with the terms hereof, Employee shall resign from the Company’s Board of Directors.

8. Employee’s Representations and Warranties. The Employee hereby represents and warrants to the Company that he has the right to enter into this Agreement, and his execution, delivery and performance of this Agreement (a) will not violate any contract to which the Employee is a party or any applicable law or regulation nor give rise to any rights in any other person or entity and (b) are not subject to the consent of any other person or entity, including, without limitation, the Equels Law Firm and Mystic Oaks Farm.

9. Confidentiality, Invention and Non-Compete Agreement. The Employee confirms his obligation to be bound by the terms of a Confidentiality, Invention and Non-Compete Agreement attached hereto as Exhibit “A”.

10. Offices. Equels may conduct the business of the Company from a variety of locations including the Company’s Florida based headquarters in Ocala, Florida, and home offices at his two residences in Coral Gables and Ocala. The Company shall supply that equipment necessary for full telephone, telefax and internet access at all these locations and supply a portable computer capable of remote access while employee travels domestically and internationally on Company business As a condition of employment, Equels shall not be required to relocate from the main-office in Ocala, Florida and the headquarters will be adequately staffed to allow CEO, COO and CFO functions on site and may not be relocated without Equels’ express consent..

Page 4 of 8

11. Expenses. The Company shall be responsible for all travel and business related expenses of Equels. Employee shall provide substantiation, in accordance with IRS regulations, as to all such expenses. Employee agrees to reimburse the Company for all unrelated or personal expenses within one month. The expenditures shall be as prescribed or limited by the Company’s Travel & Expense policies and procedures; however, for air travel Employee shall be entitled to fly in business or first class at Employee’s discretion. The Company shall provide Equels with an unrestricted American Express Platinum card to use only for travel, entertainment and related business expenses of the Company.

12. Notices. Any notice or other communication pursuant to this Agreement shall be in writing and shall be sent by telecopy or by certified or registered mail addressed to the respective parties as follows:

If to the Company, to:
	AIM ImmunoTech Inc.
	2117 SW Highway 484
	Ocala Florida 34473
	Attn: Peter Rodino, General Counsel, and Ellen Lintal, CFO
	If to the Employee, to:
	Thomas K. Equels
	11900 S. Highway 475
	Ocala, FL 34480

or to such other address as the parties shall have designated by notice to the other parties given in accordance with this section. Any notice or other communication shall be deemed to have been duly given if personally delivered or mailed via registered or certified mail, postage prepaid, return receipt requested, or, if sent by telecopy, when confirmed.

13. Survival. Notwithstanding anything in section 2 hereof to the contrary, the Confidentiality, Invention and Non-Compete Agreement shall survive any termination of this Agreement or any termination of the Employee’s services.

14. Modification. No modification or waiver of this Agreement or any provision hereof shall be binding upon the party against whom enforcement of such modification or waiver is sought unless it is made in writing and signed by or on behalf of both parties hereto.

15. Miscellaneous.

(a) This Agreement shall be subject to and construed in accordance with the laws of the State of Florida. Furthermore, the parties acknowledge that the Company has had independent counsel representing it in this matter.

(b) The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate and be construed as a waiver or a continuing waiver by that party of the same or any subsequent breach of any provision of this Agreement by the other party.

Page 5 of 8

(c) If any provisions of this Agreement or the application thereof to any person or circumstance shall be determined by an arbitrator (or panel of arbitrators) or any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder hereof, or the application of such provision to persons or circumstances other than those as to which it is so determined to be invalid or unenforceable, shall not - be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

(d) This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective heirs, executors and administrators, successors and assigns.

i.

Notwithstanding anything to the contrary in this Agreement, no Deferred Payments will be paid or otherwise provided until Employee has a “separation from service” within the meaning of Section 409A. Similarly, no severance payable to Employee, if any, pursuant to this Agreement that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until Employee has a “separation from service” within the meaning of Section 409A.

If any payment or benefit (including payments and benefits pursuant to this Agreement) Executive would receive in connection with a Change in Control from the Company or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax, or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Executive’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a Reduced Amount is paid, (i) the Payment shall be paid only to the extent of the Reduced Amount, and Executive shall have no rights to any additional payments and/or benefits constituting the Payment, and (ii) reduction in payments and/or benefits shall occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of equity awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits paid to Executive. If acceleration of compensation from Executive’s equity awards is to be reduced, such acceleration of vesting shall be canceled in the reverse order of the date of grant.

Page 6 of 8

ii.	Any severance payments or benefits under this Agreement that would be considered Deferred Payments will be paid on, or, in the case of installments, will not commence until, the 60th day following Employee’s separation from service, or, if later, such time as required by Section (d)iii. Except as required by Section (d)iii, any installment payments that would have been made to Employee during the 60-day period immediately following Employee’s separation from service but for the preceding sentence will be paid to Employee on the 60th day following Employee’s separation from service and the remaining payments shall be made as provided in this Agreement. In no event will Employee have discretion to determine the taxable year of payment for any Deferred Payments.
iii.	Notwithstanding anything to the contrary in this Agreement, if Employee is a “specified employee” within the meaning of Section 409A at the time of Employee’s separation from service (other than due to death), then the Deferred Payments that are payable within the first 6 months following Employee’s separation from service, will, to the extent required to be delayed pursuant to Section 409A(a)(2)(B) of the Code, become payable on the date 6 months and 1 day following the date of Employee’s separation from service. All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if Employee dies following Employee’s separation from service, but prior to the 6-month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Employee’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
iv.	Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Payments.
v.	Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit (as defined below) will not constitute Deferred Payments.
vi.	The foregoing provisions and all compensation and benefits provided for under this Agreement are intended to comply with or be exempt from the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to be exempt or so comply. The Company and Employee agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Employee under Section 409A.

Page 7 of 8

vii. Definitions:

A. Section 409A. “Section 409A” means Section 409A of the U.S. Internal Revenue Code (the “Code”) and any final regulations and guidance thereunder and any applicable state law equivalent, as each may be amended or promulgated from time to time.

B. Section 409A Limit. “Section 409A Limit” will mean 2 times the lesser of: (i) Employee’s annualized compensation based upon the annual rate of pay paid to Employee during the Employee’s taxable year preceding the Employee’s taxable year of Employee’s separation from service as determined under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Internal Revenue Code for the year in which Employee’s separation from service occurred.

IN WITNESS WHEREOF, this Agreement has been signed by the parties hereto on the dates set forth next to their signature and this Agreement takes effect on the date of the last signature.

For Thomas Equels:	For Board of Directors:
/s/ Thomas K. Equels	/s/ William M. Mitchell
Thomas K. Equels, Esq.	William M. Mitchell, MD, PhD
President, CEO, BoD Executive Vice-Chairman Chairman BoD
AIM ImmunoTech Inc.
For AIM ImmunoTech Inc.:
/s/ Peter W. Rodino, III
Peter W. Rodino, III, Esq.
COO, AIM ImmunoTech Inc.

Page 8 of 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 AIM ImmunoTech 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: November 12, 2020
	/s/ Thomas K. Equels
	Thomas K. Equels, Esq.
	Chief Executive Officer & President

EX-31.2

EXHIBIT 31.2

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

I, Ellen M. Lintal, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of AIM ImmunoTech 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: November 12, 2020
	/s/ Ellen M. Lintal
	Ellen M. Lintal
	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 AIM ImmunoTech Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended September 30, 2020, 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: November 12, 2020
	/s/ Thomas K. Equels
	Thomas K. Equels, Esq.
	Chief Executive Officer & President

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 AIM ImmunoTech Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ellen M. Lintal, 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: November 12, 2020
	/s/ Ellen M. Lintal
	Ellen M. Lintal
	Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 11, 2020
Cover [Abstract]
Entity Registrant Name	AIM ImmunoTech Inc.
Entity Central Index Key	0000946644
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		40,686,482
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 38,496	$ 1,470
Marketable securities, short term	1,144	7,308
Funds receivable from sale of New Jersey net operating loss		776
Accounts receivable, net	26	44
Prepaid expenses and other current assets	91	848
Total current assets	39,757	10,446
Property and equipment, net	6,629	7,116
Right of use assets, net	188	152
Patent and trademark rights, net	1,407	1,151
Marketable securities, long term	14,836
Other assets	1,347	1,354
Total assets	64,164	20,219
Current liabilities:
Accounts payable	205	472
Accrued expenses	322	403
Current portion of operating lease liabilities	42	38
Current portion of financing obligation	226	214
Total current liabilities	795	1,127
Long-term liabilities:
Operating lease obligation	146	114
Notes payable, net		3,910
Financing obligation arising from sale leaseback transaction (Note 14)	1,934	2,104
Redeemable warrants	177	57
Commitments and contingencies
Stockholders' equity:
Series B Convertible Preferred Stock, stated value $1,000 per share, 8,000 shares designated, 733 and 778 shares issues and outstanding, respectively	733	778
Common stock, par value $0.001 per share, authorized 350,000,000 shares; issued and outstanding 40,685,282 and 10,386,754 respectively	41	10
Additional paid-in capital	398,925	340,228
Accumulated other comprehensive income	(12)
Accumulated deficit	(338,575)	(328,109)
Total stockholders' equity	61,112	12,907
Total liabilities and stockholders' equity	$ 64,164	$ 20,219

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Preferred stock, par value	$ 0.01
Preferred stock, shares authorized	5,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	350,000,000	350,000,000
Common stock, shares issued	40,685,282	10,386,754
Common stock, shares outstanding	40,685,282	10,386,754
Series B Convertible Preferred Stock [Member]
Preferred stock, par value	$ 1,000	$ 1,000
Preferred stock, shares authorized	8,000	8,000
Preferred stock, shares, issued	733	778
Preferred stock, shares, outstanding	733	778

XML

Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues:
Total revenues	$ 36	$ 61	$ 121	$ 90
Costs and expenses:
Production costs	204	230	608	676
Research and development	1,102	1,190	3,445	3,214
General and administrative	2,085	1,846	6,070	5,555
Total costs and expenses	3,391	3,266	10,123	9,445
Operating loss	(3,355)	(3,205)	(10,002)	(9,355)
Interest and other income	69	8	131	44
Interest expense and other finance costs	(51)	(193)	(617)	(537)
Extinguishment of notes payable			142	(250)
Convertible note valuation adjustment		(4)		12
Settlement of litigation				260
Redeemable warrants valuation adjustment	31	446	(120)	1,485
Net loss	(3,306)	(2,948)	(10,466)	(8,341)
Other comprehensive income (loss):
Unrealized loss on marketable securities	(75)		(12)
Net comprehensive loss	$ (3,381)	$ (2,948)	$ (10,478)	$ (8,341)
Basic and diluted loss per share	$ (0.08)	$ (1.13)	$ (0.36)	$ (4.41)
Weighted average shares outstanding, basic and diluted	38,907,546	2,603,854	28,826,283	1,891,782
United States [Member]
Revenues:
Clinical treatment programs	$ 27	$ 56	$ 110	$ 60
Europe [Member]
Revenues:
Clinical treatment programs	$ 9	$ 5	$ 11	$ 30

