Aethlon Medical (AEMD) risk factors, FY2025 10-K

Risks Relating to Our Financial Position and Need for Additional Capital

1. 01We have incurred significant losses and expect to continue to incur losses for the foreseeable future
2. 02We will require additional financing to sustain our operations, achieve our business objectives and satisfy our cash obligations, which may dilute the ownership of our existing stockholders
3. 03We may not currently or in the future be able to continue as a going concern

Risks Related to Our Business Operations

1. 04Delays, interruptions or the cessation of production by our third-party suppliers of important materials or delays in qualifying new materials, has and may continue to prevent or delay our ability to manufacture our Hemopurifier
2. 05Difficulties in manufacturing our Hemopurifier could have an adverse effect upon our expenses, our product revenues and our ability to complete our clinical trials
3. 06Our products are manufactured with raw materials that are sourced from specialty suppliers with limited competitors and we may therefore be unable to access the materials we need to manufacture our products
4. 07We face intense competition in the medical device industry
5. 08We have limited experience in identifying and working with large-scale contracts with medical device manufacturers; manufacture of our devices must comply with good manufacturing practices in the United States
6. 09As of March 31, 2025, management has concluded that the previously identified material weakness has been remediated. While we are committed to maintaining a robust control environment, there can be no assurance that future material weaknesses will not be identified
7. 10Our Hemopurifier technology may become obsolete
8. 11We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy
9. 12Our inability to attract and retain qualified personnel could impede our ability to achieve our business objectives
10. 13We plan to expand our operations, which may strain our resources; our inability to manage our growth could delay or derail implementation of our business objectives
11. 14We have limited experience in the organ transplant market and face competition from entities more familiar with this business and our efforts may not succeed
12. 15As a public company with limited financial resources undertaking the launch of new medical technologies, we may have difficulty attracting and retaining executive management and directors
13. 16If we fail to comply with extensive regulations of U.S. and foreign regulatory agencies, the commercialization of our products could be delayed or prevented entirely
14. 17Delays in successfully commencing or completing our planned clinical trials could jeopardize our ability to obtain regulatory approval and sustain our operations
15. 18If we or our suppliers fail to comply with ongoing FDA or foreign regulatory authority requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market
16. 19If our products, or malfunction of our products, cause or contribute to a death or a serious injury, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions
17. 20We will need to outsource and rely on third parties for the clinical development, sales and marketing of our Hemopurifier or any future product candidates that we may develop, and our future success will be dependent on the timeliness and effectiveness of the efforts of these third parties
18. 21We are and will be exposed to product liability risks, and clinical and preclinical liability risks, which could place a substantial financial burden upon us should we be sued
19. 22We have not received, and may never receive, approval from the FDA to market a medical device in the United States
20. 23The approval requirements for medical products used to fight bioterrorism and pandemics are still evolving, and any products we develop for such uses may not meet these requirements
21. 24The results of our clinical trials may not support our product candidate claims or may result in the discovery of adverse side effects
22. 25U.S. legislative or FDA regulatory reforms may make it more difficult and costly for us to obtain regulatory approval of our product candidates and to manufacture, market and distribute our products after approval is obtained
23. 26Our current and future business activities are subject to applicable anti-kickback, fraud and abuse, false claims, physician payment transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to significant penalties
24. 27Any of the previously identified or similar threats could cause a Security Breach or other interruption and disrupt our ability and that of third parties with whom we work to provide our services
25. 28Our contracts may not contain limitations of liability, and even where they do, any such limitations or exclusions of liability in our contracts may not be adequate to protect us from liabilities or damages if we fail to comply with Data Protection Obligations related to information security or Security Breaches
26. 29Should our products be approved for commercialization, lack of third-party coverage and reimbursement for our devices could delay or limit their adoption
27. 30Should our Hemopurifier or any future products, be approved for commercialization, certain health reform measures and adverse changes in reimbursement policies and procedures may impact our ability to market and sell our products
28. 31Our ability to use net operating loss carryforwards and certain other tax attributes to offset future taxable income or taxes may be limited
29. 32Uncertainties in the interpretation and application of existing, new and proposed tax laws and regulations could materially affect our tax obligations and effective tax rate
30. 33Our use of hazardous materials, chemicals and viruses exposes us to potential liabilities for which we may not have adequate insurance
31. 34Our products may in the future be subject to product recalls. A recall of our products, either voluntarily or at the direction of the FDA or another governmental authority, including a third-country authority, or the discovery of serious safety issues with our products, could have a significant adverse impact on us
32. 35Even though we have received breakthrough device designation for the Hemopurifier for two independent indications, this designation may not expedite the development or review of the Hemopurifier and does not provide assurance ultimately of PMA submission or approval by the FDA

Risks Related to Our Intellectual Property and Related Litigation

1. 36We rely upon licenses and patent rights from third parties which are subject to termination or expiration
2. 37We could become subject to intellectual property litigation that could be costly, result in the diversion of management’s time and efforts, require us