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Series B Preferred [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2018		$ 1	$ 323,749		$ (318,576)	$ 5,174
Balance, shares at Dec. 31, 2018		1,107,607
Shares issued for: Common stock issuance, net of costs		$ 5	16,939			16,944
Shares issued for: Common stock issuance, net of costs, shares		4,243,390
Shares issued for: Convertible note originations shares			1,473			1,473
Shares issued for: Convertible note originations shares, shares		204,246
Deemed dividends			(135)			(135)
Equity-based compensation			649			649
Equity-based compensation, shares		1,932
Redeemable warrants			(2,787)			(2,787)
Shares issued to pay accounts payable			84			84
Shares issued to pay accounts payable , shares		25,459
Series B preferred shares issued, net of offering costs	$ 5,312					5,312
Series B preferred shares converted to common shares	(4,529)					(4,529)
Series B preferred shares converted to common shares, shares		514,659
Warrant modification
Net comprehensive loss					(8,341)	(8,341)
Balance at Sep. 30, 2019	$ 783	$ 6	339,972		(323,917)	13,844
Balance, shares at Sep. 30, 2019		6,097,293
Balance at Dec. 31, 2019	$ 778	$ 10	340,228		(328,109)	12,907
Balance, shares at Dec. 31, 2019		10,386,754
Shares issued for: Common stock issuance, net of costs		$ 31	58,035			58,066
Shares issued for: Common stock issuance, net of costs, shares		30,287,007
Equity-based compensation			596			596
Equity-based compensation, shares
Shares issued to pay accounts payable			20			20
Shares issued to pay accounts payable , shares		6,407
Series B preferred shares converted to common shares	$ (45)					(45)
Series B preferred shares converted to common shares, shares		5,114
Warrant modification			46			46
Net comprehensive loss				(12)	(10,466)	(10,478)
Balance at Sep. 30, 2020	$ 733	$ 41	$ 398,925	$ (12)	$ (338,575)	$ 61,112
Balance, shares at Sep. 30, 2020		40,685,282

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash flows from operating activities:
Net loss	$ (10,466)	$ (8,341)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment	500	557
Redeemable warrants valuation adjustment	120	(1,485)
Fair value of convertible note adjustment		(12)
Change in convertible debt - refinancing		20
Extinguishment of notes payable	142	345
Warrant modification	46
Amortization of patent, trademark rights	41	53
Changes in ROU assets	(36)	26
Equity-based compensation	596	649
Realized (loss) gain on sale of marketable securities	(12)
Amortization of finance and debt issuance costs	77	303
Change in assets and liabilities:
Accounts receivable and other receivables	794	1,032
Prepaid expenses and other current assets	764	49
Lease liability	36	(25)
Accounts payable	(265)	24
Accrued interest expense	230
Accrued expenses	(81)	27
Net cash used in operating activities	(7,514)	(6,778)
Cash flows from investing activities:
Proceeds from sale of marketable securities	8,497
Purchase of marketable securities	(17,169)	(588)
Purchase of property and equipment	(13)	(68)
Purchase of patent and trademark rights	(297)	(202)
Net cash used in investing activities	(8,982)	(858)
Cash flows from financing activities:
Payment of note payable	(4,279)
Financing obligation payments	(265)	(254)
Proceeds from note payable, net of issuance costs		1,900
Proceeds from sale of stock, net of issuance costs	58,066	15,307
Net cash provided by financing activities	53,522	16,953
Net increase in cash and cash equivalents	37,026	9,317
Cash and cash equivalents at beginning of period	1,470	299
Cash and cash equivalents at end of period	38,496	9,616
Supplemental disclosures of non-cash investing and financing cash flow information:
Unrealized loss on marketable securities	(12)
Conversion of Series B preferred	45	4,529
Conversion of note payable into shares		1,474
Stock issued to settle accounts payable	20	84
Operating lease - right of use assets	$ 65	$ 188

XML

Business and Basis of Presentation

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business and Basis of Presentation

Note 1: Business and Basis of Presentation

AIM ImmunoTech Inc. and its subsidiaries (collectively, “AIM” or “Company”) are an immuno-pharma company headquartered in Ocala, Florida and focused on the research and development of therapeutics to treat multiple types of cancers, various viruses and immune-deficiency disorders. The Company has established a strong foundation of laboratory, pre-clinical and clinical data with respect to the development of nucleic acids and natural interferon to enhance the natural antiviral defense system of the human body and to aid the development of therapeutic products for the treatment of certain cancers and chronic diseases.

AIM’s flagship products include Ampligen® (rintatolimod), a first-in-class drug of large macromolecular RNA (ribonucleic acid) molecules, and Alferon N Injection® (Interferon Alfa-N3). A first-in-class drug is also known as a new molecular entity that contains an active moiety. Ampligen has not been approved by the FDA or marketed in the US.

A global pandemic due to a novel strain of coronavirus (COVID-19) has occurred. Since the late 2019 outbreak of SARS-CoV-2, the novel virus that causes COVID-19, the Company has been actively engaged in determining whether Ampligen could be an effective treatment for this virus or could be part of a vaccine. The Company believes that Ampligen has the potential to be both an early-onset treatment for and prophylaxis against SARS-Cov-2. Ampligen is also being researched as part of a potential COVID-19 vaccine strategy that combines Ampligen as an immune enhancer seeking to boost the efficacy of the vaccine and also convey cross-reactivity and cross-protection against future mutations. The Company believes that prior studies of Ampligen in SARS-CoV-1 animal experimentation may predict similar protective effects against the new virus.

In February 2020, AIM filed three provisional patent applications related to Ampligen in the Company’s efforts toward joining the global health community in the fight against the deadly coronavirus. The Company’s three provisional patent applications include: 1) Ampligen as a therapy for the coronavirus; 2) Ampligen as part of a proposed intranasal universal coronavirus vaccine that combines Ampligen with inactivated coronavirus, conveying immunity and cross-protection and; 3) a high-volume manufacturing process for Ampligen. Under the Patent Cooperation Treaty of 1970, which provides international protections for patents, the three provisional patent applications can be converted to international patent applications based on the date of their filings.

In early April 2020, the Company entered into a Material Transfer Agreement with Shenzhen Smoore Technologies located in Shenzhen China, the world’s largest manufacturer of inhalation devices. Pursuant to this agreement, the Company is providing Smoore with Ampligen and Smoore will be conducting in vitro tests using its porous ceramic atomizer technology. Initial testing will include evaluation of Ampligen with regard to safety and characterization of the inhaler vapor properties. Additional testing will study the particle size of various Ampligen concentrations in aqueous solutions obtainable using Smoore’s technology. The goal of these studies is to establish a reproducible method to obtain an Ampligen-containing atomized mist that can deliver biologically active Ampligen deep into the lung airways of humans. Ampligen is scheduled to be shipped to Smoore for testing, pending resolution of various China inbound import regulatory requirements. AIM and Smoore are working to identify and navigate any and all regulatory obligations. The Company will provide additional updates as they become available.

Beginning in April 2020, the Company entered into confidentiality and non-disclosure agreements with numerous companies for the potential outsourcing of the production of polymer, enzyme, placebo as well as Ampligen, and one Contract Research Organization, Amarex Clinical Research LLC (“Amarex”), which will provide regulatory support, including managing a clinical trial testing Ampligen’s potential as a COVID-19 prophylaxis via intranasal delivery.

In addition, the Company has joined with ChinaGoAbroad (CGA) to facilitate the entry of Ampligen into the People’s Republic of China (PRC) for use as a prophylactic/early-onset therapeutic against COVID-19. CGA is a member-based online information platform and offline advisory firm serving to facilitate two-way international transactions relating to the PRC in collaboration with the China Overseas Development Association. The relationship with ChinaGoAbroad is ongoing.

On May 11, 2020, the FDA authorized an IND for Roswell Park Comprehensive Cancer Institute (“Roswell Park”) to conduct a Phase 1/2a study of a regimen of Ampligen and interferon alpha in cancer patients with mild or moderate COVID-19 infections. This new clinical trial, sponsored by the Roswell Park in collaboration with the Company, will test the safety of this combination regimen in patients with cancer and mild to moderate COVID-19, and the extent to which this therapy will promote clearance of the SARS-CoV-2 virus from the upper airway. It is planned that the phase 1/2a study will enroll up to 44 patients in two stages. Phase 1 will see 12-24 patients receiving both Ampligen and interferon alfa-2b at escalating doses. Once that initial phase is complete, further study participants will be randomized to two arms: one receiving the two-drug combination and a control group who will not receive Ampligen or interferon alfa but will receive best available care. The Company intends to be a financial sponsor of the study and will provide Ampligen at no charge for this study.

In March 2020, the Japanese National Institute of Infectious Diseases (“NIID”) initiated preliminary laboratory testing of Ampligen as a potential treatment for COVID-19. On July 1, 2020, we entered into a trilateral material transfer and research agreement with the NIID and Shionogi & Co., Ltd. (“Shionogi”), one of Japan’s premier pharma companies to test the Company’s drug Ampligen as a potential vaccine adjuvant for COVID-19. Under the agreement, we have and will continue to provide Ampligen samples for various research projects. Per this agreement, the details of all preclinical and clinical results will remain confidential until released by NIID and Shionogi.

On July 6, 2020, we entered into a clinical trial agreement with Roswell Park pursuant to which Roswell Park will conduct a Phase 1/2a trial of Ampligen (rintatolimod) in combination with Intron-A (interferon alfa-2b), in cancer patients with COVID-19, the disease caused by the SARS-CoV-2 coronavirus.

Recently, the Company also entered into a material transfer agreement with the University of Rochester which is planning a series of in vitro experiments in which it will be testing the direct antiviral activity of Ampligen on SARS-CoV-2, as well as the mechanism of action. The Company also entered into a specialized services agreement with Utah State University that has supplied Ampligen to support the University’s Institute for Viral Research in its research into SARS-CoV-2. The Utah State results show that Ampligen was able to decrease SARS-CoV-2 infectious viral yields by 90% at clinically achievable intranasal Ampligen dosage levels.

In June 2020, AIM filed a provisional patent application for, among other discoveries, the use of Ampligen® as a potential early-onset therapy for the treatment of COVID-19 induced chronic fatigue.

Many survivors of the first SARS-CoV-1 epidemic in 2003 continued to report chronic fatigue, difficulty sleeping and shortness of breath months after recovering from the acute illness. These patients are commonly referred to as “Long Haulers.” Now there is increasing evidence that patients with COVID-19 can develop a similar, ME/CFS-like illness. In October 2020, AIM received Institutional Review Board (IRB) approval for the expansion of the AMP-511 Expanded Access Program (EAP) clinical trial for Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS) to include patients previously diagnosed with SARS-CoV-2, but who still demonstrate chronic fatigue-like symptoms.

On November 2, 2020, AIM announced the publication of statistically significant data detailing how Ampligen could have a considerable positive impact on people living with ME/CFS when administered in the early stages of the disease. The data were published in PLOS ONE, a peer-reviewed open access scientific journal published by the Public Library of Science. AIM researchers found that the TLR3 agonist Ampligen substantially improved physical performance in a subset of ME/CFS patients. The findings potentially carry special importance for COVID-19 “Long Haulers,” who are uniquely situated to potentially benefit from Ampligen as an early onset therapy for subjects who have recovered from acute COVID-19, but then experience chronic fatigue-like symptoms.

The COVID-19 pandemic has significantly impacted the economic conditions in the U.S., accelerating during the first half of March. The ultimate impact of the pandemic on the Company’s results of operations, financial position, liquidity, or capital resources cannot be reasonably estimated at this time.

AIM 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 its drug, Ampligen, and its approved drug, Alferon N Injection.

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, 2019 and 2018, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed on March 30, 2020.

On May 29, 2019, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split at a ratio in the range of 1-for-20 to 1-for-50. The Company’s Board of Directors approved the implementation of the reverse stock split at a ratio 1-for-44 which took effect on June 10, 2019. All share and per share amounts for prior periods have been revised to give retroactive effect to this reverse stock split.

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Net Loss Per Share

9 Months Ended

Sep. 30, 2020

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 8,017 and 5,893,040 and 534,283 and 6,733,420 are excluded from the calculation of diluted net loss per share for the three months and nine months ended September 30, 2020 and 2019, respectively, since their effect is antidilutive due to the net loss.

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Equity-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [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. Options granted in the nine months ended September 30, 2020 and 2019 were 400,000 and 39,267, respectively.

Stock option for employees’ activity during the nine months ended September 30, 2020 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, 2020		127,747		$	29.61		6.41	$	—
Granted		300,000			3.07		9.83		—
Forfeited		(2,483	)		19.50		—		—
Expired		(568	)		348.48		—		—
Outstanding September 30, 2020		424,696		$	10.50		8.64	$	—
Vested and expected to vest September 30, 2020		424,696		$	20.50		8.64	$	—
Exercisable September 30, 2020		125,321		$	11.18		6.13	$	—

Unvested stock option activity for employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Unvested January 1, 2020		68,283		$	23.79		7.48	$	—
Granted		300,000			3.07		9.83		—
Vested		(68,908	)		6.26		—		—
Unvested September 30, 2020		299,375		$	7.06		9.68	$	—

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, 2020		66,675		$	24.09		5.47	$	—
Granted		100,000			2.77		9.83		—
Forfeited		—			—		—		—
Expired		(104	)		104.29		—		—
Outstanding September 30, 2020		166,571		$	7,19		7.19	$	—
Vested and expected to vest September 30, 2020		166,571		$	7.19		7.19	$	—
Exercisable September 30, 2020		31,661		$	7.76		9.13	$	—

Unvested stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Unvested January 1, 2020		66,675		$	12.80		5.59	$	—
Granted		100,000			2.77		9.83		—
Expired		—			—		—		—
Vested		(31,765	)		7.75		—		—
Unvested September 30, 2020		134,910		$	6.56		7.90	$	—

Stock-based compensation expense was approximately $596,000 and $649,000 for the nine months ended September 30, 2020 and 2019 resulting in an increase in general and administrative expenses, respectively.

As of September 30, 2020, and 2019, respectively, there was approximately $1,080,000 and $877,000 of unrecognized equity-based compensation cost related to options granted under the Equity Incentive Plan. 

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Inventories

9 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

Inventories

Note 4: Inventories

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

Commercial sales of Alferon in the U.S. will not resume until new batches of commercial filled and finished product are produced and released by the U.S. Food and Drug Administration (“FDA”). While the facility is approved by the FDA under the Biologics 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. 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 in excess of one year, the Company reclassified Alferon work in process inventory of $1,095,000 to other assets within our balance sheet as of September 30, 2020 and December 31, 2019 and due to the high cost estimates to bring the facility back online. Prior to completing validation, the Company plans on modernizing the manufacturing process to make it lower-cost and higher volume. If, following modernization, the Company is unable to gain the necessary FDA approvals related to the manufacturing process and/or final product of new Alferon inventory, its operations most likely will be materially and/or adversely affected. Considering 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.

The Alferon work in process is currently compliant with our internal protocols and is stored in a controlled state. All of these factors contribute to the potential sale of the Alferon work in process, after validation lots have been produced and including a successful pre-approval inspection.

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Marketable Securities

9 Months Ended

Sep. 30, 2020

Marketable Securities [Abstract]

Marketable Securities

Note 5: Marketable Securities

Marketable securities consist of mutual funds and debt securities. As of September 30, 2020, and December 31, 2019, it was determined that none of the marketable securities had an other-than-temporary impairment. At September 30, 2020 and December 31, 2019, all securities were measured as Level 1 instruments of the fair value measurements standard (see Note 13: Fair Value). As of September 30, 2020, and December 31, 2019 the Company held $15,980,000 and $7,308,000 in debt and equity securities, respectively.

Debt securities classified as available for sale consisted of:

September 30, 2020
(in thousands)

Securities	Amortized Cost		Gross Unrealized Gains /(Losses)		Gross Unrealized Gains /(Losses)			Fair Value		Marketable Securities
U.S. Treasury notes	$	5,641	$	—	$	(23	)	$	5,618	$	5,618
U.S. Government mortgage backed securities		4,748		—		(27	)		4,721		4,721
Corporate bonds		5,603		—		38			5,641		5,641
Totals	$	15,992	$	—	$	(12	)	$	15,980	$	15,980

As of December 31, 2019 the Company held no debt securities.

The following presents available-for-sale securities’ gross unrealized losses and fair value aggregated by the short- and long-term maturity.

September 30, 2020
(in thousands)

	Less than 12 Months				12 Months or More					Total
Securities	Fair Value		Gross Unrealized Gains		Fair Value		Gross Unrealized Gains			Fair Value		Gross Unrealized Gains
U.S. Treasury notes	$	1,008	$	—	$	4,610	$	(23	)	$	5,618	$	(23	)
U.S. Government mortgage backed securities		—		—		4,721		(27	)		4,721		(27	)
Corporate bonds		136		—		5,505		38			5,641		38
Totals	$	1,144	$	—	$	14,836	$	12		$	15,980	$	(12	)

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Accrued Expenses

9 Months Ended

Sep. 30, 2020

Payables and Accruals [Abstract]

Accrued Expenses

Note 6: Accrued Expenses

Accrued expenses consist of the following:

	(in thousands)
	September 30, 2020		December 31, 2019
Compensation	$	89	$	94
Professional fees		116		73
Clinical trial expenses		—		56
Other expenses		117		180
	$	322	$	403

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Property and Equipment

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment

Note 7: Property and Equipment

	(in thousands)
	September 30, 2020			December 31, 2019
Land, buildings and improvements	$	10,547		$	10,547
Furniture, fixtures, and equipment		5,127			5,114
Total property and equipment		15,674			15,661
Less: accumulated depreciation		(9,045	)		(8,545	)
Property and equipment, net	$	6,629		$	7,116

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, ranging from three to thirty-nine years.

On March 16, 2018, the Company sold land and a building for $4,080,000 and concurrently entered into an agreement to lease the property back for ten years. The lease payments are initially $408,000 per year for two years through March 31, 2020 and will escalate in subsequent years. (See Note 14: Financing Obligation Arising from Sale Leaseback Transaction for more details on the sale leaseback of the property and equipment).

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Stockholders' Equity

9 Months Ended

Sep. 30, 2020

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. Of our authorized preferred stock, 250,000 shares have been designated as Series A Junior Participating Preferred Stock and 8,000 shares have been designated as Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock has a stated value $1,000 per share.

The Company is authorized to issue 8,000 Series B Convertible Preferred Stock, no par value, stated value $1,000 per share. As of September 30, 2020, and December 31, 2019, the Company had 733 and 783 shares of Series B Convertible Preferred Stock outstanding, respectively. Each such Preferred Share is convertible into 114 shares of common stock.

Pursuant to a registration statement relating to a rights offering declared effective by the SEC on February 14, 2019, AIM distributed to its holders of common stock and to holders of certain options and warrants as of February 14, 2019, at no charge, one non-transferable subscription right for each share of common stock held or deemed held on the record date. Each right entitled the holder to purchase one unit, at a subscription price of $1,000 per unit, consisting of one share of Series B Convertible Preferred Stock with a face value of $1,000 (and immediately convertible into common stock at an assumed conversion price of $8.80) and 114 warrants with an assumed exercise price of $8.80. The warrants are exercisable for five years after the date of issuance. The net proceeds realized from the rights offering were approximately $4,700,000. During the nine months ending September 30, 2020, 45 shares of Series B Convertible Preferred Stock were converted into common stock.

(b) Common Stock

The Company has authorized shares of 350,000,000 with specific limitations and restrictions on the usage of 8,000,000 of the 350,000,000 authorized shares.

In June 2019, the Company effected a 44-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. All references herein to shares of common stock, options, warrants and preferred stock have been adjusted to give effect to this reverse stock.

On June 11, 2019, 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. As of September 30, 2019, the Company has issued 67,767 shares of its common stock at prices between $4.03 and $4.37 for a total of $274,000. This plan expired August 19, 2019. On September 27, 2019, the Company closed an public offering underwritten by A.G.P./Alliance Global Partners, LLC (the “Offering”) of (i) 1,740,550 shares of Common Stock; (ii) pre-funded warrants exercisable for 7,148,310 shares of Common Stock (the “Pre-funded Warrants”), and (iii) warrants to purchase up to an aggregate of 8,888,860 shares of Common Stock (the “Warrants”). In conjunction with the Offering, a Representative’s Warrant to purchase up to an aggregate of 266,665 shares of common stock (the “Representative’s Warrant”). The shares of Common Stock and Warrants were sold at a combined Offering price of $0.90, less underwriting discounts and commissions. Each Warrant sold with the shares of Common Stock represents the right to purchase one share of Common Stock at an exercise price of $0.99 per share. The Pre-Funded Warrants and Warrants were sold at a combined Offering price of $0.899, less underwriting discounts and commissions. The Pre-Funded Warrants were sold to purchasers whose purchase of shares of Common Stock in the Offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% of the Company’s outstanding Common Stock immediately following the consummation of the Offering, in lieu of shares of Common Stock. Each Pre-Funded Warrant represents the right to purchase one share of Common Stock at an exercise price of $0.001 per share. The Pre-Funded Warrants are exercisable immediately and may be exercised at any time until the Pre-Funded Warrants are exercised in full. A registration statement on Form S-1, relating to the Offering was filed with the SEC and was declared effective on September 25, 2019, the net proceeds were approximately $7,200,000. During the nine months ended September 30, 2020, 1,870,000 of the Pre-funded Warrants were exercised and 8,873,860 Warrants were exercised. In addition, on March 25, 2020, the Representative’s Warrant was amended to permit exercise of such warrant to commence on March 30, 2020. These warrants were exercised on March 31, 2020 and an aggregate of 266,665 shares were issued upon exercise of this warrant for gross proceeds of approximately $264,000 and a $46,000 expense for the warrant modification.

On May 2, 2019, the Company entered into a modification agreement with certain redeemable warrant holders of the August 23, 2017 and April 20, 2018, respectively. The warrant exercise price was reduced to $6.60 and 103,410 warrants were exercised, reducing the liability attributed to the warrants by approximately $404,000, and the Company realized about $682,000 in net proceeds, resulting in an addition to stockholders’ equity of approximately $1,086,000, offset by a deemed dividend of $135,000.

On July 19, 2019, the Company entered into a new Equity Distribution Agreement (the “2019 EDA”) with Maxim, pursuant to which it may sell from time to time, shares of its Common Stock through Maxim, as agent (the “Offering”). The 2019 EDA replaced the EDA with Maxim. On July 19, 2019, the Company filed a prospectus supplement with the SEC in connection with the offering under the 2019 EDA under its existing Registration Statement on Form S-3 (File No 333-226059) related to the sale of shares of its common stock having an aggregate offering price of up to $4,508,244, the maximum number of Shares permitted to be sold under the 2019 EDA at that time. As of December 31, 2019, the Company had sold 905,869 shares under the 2019 EDA for gross proceeds of $2,553,079 which includes a 3.5% fee to Maxim of $89,358. On March 3, 2020, the Company filed a new prospectus supplement with SEC increasing the aggregate offering price of shares of common stock it could sell under the 2019 EDA to $10,867,245. On March 10, 2020, the Company filed another prospectus supplement with SEC increasing the aggregate offering price under the 2019 EDA to $18,833,739. During the nine months ended September 30, 2020, the Company sold 18,990,367 shares under the 2019 EDA for total gross proceeds of $50,692,287, which includes a 3.5% fee to Maxim of $1,774,230. On June 15, 2020, the Company filed another prospectus supplement with SEC increasing the aggregate offering price under the 2019 EDA to $19,406,552. On August 18, 2020, the Company filed another prospectus supplement with SEC increasing the aggregate offering price under the 2019 EDA to $19,004,095. During the quarter ended September 30, 2020, the Company sold 6,409,441 shares under the 2019 EDA for total gross proceeds of $17,813,884, which includes a 3.5% fee to Maxim of $623,486. The actual number of shares, that the Company can sell, and the proceeds to be received therefrom under the 2019 EDA are dependent upon the market price of its Common Stock.

The 2018 Equity Incentive Plan, effective September 12, 2018, authorizes the grant of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards. Initially, a maximum of 7,000,000 shares of Common Stock is reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. Unless sooner terminated, the 2018 Equity Incentive Plan will continue in effect for a period of 10 years from its effective date. On October 17, 2018, the Board of Directors issued 26,324 options to the officers and directors at the exercise price of $9.68 expiring in 10 years, and on November 14, 2018, the Board of Directors issued 23 options to each employee, officer and director at the exercise price of $9.68 expiring in ten years. On January 28, 2019, 27,570 options were issued to each of these officers with an exercise price of $9.68 for a period of ten years with a vesting period of one year. In August, 2020, 400,000 options were issued to each of these officers with a exercise price range of of $2.77 to $3.07 for a period of ten years with a vesting period of one year.

As of September 30, 2020, and December 31, 2019, there were 40,685,282 and 10,386,754 shares outstanding, respectively. 

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Cash and Cash Equivalents

9 Months Ended

Sep. 30, 2020

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

9 Months Ended

Sep. 30, 2020

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Note 10: Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments, and subsequent amendments to the guidance, ASU 2018-19 in November 2018 and ASU 2020-02 in February 2020. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. The amendment will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2018-19 clarifies that receivables arising from operating leases are accounted for using lease guidance and not as financial instruments. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. This ASU will be effective for us beginning the first day of our 2023 fiscal year. Early adoption is permitted. We are evaluating the impact of adoption of this ASU on our financial condition, results of operations and cash flows, and, as such, we are not able to estimate the effect the adoption of the new standard will have on our financial statements.

Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

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Convertible Note Payable

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Convertible Note Payable

Note 11: Convertible Note Payable

On September 28, 2018, the Company entered into a $3,170,000 10% Secured Convertible Promissory Note (the “IR Note”) with Iliad Research and Trading, L.P. (the “Holder”), which was issued to the Holder in conjunction with 500,000 shares of common stock (the “Origination Shares”). The Company collected $3,000,000 in cash from the Holder during September 2018 and the remainder $170,000 was retained by the Holder for the Holder’s legal fees of $20,000 for the issuance of the IR Note and the Original Issue Discount of $150,000. The Company incurred $210,000 in third-party fees directly attributed to the issuance of the IR Note. The Company promised to pay the principal amount, together with guaranteed interest at the annual rate of 10%, with principal and accrued interest on the IR Note due and payable on September 28, 2019, unless converted under terms and provisions as set forth within the IR Note. The IR Note provides the Holder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company’s common stock at a conversion price of $0.30 per share. In addition, beginning on March 28, 2019, the IR Note also provides the Holder with the right to redeem all or any portion of the IR Note (“Redemption Amount”). The payments of each Redemption Amount may be made, at the option of the Company, in cash, by converting such Redemption Amount into shares of common stock (“Redemption Conversion Shares”), or a combination thereof. The number of Redemption Conversion Shares equals the portion of the applicable Redemption Amount being converted divided by the lesser of $0.30 or 80% of the lowest Volume Weighted Average Price (“VWAP”) during the ten (10) trading days immediately preceding the applicable measurement date (the “Market Price”). The Purchase Agreement requires the Company to reserve at least 8,900,000 shares of common stock from its authorized and unissued common stock to provide for all issuances of common stock under the IR Note. However, the IR Note provides that the aggregate number shares of common stock issued to the Holder under the IR Note and Purchase Agreement shall not exceed 19.99% of the total number of shares of common stock outstanding as of the closing date unless the Company has obtained stockholder approval of the issuance. The Origination Shares were to be returned to the Company in the event that the Company could provide within 30 days of the closing of the transaction certain requested assets as security for repayment of the IR Note. The security was not provided so the Origination Shares remained with the Holder.

The Company determined the IR Note should be recorded at fair value with subsequent changes in fair value recorded in earnings. This conclusion is based on the redemption conversion feature, which allows the Holder to trigger the redemption of the IR Note for cash or conversion of the IR Note for common shares prior to its maturity date at a price of the lesser of $0.30 per share or the Market Price as defined within the IR Note. The choice of cash redemption or conversion of the IR Note for common shares is at the option of the Company. This feature may require the Company to issue a variable number of common shares to settle the IR Note which was determined to have a predominantly fixed monetary value at inception.

On March 13, 2019, the Company amended the Purchase Agreement pursuant to which it issued the Convertible IR Note (the “Amendment”). The Amendment extends the maturity of the IR Note to September 28, 2020. In addition, the redemption conversion rates were revised to a price to be determined by mutual agreement between the Company and the Holder. In the event that the Company and the Holder are unable to reach a mutually agreeable price, the Company will be required to pay the applicable redemption amount in cash. The maximum amount of the IR Note the Lender will be able to redeem in any given calendar month is $300,000.

The Company evaluated the Amendment in accordance with ASC 470, Debt (“ASC 470”) and determined the Amendment is considered an extinguishment of the existing debt and issuance of net debt. As a result, the Company derecognized the liability and recorded a loss on the extinguishment of debt of $345,000 in 2019 which was equal to the difference between the reacquisition price of the debt and the net carrying amount (amount due at maturity, adjusted for unamortized discounts) of the extinguished debt. Subsequently, the amended note was recorded in accordance with ASC 480 at the fair value that the note was issued with changes in fair value recorded through earnings at each reporting period.

There were a series of debt conversions during 2019 which partially converted $1,400,000 of the $3,408,000 convertible debt, as amended, into stockholders’ equity, adding approximately $1,400,000 to stockholders’ equity. The number of shares issued in these conversions were 204,246 shares. In October 2019 and November 2019 respectively, the lender redeemed $300,000 pursuant to the terms of the modification. In connection with the IR Note, the Company recorded a gain equal to $127,000 for the year-end December 31, 2019. See Note 12: Long Term Debt.

Interest expense associated with the IR Note was $0 for September 30, 2020 and $94,000 for the nine months ended September 30, 2019. 

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Long-Term Debt

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Long-Term Debt

Note 12: Long-Term Debt

On August 5, 2019, the Company issued a Secured Promissory Note (the “CV Note”) with Chicago Venture Partners, L.P. (the “CV”). The Note has an original principal amount of $2,635,000, bears interest at a rate of 10% per annum and will mature in 24 months, unless earlier paid in accordance with its terms. The Company received proceeds of $1,900,000 after an original issue discount and payment of Lender’s legal fees. Pursuant to a Security Agreement between the Company and the Lender, repayment of the Convertible Note is secured by substantially all of our assets other than its intellectual property.

During the quarter ending June 30, 2020, the Holder made redemptions of $650,000 reducing the principal to $1,985,000. On May 29, 2020, the Company paid off the outstanding CV note consisted of principal of $1,985,000, and accrued interest payable of $220,000. The net payment of $1,795,000, less the write off of the origination discount of $369,000 and issuance costs of $6,000, resulted in a gain on extinguishment of $66,000.

On December 5, 2019, the Company issued a secured Promissory Note (the “AS Note”) to Atlas Sciences L.P. (“AS”). The AS Note has an original principal amount of $2,175,000, bears interest at a rate of 10% per annum and will mature in 24 months, unless earlier paid in accordance with its term. In conjunction with the AS Note, the Company utilized $1,650,000 of the net proceeds from the AS Note to pay off in full our obligation to Iliad, an entity with affiliations to AS, pursuant to the IR Note.

The Company evaluated the IR Note transaction in accordance with ASC 470, Debt (“ASC 470”) and determined the exchange is considered an extinguishment of the existing debt and issuance of new debt. As a result, the Company derecognized the liability and recorded a loss on the extinguishment of debt of $250,000 which was equal to the difference between the reacquisition price of the debt and the net carrying amount (amount due at maturity, adjusted for unamortized discounts) of the extinguished debt. Subsequently, the AS Note was recorded in accordance with ASC 470 whereby the Company will record a liability equal to the proceeds received on December 5, 2019.

On June 19, 2020, the Company paid off the outstanding AS note consisted of original principal of $2,175,000, and accrued interest payable of $122,000 less origination discount of $376,000 and issuance costs of $7,000, with a net note payable of $1,838,000, including a gain on extinguishment of $76,000.

In, conjunction with the financing, the Company used the proceeds to pay the outstanding IR Note. See Note 11: Convertible Note Payable.

Interest expense associated with the CV Note and AS Note for the period ended September 30, 2020 was approximately $116,000 and $106,000, respectively.

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Fair Value

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value

Note 13: Fair Value

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

The Company estimates that the fair values of cash and cash equivalents, other assets, accounts payable and accrued expenses approximate their carrying values due to the short-term maturities of these items. The Company also has certain warrants with a cash settlement feature in the unlikely occurrence of a Fundamental Transaction, namely (1) a merger or consolidation with another person; (2) sale of substantially all of its assets; (3) holders of common stock sell 50% or more of outstanding shares; (4) the Company effects an exchange of all its securities for other securities, cash or property, and (5) the Company effects a stock purchase agreement or business combination for more than 50% of outstanding shares. The fair value of the redeemable warrants (“Warrants”) related to the Company’s August 2016, February 2017, June 2017, August 2017, April 2018 and March 2019 common stock warrant issuances, 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:

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	82.50		$	82.50
Risk-free interest rate		0.12	%		1.58	%
Expected holding period		0.92			1.67
Expected volatility		125	%		96	%
Expected dividend yield		-			-

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

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	30.25 – 33.00		$	30.25-33.00
Risk-free interest rate		0.13	%		1.60	%
Expected holding period		1.84 – 1.85			2.59-2.60
Expected volatility		125	%		89	%
Expected dividend yield		-			-

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

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	27.50		$	27.50
Risk-free interest rate		0.13	%		1.60	%
Expected holding period		1.67			2.42
Expected volatility		130	%		91	%
Expected dividend yield		-			-

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

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share		19.80		$	19.80
Risk-free interest rate		0.12	%		1.59	%
Expected holding period		1.43			2.18
Expected volatility		140	%		94	%
Expected dividend yield		-			-

The Company utilized the following assumptions to estimate the fair value of the April 2018 Warrants:

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	17.16		$	17.16
Risk-free interest rate		0.06 – 0.16	%		1.59%-1.65	%
Expected holding period		0.07 – 3.07			0.82-3.82
Expected volatility		100% - 105	%		86%-124	%
Expected dividend yield		-			-

The Company utilized the following assumptions to estimate the fair value of the March 2019 Warrants:

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	8.80		$	8.80
Risk-free interest rate		0.19	%		1.66	%
Expected holding period		3.44			4.19
Expected volatility		100	%		87	%
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 $0.00 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 18 months at the earliest;
b.	The Company flagship product is approved only in Argentina for Severely Debilitated Chronic Fatigue Syndrome patients;
c.	The Company may have to perform additional clinical trials for FDA approval of its flagship product;
d.	Industry and global market conditions continue to include uncertainty, adding risk to any transaction;
e.	Available capital for a potential buyer in a cash transaction continues to be limited;
f.	The nature of a life science company is heavily dependent on future funding and high costs, including research & development;
g.	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
h.	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 stated above, the Company used a discrete uniform probability distribution over the Expected Holding Period to model 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., using historical stock prices), the numbers input change from period to period (e.g., the actual historical prices input for the relevant period).

The Company applies FASB ASC 820 that defines fair value, establishes a framework for measuring fair value in U.S. GAAP, 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 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 certain U.S. and government agency debt and equity securities that are traded in an active market.

● Level 2 – Observable inputs other than Level 1 prices such as quoted 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 September 30, 2020, 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 September 30, 2020
	Total		Level 1		Level 2		Level 3
Assets:
U. S. Treasury notes	$	5,618	$	5,618	$	—	$	—
U.S. Government mortgage backed Securities		4,721		4,721		—		—
Corporate bonds		5,641		5,641		—		—
Marketable Securities	$	15,980	$	15,980	$	—	$	—
Liabilities:
Redeemable warrants	$	177	$	—	$	—	$	177

	(in thousands) As of December 31, 2019
	Total		Level 1		Level 2		Level 3
Assets:
Mutual Fund	$	7,308	$	7,308	$	—	$	—
Liabilities:
Redeemable warrants	$	57	$	—	$	—	$	57

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

Redeemable warrants:
Balance at December 31, 2019	$	57
Fair value adjustment		120
Balance at September 30, 2020	$	177

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Financing Obligation Arising from Sale Leaseback Transaction

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Financing Obligation Arising from Sale Leaseback Transaction

Note 14: Financing Obligation Arising from Sale Leaseback Transaction

On March 16, 2018, the Company sold land and a building for $4,080,000 and concurrently entered into an agreement to lease the property back for ten years at $408,000 per year for two years through March 31, 2020. The lease payments will increase 2.5% per year for the next three years through March 31, 2023 and the lease payments will increase 3% for the remaining five years through March 31, 2028. The sale of the property includes an option to repurchase the property at fair value which does not permanently transfer all the risks and rewards of ownership to the buyer. The option to repurchase the property also would be at a higher price than the sales price and is considered likely based upon the Company’s plans going forward. Because the sale of the property includes the option to repurchase the property and includes the above attributes, the transaction was accounted for as a financing transaction whereby the Company debited cash for the amount of cash received and credit financing obligation. The Company will continue to report the property as an asset and the property will continue to be depreciated. The fair value repurchase option is accounted for similar to a share appreciation mortgage. Accordingly, the guidance in ASC 470-30 related to participating mortgage loans would be applied to the liability. If the option expires unused, the sale is recognized at that time. The gain on the sale would be the excess of the liability (current fair value of the property) over its carrying amount. As part of the sale of this building, warrants were provided to the buyer for the purchase of up to 73,314 shares of Company common stock for a period of five years at an exercise price of $17.05 per share, 125% of the closing price of the common stock on the NYSE American on the date of execution of the letter of intent for the purchase. The warrants cannot be exercised to the extent that any exercise would result in the purchaser owning in excess of 4.99% of our issued and outstanding shares of common stock.

The Property and Equipment in Note 7 above are the property and equipment involved in this transaction. Depreciation on the building will continue until a sale has been recognized.

Future minimum payments required under the Financing Obligation and the balance of the Finance Obligation as of September 30, 2020 are as follows:

During the year:

	(in thousands)
2020	$	105
2021		426
2022		437
2023		449
2024		463
Thereafter		1,567
Total of payments		3,447
Less deferred issuance costs		(199	)
Less discount on debt instrument		(852	)
Less imputed interest		(236	)
Total balance		2,160
Less current portion		(226	)
Long term portion	$	1,934

Interest expense relating to this financing agreement was $46,000 for the nine months ended September 30, 2020 and $51,000 for the nine months ended September 30, 2019.

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Leases

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Leases

Note 15: Leases

In February 2016, the FASB established Topic 842, Leases, by issuing ASU No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; ASU No. 2018-11, Targeted Improvements; and ASU No. 2018-20, Narrow-Scope Improvements for Lessors. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The new standard was effective for the Company on January 1, 2019, with early adoption permitted. A modified retrospective transition approach was required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. We adopted the new standard on January 1, 2019 and used the effective date as our date of initial application. Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.

The new standard provides several optional practical expedients in transition. We elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We elected all the new standard’s available transition practical expedients other than the use-of hindsight.

The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components for leases of office equipment.

This standard had a material effect on our financial statements. The most significant effect related to the recognition of new ROU assets and lease liabilities on our balance sheet for our real estate and equipment operating leases and providing significant new disclosures about our leasing activities.

The Company entered into a Lease Agreement for a term of five years commencing on September 14, 2020 with Fraser Advanced Information Systems, pursuant to which the Company agreed to lease two Sharp copiers. The base of $1,415 per month.

On June 13, 2018, the Company entered into a Lease Agreement for a term of six years commencing on July 1, 2018 with SML FL Holdings LLC, pursuant to which the Company agreed to lease approximately 3,000 rentable square feet. The base rent increases by 3% each year, and ranges from $2,100 per month for the first year to $2,785 per month for the sixth year.

On May 1, 2019, the Company entered into a Lease Agreement for a term of three years commencing on May 1, 2019 with 604 Associates LLC, pursuant to which the Company agreed to lease approximately 3,000 rentable square feet. The base rent is $1,500 per month for the term of the lease.

The expected lease term includes both contractual lease periods and, when applicable, cancelable option periods when it is reasonably certain that the Company would exercise such options. The Company’s leases have remaining lease terms between 6 months and 4 years. As of September 30, 2020, the weighted-average remaining term is 2.17 years. The Company has determined that the incremental borrowing rate is 10% as of December 31, 2018 based upon the recently completed financing transaction in September 2018.

Below are the lease commitments for the next 5 years and thereafter.

Year-Ending September 30,
	(in thousands)
2020	$	48
2021		52
2022		46
2023		42
Thereafter		21
Less Imputed Interest		(21	)
Total	$	188

As of September, 30, 2020, the balance of the right of use assets was $188,000 and the corresponding lease liability balance was $188,000. Total rent expense was $41,000 for the nine months ended September 30, 2020 and $44,000 for the nine months end September 30, 2019.

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Subsequent Events

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

Subsequent Events

Note 16: Subsequent Events

On November 10, 2020, the Company entered into a five year employment agreement with Thomas K. Equels, President, CEO and Executive Vice Chairman of the Board. Compensation is divided into both short- and long-term compensation. Short term (cash) compensation will consist of a base salary of $850,000 and a year-end target bonus of $350,000 based on performance and goals established by the Compensation Committee. Long term compensation will be provided by 300,000 non-qualified yearly stock options with one-year vesting on November 30,2021, and each anniversary date thereafter. On November 11, 2020, the Company issued to Mr. Equels 10 year options to purchase 300,000 shares of the Company’s common stock. The exercise price of these options is $1.96 per share, the closing price of the common stock on the NYSE American on the trading date immediately preceding the date of issuance. The options will vest one year after their issuance. These options were issued pursuant to the terms of Mr. Equels’ employment agreement.

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Equity-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2020

Employees [Member]

Schedule of Stock Option Activity

Stock option activity for employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding January 1, 2020		127,747		$	29.61		6.41	$	—
Granted		300,000			3.07		9.83		—
Forfeited		(2,483	)		19.50		—		—
Expired		(568	)		348.48		—		—
Outstanding September 30, 2020		424,696		$	10.50		8.64	$	—
Vested and expected to vest September 30, 2020		424,696		$	20.50		8.64	$	—
Exercisable September 30, 2020		125,321		$	11.18		6.13	$	—

Schedule of Unvested Stock Option Activity

Unvested stock option activity for employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Unvested January 1, 2020		68,283		$	23.79		7.48	$	—
Granted		300,000			3.07		9.83		—
Vested		(68,908	)		6.26		—		—
Unvested September 30, 2020		299,375		$	7.06		9.68	$	—

Non-Employees [Member]

Schedule of 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, 2020		66,675		$	24.09		5.47	$	—
Granted		100,000			2.77		9.83		—
Forfeited		—			—		—		—
Expired		(104	)		104.29		—		—
Outstanding September 30, 2020		166,571		$	7,19		7.19	$	—
Vested and expected to vest September 30, 2020		166,571		$	7.19		7.19	$	—
Exercisable September 30, 2020		31,661		$	7.76		9.13	$	—

Schedule of Unvested Stock Option Activity

Unvested stock option activity for non-employees:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Unvested January 1, 2020		66,675		$	12.80		5.59	$	—
Granted		100,000			2.77		9.83		—
Expired		—			—		—		—
Vested		(31,765	)		7.75		—		—
Unvested September 30, 2020		134,910		$	6.56		7.90	$	—

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Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2020

Marketable Securities [Abstract]

Schedule of Available for Sale

Debt securities classified as available for sale consisted of:

September 30, 2020
(in thousands)

Securities	Amortized Cost		Gross Unrealized Gains /(Losses)		Gross Unrealized Gains /(Losses)			Fair Value		Marketable Securities
U.S. Treasury notes	$	5,641	$	—	$	(23	)	$	5,618	$	5,618
U.S. Government mortgage backed securities		4,748		—		(27	)		4,721		4,721
Corporate bonds		5,603		—		38			5,641		5,641
Totals	$	15,992	$	—	$	(12	)	$	15,980	$	15,980

As of December 31, 2019 the Company held no debt securities.

The following presents available-for-sale securities’ gross unrealized losses and fair value aggregated by the short- and long-term maturity.

September 30, 2020
(in thousands)

	Less than 12 Months				12 Months or More					Total
Securities	Fair Value		Gross Unrealized Gains		Fair Value		Gross Unrealized Gains			Fair Value		Gross Unrealized Gains
U.S. Treasury notes	$	1,008	$	—	$	4,610	$	(23	)	$	5,618	$	(23	)
U.S. Government mortgage backed securities		—		—		4,721		(27	)		4,721		(27	)
Corporate bonds		136		—		5,505		38			5,641		38
Totals	$	1,144	$	—	$	14,836	$	12		$	15,980	$	(12	)

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Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2020

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses consist of the following:

	(in thousands)
	September 30, 2020		December 31, 2019
Compensation	$	89	$	94
Professional fees		116		73
Clinical trial expenses		—		56
Other expenses		117		180
	$	322	$	403

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Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

	(in thousands)
	September 30, 2020			December 31, 2019
Land, buildings and improvements	$	10,547		$	10,547
Furniture, fixtures, and equipment		5,127			5,114
Total property and equipment		15,674			15,661
Less: accumulated depreciation		(9,045	)		(8,545	)
Property and equipment, net	$	6,629		$	7,116

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Assumptions to Estimate Fair Value of Warrants

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

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	82.50		$	82.50
Risk-free interest rate		0.12	%		1.58	%
Expected holding period		0.92			1.67
Expected volatility		125	%		96	%
Expected dividend yield		-			-

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

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	30.25 – 33.00		$	30.25-33.00
Risk-free interest rate		0.13	%		1.60	%
Expected holding period		1.84 – 1.85			2.59-2.60
Expected volatility		125	%		89	%
Expected dividend yield		-			-

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

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	27.50		$	27.50
Risk-free interest rate		0.13	%		1.60	%
Expected holding period		1.67			2.42
Expected volatility		130	%		91	%
Expected dividend yield		-			-

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

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share		19.80		$	19.80
Risk-free interest rate		0.12	%		1.59	%
Expected holding period		1.43			2.18
Expected volatility		140	%		94	%
Expected dividend yield		-			-

 The Company utilized the following assumptions to estimate the fair value of the April 2018 Warrants:

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	17.16		$	17.16
Risk-free interest rate		0.06 – 0.16	%		1.59%-1.65	%
Expected holding period		0.07 – 3.07			0.82-3.82
Expected volatility		100% - 105	%		86%-124	%
Expected dividend yield		-			-

The Company utilized the following assumptions to estimate the fair value of the March 2019 Warrants:

	September 30, 2020			December 31, 2019
Underlying price per share	$	2.15		$	0.54
Exercise price per share	$	8.80		$	8.80
Risk-free interest rate		0.19	%		1.66	%
Expected holding period		3.44			4.19
Expected volatility		100	%		87	%
Expected dividend yield		-			-

Schedule of Range of Probabilities

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	%

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 September 30, 2020
	Total		Level 1		Level 2		Level 3
Assets:
U. S. Treasury notes	$	5,618	$	5,618	$	—	$	—
U.S. Government mortgage backed Securities		4,721		4,721		—		—
Corporate bonds		5,641		5,641		—		—
Marketable Securities	$	15,980	$	15,980	$	—	$	—
Liabilities:
Redeemable warrants	$	177	$	—	$	—	$	177

	(in thousands) As of December 31, 2019
	Total		Level 1		Level 2		Level 3
Assets:
Mutual Fund	$	7,308	$	7,308	$	—	$	—
Liabilities:
Redeemable warrants	$	57	$	—	$	—	$	57

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):

Redeemable warrants:
Balance at December 31, 2019	$	57
Fair value adjustment		120
Balance at September 30, 2020	$	177

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Financing Obligation Arising from Sale Leaseback Transaction (Tables)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Schedule of Future Minimum Payments Under Financing Obligation

Future minimum payments required under the Financing Obligation and the balance of the Finance Obligation as of September 30, 2020 are as follows:

During the year:

	(in thousands)
2020	$	105
2021		426
2022		437
2023		449
2024		463
Thereafter		1,567
Total of payments		3,447
Less deferred issuance costs		(199	)
Less discount on debt instrument		(852	)
Less imputed interest		(236	)
Total balance		2,160
Less current portion		(226	)
Long term portion	$	1,934

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Leases (Tables)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Schedule of Operating lease Future Payments

Below are the lease commitments for the next 5 years and thereafter.

Year-Ending September 30,
	(in thousands)
2020	$	48
2021		52
2022		46
2023		42
Thereafter		21
Less Imputed Interest		(21	)
Total	$	188

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Business and Basis of Presentation (Details Narrative)		9 Months Ended
	May 29, 2019	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Reverse stock split	1-for-20 to 1-for-50	In June 2019, the Company effected a 44-to-1 reverse stock split of the outstanding shares

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Net Loss Per Share (Details Narrative) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Stock Options [Member]
Antidilutive securities excluded from computation of earnings per share	8,017	534,283	5,893,040	6,733,420
Warrants [Member]
Antidilutive securities excluded from computation of earnings per share	8,017	534,283	5,893,040	6,733,420

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Equity-Based Compensation (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Share-based Payment Arrangement [Abstract]
Number of options granted	400,000	39,267
Stock-based compensation expense	$ 596,000	$ 649,000
Unrecognized equity-based compensation cost	$ 1,080,000	$ 877,000

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Equity-Based Compensation - Schedule of Stock Option Activity (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Number of Options, Granted	400,000	39,267
Employees [Member]
Number of Options, Granted	300,000
Number of Options, Expired
Stock Options [Member] | Employees [Member]
Number of Options Outstanding, Beginning of Period	127,747
Number of Options, Granted	300,000
Number of Options, Forfeited	(2,483)
Number of Options, Expired	(568)
Number of Options Outstanding, Ending of Period	424,696
Number of Options, Vested and Expected to Vest	424,696
Number of Options Exercisable, End of Period	125,321
Weighted Average Exercise Price Outstanding, Beginning of Period	$ 29.61
Weighted Average Exercise Price, Granted	3.07
Weighted Average Exercise Price, Forfeited	19.50
Weighted Average Exercise Price, Expired	348.48
Weighted Average Exercise Price Outstanding, End of Period	10.50
Weighted Average Exercise Price, Vested and Expected to Vest	20.50
Weighted Average Exercise Price Exercisable, Ending of Period	$ 11.18
Weighted Average Remaining Contracted Term (years) Outstanding, Beginning of Period	6 years 4 months 28 days
Weighted Average Remaining Contracted Term (years) Granted	9 years 9 months 29 days
Weighted Average Remaining Contracted Term (years) Outstanding, End of Period	8 years 7 months 21 days
Weighted Average Remaining Contracted Term (years), Vested and Expected to Vest	8 years 7 months 21 days
Weighted Average Remaining Contracted Term (years), Exercisable at End of Period	6 years 1 month 16 days
Aggregate Intrinsic Value Outstanding, Beginning of Period
Aggregate Intrinsic Value, Granted
Aggregate Intrinsic Value, Forfeited
Aggregate Intrinsic Value Outstanding, Ending of Period
Aggregate Intrinsic Value, Vested and Expected to Vest
Aggregate Intrinsic Value, Exercisable at End of Period
Stock Options [Member] | Non-Employees [Member]
Number of Options Outstanding, Beginning of Period	66,675
Number of Options, Granted	100,000
Number of Options, Forfeited
Number of Options, Expired	(104)
Number of Options Outstanding, Ending of Period	166,571
Number of Options, Vested and Expected to Vest	166,571
Number of Options Exercisable, End of Period	31,661
Weighted Average Exercise Price Outstanding, Beginning of Period	$ 24.09
Weighted Average Exercise Price, Granted	2.77
Weighted Average Exercise Price, Forfeited
Weighted Average Exercise Price, Expired	104.29
Weighted Average Exercise Price Outstanding, End of Period	7.19
Weighted Average Exercise Price, Vested and Expected to Vest	7.19
Weighted Average Exercise Price Exercisable, Ending of Period	$ 7.76
Weighted Average Remaining Contracted Term (years) Outstanding, Beginning of Period	5 years 5 months 20 days
Weighted Average Remaining Contracted Term (years) Granted	9 years 9 months 29 days
Weighted Average Remaining Contracted Term (years) Outstanding, End of Period	7 years 2 months 8 days
Weighted Average Remaining Contracted Term (years), Vested and Expected to Vest	7 years 2 months 8 days
Weighted Average Remaining Contracted Term (years), Exercisable at End of Period	9 years 1 month 16 days
Aggregate Intrinsic Value Outstanding, Beginning of Period
Aggregate Intrinsic Value, Granted
Aggregate Intrinsic Value, Forfeited
Aggregate Intrinsic Value Outstanding, Ending of Period
Aggregate Intrinsic Value, Vested and Expected to Vest
Aggregate Intrinsic Value, Exercisable at End of Period

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Equity-Based Compensation - Schedule of Unvested Stock Option Activity (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Number of Options, Granted	400,000	39,267
Employees [Member]
Number of Options Unvested, Beginning of Period	68,283
Number of Options, Granted	300,000
Number of Options, Expired
Number of Options, Vested	(68,908)
Number of Options Unvested, End of Period	299,375
Weighted Average Exercise Price Unvested, Beginning of Period	$ 23.79
Weighted Average Exercise Price, Granted	3.07
Weighted Average Exercise Price, Expired
Weighted Average Exercise Price, Vested	6.26
Weighted Average Exercise Price Unvested, Ending of Period	$ 7.06
Average Remaining Contractual Term (years) Unvested, Beginning of Period	7 years 5 months 23 days
Average Remaining Contractual Term (years) Unvested, Granted	9 years 9 months 29 days
Average Remaining Contractual Term (years) Unvested, End of Period	9 years 8 months 5 days
Aggregate Intrinsic Value Unvested, Beginning of Period
Aggregate Intrinsic Value, Granted
Aggregate Intrinsic Value, Vested
Aggregate Intrinsic Value Unvested, End of Period
Non-Employees [Member]
Number of Options Unvested, Beginning of Period	66,675
Number of Options, Granted	100,000
Number of Options, Expired
Number of Options, Vested	(31,765)
Number of Options Unvested, End of Period	134,910
Weighted Average Exercise Price Unvested, Beginning of Period	$ 12.8
Weighted Average Exercise Price, Granted	2.77
Weighted Average Exercise Price, Expired
Weighted Average Exercise Price, Vested	7.75
Weighted Average Exercise Price Unvested, Ending of Period	$ 6.56
Average Remaining Contractual Term (years) Unvested, Beginning of Period	5 years 7 months 2 days
Average Remaining Contractual Term (years) Unvested, Granted	9 years 9 months 29 days
Average Remaining Contractual Term (years) Unvested, End of Period	7 years 10 months 25 days
Aggregate Intrinsic Value Unvested, Beginning of Period
Aggregate Intrinsic Value, Granted
Aggregate Intrinsic Value, Vested
Aggregate Intrinsic Value Unvested, End of Period

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Inventories (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Work-in-process inventory	$ 1,095	$ 1,095

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Marketable Securities (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Marketable Securities [Abstract]
Debt marketable securities	$ 15,980	$ 7,308
Debt securities

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Marketable Securities - Schedule of Available for Sale (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Amortized Cost	$ 15,992
Gross Unrealized Gains
Gross Unrealized Losses	(12)
Fair Value	15,980
Marketable securities	15,980
Less Than Twelve Months [Member]
Gross Unrealized Gains
Fair Value	1,144
12 Months or More [Member]
Gross Unrealized Gains	63
Fair Value	14,836
U.S. Treasury Notes [Member]
Amortized Cost	5,641
Gross Unrealized Gains
Gross Unrealized Losses	(23)
Fair Value	5,618
Marketable securities	5,618
U.S. Treasury Notes [Member] | Less Than Twelve Months [Member]
Gross Unrealized Gains
Fair Value	1,008
U.S. Treasury Notes [Member] | 12 Months or More [Member]
Gross Unrealized Gains	(23)
Fair Value	4,610
U.S. Government Mortgage Backed Securities [Member]
Amortized Cost	4,748
Gross Unrealized Gains
Gross Unrealized Losses	(27)
Fair Value	4,721
Marketable securities	4,721
U.S. Government Mortgage Backed Securities [Member] | Less Than Twelve Months [Member]
Gross Unrealized Gains
Fair Value
U.S. Government Mortgage Backed Securities [Member] | 12 Months or More [Member]
Gross Unrealized Gains	(27)
Fair Value	4,721
Corporate Bonds [Member]
Amortized Cost	5,603
Gross Unrealized Gains
Gross Unrealized Losses	38
Fair Value	5,641
Marketable securities	5,641
Corporate Bonds [Member] | Less Than Twelve Months [Member]
Gross Unrealized Gains
Fair Value	136
Corporate Bonds [Member] | 12 Months or More [Member]
Gross Unrealized Gains	38
Fair Value	$ 5,505

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Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Payables and Accruals [Abstract]
Compensation	$ 89	$ 94
Professional fees	116	73
Clinical trial expenses		56
Other expenses	117	180
Accrued expenses	$ 322	$ 403

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Property and Equipment (Details Narrative) $ in Thousands	Mar. 16, 2018 USD ($)
Property, Plant and Equipment [Abstract]
Proceeds from sale of property	$ 4,080
Lease description	Concurrently entered into an agreement to lease the property back for ten years. The lease payments are initially $408,000 per year for two years through March 31, 2020 and will escalate in subsequent years.
Lease of rent expenses	$ 408

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Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Property, Plant and Equipment [Abstract]
Land, buildings and improvements	$ 10,547	$ 10,547
Furniture, fixtures, and equipment	5,127	5,114
Total property and equipment	15,674	15,661
Less: accumulated depreciation and amortization	(9,045)	(8,545)
Property and equipment, net	$ 6,629	$ 7,116

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Stockholders' Equity (Details Narrative) - USD ($)														1 Months Ended	3 Months Ended	9 Months Ended		12 Months Ended
	Aug. 18, 2020	Jun. 15, 2020	Mar. 10, 2020	Mar. 03, 2020	Sep. 30, 2019	Sep. 27, 2019	Jul. 19, 2019	Jun. 11, 2019	May 29, 2019	May 02, 2019	Jan. 28, 2019	Nov. 14, 2018	Oct. 17, 2018	Aug. 31, 2020	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Mar. 16, 2018
Preferred stock, shares authorized															5,000,000	5,000,000
Preferred stock par or stated value															$ 0.01	$ 0.01
Subscription/exercise price																			$ 17.05
Warrants issued																			73,314
Proceeds from issuance of rights																$ 25,774,000
Common stock, shares authorized															350,000,000	350,000,000		350,000,000
Common stock shares with specific limitations and restrictions on usage																		8,000,000
Reverse stock split description									1-for-20 to 1-for-50							In June 2019, the Company effected a 44-to-1 reverse stock split of the outstanding shares
Common stock shares issued, value																$ 58,066,000	$ 16,944,000
Warrant description																In addition, on March 25, 2020, the Representative's Warrant was amended to permit exercise of such warrant to commence on March 30, 2020.
Proceeds from warrants exercised																$ 264,000
Warrant modification																$ 46,000
Deemed dividend																	$ 135,000
Number of options granted																400,000	39,267
Common stock, shares outstanding															40,685,282	40,685,282		10,386,754
Board of Directors [Member]
Number of common stock reserved for potential issuance													7,000,000
Number of options granted													26,324
Option exercise price per share													$ 9.68
Option vested years													10 years
Employee [Member]
Number of options granted												23
Option exercise price per share												$ 9.68
Option vested years												10 years
Officers [Member]
Number of options granted											27,570			400,000
Option exercise price per share											$ 9.68
Option vested years											1 year			1 year
Options holding period											10 years			10 years
Equity Distribution Agreement [Member]
Number of shares sold in transaction, value			$ 18,833,739	$ 10,867,245
Number of shares sold in transaction															6,409,441	18,990,367
Underwriting fee amount															$ 623,486	$ 774,230
Proceeds from sale of common stock, net of issuance costs															$ 17,813,884	$ 50,692,287
Percentage of fees paid															3.50%	3.50%
Pre-funded Warrants [Member]
Proceeds from warrants exercised																$ 8,873,860
Warrant [Member]
Subscription/exercise price										$ 6.60
Number of warrant exercisable										103,410
Proceeds from warrants exercised										$ 682,000						$ 1,870,000
Reduced liability attributed to the warrants										404,000
Additional shareholder's equity										1,086,000
Deemed dividend										$ 135,000
Alliance Global Partners, LLC [Member]
Number of shares issued upon transaction						1,740,550
Common stock shares issued, value						$ 7,148,310
Alliance Global Partners, LLC [Member] | Warrants [Member]
Number of warrant to purchase shares of common stock						8,888,860
Alliance Global Partners, LLC [Member] | Pre-funded Warrants [Member]
Subscription/exercise price						$ 0.90
Proceeds from issuance of rights						$ 7,200,000
Warrant description						Each Warrant sold with the shares of Common Stock represents the right to purchase one share of Common Stock at an exercise price of $0.99 per share. The Pre-Funded Warrants and Warrants were sold at a combined Offering price of $0.899, less underwriting discounts and commissions. The Pre-Funded Warrants were sold to purchasers whose purchase of shares of Common Stock in the Offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% of the Company's outstanding Common Stock immediately following the consummation of the Offering, in lieu of shares of Common Stock. Each Pre-Funded Warrant represents the right to purchase one share of Common Stock at an exercise price of $0.001 per share.
Maxim Group LLC [Member] | Equity Distribution Agreement [Member]
Number of shares sold in transaction, value	$ 19,004,095	$ 19,406,552					$ 4,508,244											$ 2,553,079
Number of shares sold in transaction																		905,869
Shares sales fee percentage																		3.50%
Underwriting fee amount																		$ 89,358
Maximum [Member]
Shares issued price per share					$ 4.37												$ 4.37
Maximum [Member] | Officers [Member]
Option exercise price per share														$ 3.07
Maximum [Member] | Alliance Global Partners, LLC [Member] | Representative Warrants [Member]
Number of warrant to purchase shares of common stock						266,665
Minimum [Member]
Shares issued price per share					$ 4.03												$ 4.03
Minimum [Member] | Officers [Member]
Option exercise price per share														$ 2.77
Directors, Officers and Employees [Member]
Number of shares issued upon transaction					67,767
Common stock shares issued, value					$ 274,000
Directors, Officers and Employees [Member] | Maximum [Member]
Payments approved for company shares, value								$ 500,000
Rights [Member]
Subscription/exercise price															$ 1,000	$ 1,000
Common stock conversion price															8.80	$ 8.80
Proceeds from issuance of rights																$ 4,700,000
Warrant [Member]
Subscription/exercise price															$ 8.80	$ 8.80
Warrants issued															114	114
Warrants exercisable term															5 years	5 years
Series A Junior Participating Preferred Stock [Member]
Preferred stock, shares authorized															250,000	250,000
Series B Convertible Preferred Stock [Member]
Preferred stock, shares authorized															8,000	8,000		8,000
Preferred stock par or stated value															$ 1,000	$ 1,000		$ 1,000
Preferred stock, shares outstanding															733	733		778
Number of shares to be issued on conversion															45	45
Series B Convertible Preferred Stock [Member] | Rights [Member]
Preferred stock value															$ 1,000	$ 1,000
Series B Preferred [Member]
Preferred stock, shares outstanding																		783
Number of shares issued upon transaction
Common stock shares issued, value
Deemed dividend
Preferred Stock [Member]
Number of shares to be issued on conversion															114	114

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Convertible Note Payable (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands			9 Months Ended		12 Months Ended
	Mar. 13, 2019	Sep. 28, 2018	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Nov. 30, 2019	Oct. 31, 2019
Maximum amount of redemption	$ 300						$ 300	$ 300
Loss on extinguishment of debt			$ 345
Extended Maturity [Member]
Debt instrument maturity date	Sep. 28, 2020
Secured Convertible Promissory Note [Member]
Loss on extinguishment of debt					$ 127
Interest expense			$ 0	$ 94
Secured Convertible Promissory Note [Member] | Iliad Research and Trading, L.P. [Member]
Convertible promissory note		$ 3,170
Convertible promissory note, interest percentage		10.00%
Proceeds from convertible promissory note		$ 3,000
Debt retained by the holder		170
Legal fees		20
Original issue discount		150
Third-party fees		$ 210
Debt instrument maturity date		Sep. 28, 2019
Convertible note, conversion price per share		$ 0.30
Lowest volume weighted average price percentage		80.00%
Convertible note, conversion description		The IR Note provides the Holder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company's common stock at a conversion price of $0.30 per share. In addition, beginning on March 28, 2019, the Note also provides the Holder with the right to redeem all or any portion of the IR Note ("Redemption Amount"). The payments of each Redemption Amount may be made, at the option of the Company, in cash, by converting such Redemption Amount into shares of common stock ("Redemption Conversion Shares"), or a combination thereof. The number of Redemption Conversion Shares equals the portion of the applicable Redemption Amount being converted divided by the lesser of $0.30 or 80% of the lowest Volume Weighted Average Price ("VWAP") during the ten (10) trading days immediately preceding the applicable measurement date (the "Market Price").
Common stock reserved		8,900,000
Common stock issuance, maximum percentage		19.99%
Secured Convertible Promissory Note [Member] | Iliad Research and Trading, L.P. [Member] | Origination Shares [Member]
Number of shares issued in conversion		500,000
Convertible Note [Member]
Number of shares issued in conversion					204,246
Debt conversion, partial amount					$ 1,400	$ 3,408
Additional shareholder's equity					$ 1,400

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Long -Term Debt (Details Narrative) - USD ($) $ in Thousands					9 Months Ended
	Jun. 19, 2020	May 29, 2020	Dec. 05, 2019	Aug. 05, 2019	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2020
Proceeds from notes payable						$ 1,900
Gain (loss) on extinguishment of debt					345
CV Note [Member]
Interest expense debt					116
CV Note [Member] | Chicago Venture Partners, L.P. [Member]
Debt instrument, face amount				$ 2,635			$ 1,985
Note interest rate				10.00%
Debt term				24 months
Proceeds from notes payable				$ 1,900
Debt instrument, redemption amount							$ 650
Accrued interest payable		$ 220
Net payment of debt		1,795
Origination discount		369
Issuance costs		6
Gain (loss) on extinguishment of debt		$ 66
AS Note [Member]
Interest expense debt					106
AS Note [Member] | Atlas Sciences L.P. [Member]
Debt instrument, face amount	$ 2,175		$ 2,175
Note interest rate			10.00%
Debt term			24 months
Proceeds from notes payable			$ 1,650
Accrued interest payable	122
Origination discount	376
Issuance costs	7
Gain (loss) on extinguishment of debt	76
Note payable	$ 1,838
IR Note [Member]
Gain (loss) on extinguishment of debt					$ 250

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Fair Value (Details Narrative)	9 Months Ended
	Sep. 30, 2020
Sale of stock, description	The Company also has certain warrants with a cash settlement feature in the unlikely occurrence of a Fundamental Transaction, namely (1) a merger or consolidation with another person; (2) sale of substantially all of its assets; (3) holders of common stock sell 50% or more of outstanding shares; (4) the Company effects an exchange of all its securities for other securities, cash or property, and (5) the Company effects a stock purchase agreement or business combination for more than 50% of outstanding shares.
Floor rate used as proxy for future volatility percentage	100.00%
Expected Dividend Yield [Member]
Fair value measurement, input Percentage	0.00%

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Fair Value - Schedule of Assumptions to Estimate Fair Value of Warrants (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2020 $ / shares	Dec. 31, 2019 $ / shares
August 2016 Warrants [Member]
Underlying price per share	$ 2.15	$ 0.54
August 2016 Warrants [Member] | Exercise Price Per Share [Member]
Fair value measurement, input per share	$ 82.50	$ 82.50
August 2016 Warrants [Member] | Risk Free Interest Rate [Member]
Fair value measurement, input Percentage	0.12	1.58
August 2016 Warrants [Member] | Expected Holding Period [Member]
Fair value measurement, input term	11 months 1 day	1 year 8 months 2 days
August 2016 Warrants [Member] | Expected Volatility [Member]
Fair value measurement, input Percentage	125	96
August 2016 Warrants [Member] | Expected Dividend Yield [Member]
Fair value measurement, input Percentage	0.00	0.00
February 2017 Warrants [Member]
Underlying price per share	$ 2.15	$ 0.54
February 2017 Warrants [Member] | Exercise Price Per Share [Member] | Minimum [Member]
Fair value measurement, input per share	30.25	30.25
February 2017 Warrants [Member] | Exercise Price Per Share [Member] | Maximum [Member]
Fair value measurement, input per share	$ 33.00	$ 33.00
February 2017 Warrants [Member] | Risk Free Interest Rate [Member]
Fair value measurement, input Percentage	0.13	1.60
February 2017 Warrants [Member] | Expected Holding Period [Member] | Minimum [Member]
Fair value measurement, input term	1 year 10 months 3 days	2 years 7 months 2 days
February 2017 Warrants [Member] | Expected Holding Period [Member] | Maximum [Member]
Fair value measurement, input term	1 year 10 months 6 days	2 years 7 months 6 days
February 2017 Warrants [Member] | Expected Volatility [Member]
Fair value measurement, input Percentage	125	89
February 2017 Warrants [Member] | Expected Dividend Yield [Member]
Fair value measurement, input Percentage	0.00	0.00
June 2017 Warrants [Member]
Underlying price per share	$ 2.15	$ 0.54
June 2017 Warrants [Member] | Exercise Price Per Share [Member]
Fair value measurement, input per share	$ 27.50	$ 27.50
June 2017 Warrants [Member] | Risk Free Interest Rate [Member]
Fair value measurement, input Percentage	0.13	1.60
June 2017 Warrants [Member] | Expected Holding Period [Member]
Fair value measurement, input term	1 year 8 months 2 days	2 years 5 months 1 day
June 2017 Warrants [Member] | Expected Volatility [Member]
Fair value measurement, input Percentage	130	91
June 2017 Warrants [Member] | Expected Dividend Yield [Member]
Fair value measurement, input Percentage	0.00	0.00
August 2017 Warrants [Member]
Underlying price per share	$ 2.15	$ 0.54
August 2017 Warrants [Member] | Exercise Price Per Share [Member]
Fair value measurement, input per share	$ 19.80	$ 19.80
August 2017 Warrants [Member] | Risk Free Interest Rate [Member]
Fair value measurement, input Percentage	0.12	0.0159
August 2017 Warrants [Member] | Expected Holding Period [Member]
Fair value measurement, input term	1 year 5 months 5 days	2 years 2 months 5 days
August 2017 Warrants [Member] | Expected Volatility [Member]
Fair value measurement, input Percentage	140	0.94
August 2017 Warrants [Member] | Expected Dividend Yield [Member]
Fair value measurement, input Percentage	0.00	0.00
April 2018 Warrants [Member]
Underlying price per share	$ 2.15	$ 0.54
April 2018 Warrants [Member] | Exercise Price Per Share [Member]
Fair value measurement, input per share	$ 17.16	$ 17.16
April 2018 Warrants [Member] | Risk Free Interest Rate [Member] | Minimum [Member]
Fair value measurement, input Percentage	0.06	1.59
April 2018 Warrants [Member] | Risk Free Interest Rate [Member] | Maximum [Member]
Fair value measurement, input Percentage	0.16	1.65
April 2018 Warrants [Member] | Expected Holding Period [Member] | Minimum [Member]
Fair value measurement, input term	26 days	9 months 25 days
April 2018 Warrants [Member] | Expected Holding Period [Member] | Maximum [Member]
Fair value measurement, input term	3 years 26 days	3 years 9 months 25 days
April 2018 Warrants [Member] | Expected Volatility [Member] | Minimum [Member]
Fair value measurement, input Percentage	1.00	86
April 2018 Warrants [Member] | Expected Volatility [Member] | Maximum [Member]
Fair value measurement, input Percentage	1.05	124
April 2018 Warrants [Member] | Expected Dividend Yield [Member]
Fair value measurement, input Percentage	0.00	0.00
March 2019 Warrants [Member]
Underlying price per share	$ 2.15	$ 0.54
March 2019 Warrants [Member] | Exercise Price Per Share [Member]
Fair value measurement, input per share	$ 8.80	$ 8.80
March 2019 Warrants [Member] | Risk Free Interest Rate [Member]
Fair value measurement, input Percentage	0.19	0.0166
March 2019 Warrants [Member] | Expected Holding Period [Member]
Fair value measurement, input term	3 years 5 months 9 days	4 years 2 months 8 days
March 2019 Warrants [Member] | Expected Volatility [Member]
Fair value measurement, input Percentage	1.00	0.87
March 2019 Warrants [Member] | Expected Dividend Yield [Member]
Fair value measurement, input Percentage	0.00	0.00

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Fair Value - Schedule of Range of Probabilities (Details)	9 Months Ended
	Sep. 30, 2020
Minimum [Member]
Percentage of probability	0.50%
Weighted Average [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	Sep. 30, 2020	Dec. 31, 2019
Marketable securities	$ 15,980
Redeemable warrants	177	$ 57
Mutual Fund [Member]
Marketable securities		7,308
Level 1 [Member]
Marketable securities	15,980
Redeemable warrants
Level 1 [Member] | Mutual Fund [Member]
Marketable securities		7,308
Level 2 [Member]
Marketable securities
Redeemable warrants
Level 2 [Member] | Mutual Fund [Member]
Marketable securities
Level 3 [Member]
Marketable securities
Redeemable warrants	177	57
Level 3 [Member] | Mutual Fund [Member]
Marketable securities
US Treasury Notes [Member]
Marketable securities	5,618
US Treasury Notes [Member] | Level 1 [Member]
Marketable securities	5,618
US Treasury Notes [Member] | Level 2 [Member]
Marketable securities
US Treasury Notes [Member] | Level 3 [Member]
Marketable securities
U.S. Government Mortgage Backed Securities [Member]
Marketable securities	4,721
U.S. Government Mortgage Backed Securities [Member] | Level 1 [Member]
Marketable securities	4,721
U.S. Government Mortgage Backed Securities [Member] | Level 2 [Member]
Marketable securities
U.S. Government Mortgage Backed Securities [Member] | Level 3 [Member]
Marketable securities
Corporate Bonds [Member]
Marketable securities	5,641
Corporate Bonds [Member] | Level 1 [Member]
Marketable securities	5,641
Corporate Bonds [Member] | Level 2 [Member]
Marketable securities
Corporate Bonds [Member] | Level 3 [Member]
Marketable securities

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Fair Value - Schedule of Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis (Details) - Redeemable Warrants [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Balance at beginning	$ 57
Fair value adjustments	120
Balance at ending	$ 177

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Financing Obligation Arising from Sale Leaseback Transaction (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands		9 Months Ended
	Mar. 16, 2018	Sep. 30, 2020	Sep. 30, 2019
Proceeds from sale of property	$ 4,080
Lease and property agreement description	lease the property back for ten years at $408,000 per year for two years through March 31, 2020. The lease payments will increase 2.5% per year for the next three years through March 31, 2023 and the lease payments will increase 3% for the remaining five years through March 31, 2028.
Lease of rent expenses	$ 408
Warrant to purchase of common stock	73,314
Warrant term	5 years
Warrant exercise price per share	$ 17.05
Warrant closing price, percentage	125.00%
Warrant owning excess percentage	4.99%
Financing Agreement [Member]
Interest expenses		$ 46	$ 51

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Financing Obligation Arising from Sale Leaseback Transaction - Schedule of Future Minimum Payments Under Financing Obligation (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Leases [Abstract]
2020	$ 105
2021	426
2022	437
2023	449
2024	463
Thereafter	1,567
Total of payments	3,447
Less deferred issuance costs	(199)
Less discount on debt instrument	(852)
Less imputed interest	(236)
Total balance	2,160
Less current portion	(226)	$ (214)
Long term portion	$ 1,934	$ 2,104

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Leases (Details Narrative) $ in Thousands					9 Months Ended		12 Months Ended
	May 01, 2019 USD ($) ft²	Jun. 13, 2018 USD ($) ft²	Mar. 16, 2018 USD ($)	Jun. 01, 2015 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2018	Dec. 31, 2019 USD ($)
Base rent per month			$ 408
weighted-average remaining term					2 years 2 months 1 day
Percentage of incremental borrowing rate							10.00%
Right of use asset					$ 188			$ 152
Operating lease liability					188
Rent expense					$ 41	$ 44
Minimum [Member]
Remaining lease terms					6 months
Maximum [Member]
Remaining lease terms					4 years
Lease Agreement [Member] | Fraser Advanced Information Systems [Member]
Lease agreement term				5 years
Lease commenced date				Sep. 14, 2020
Lease Agreement [Member] | Fraser Advanced Information Systems [Member] | First Year [Member]
Base rent per month				$ 1,415
Lease Agreement [Member] | SML FL Holdings LLC [Member]
Lease agreement term		6 years
Lease commenced date		Jul. 01, 2018
Percentage of base rent		3.00%
Rentable area | ft²		3,000
Lease Agreement [Member] | SML FL Holdings LLC [Member] | First Year [Member]
Base rent per month		$ 2,100
Lease Agreement [Member] | SML FL Holdings LLC [Member] | Sixth Year [Member]
Base rent per month		$ 2,785
Lease Agreement [Member] | 604 Associates LLC [Member]
Lease agreement term	3 years
Lease commenced date	May 01, 2019
Base rent per month	$ 1,500
Rentable area | ft²	3,000

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Leases - Schedule of Operating lease Future Payments (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Leases [Abstract]
2020	$ 48
2021	52
2022	46
2023	42
Thereafter	21
Less Imputed Interest	(21)
Total	$ 188

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Subsequent Events (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands			9 Months Ended
	Nov. 11, 2020	Nov. 10, 2020	Sep. 30, 2020	Sep. 30, 2019
Options to purchase common stock			400,000	39,267
Subsequent Event [Member] | Thomas K. Equels [Member]
Vesting period of stock options	10 years
Options to purchase common stock	300,000
Excerise of options	$ 1.96
Subsequent Event [Member] | Thomas K. Equels [Member] | Five Year Employment Agreement [Member]
Base salary		$ 850
Performance bonus		$ 350
Long term compensation		300,000
Vesting period of stock options		1 year
Vesting date of stock options		Nov. 30, 2021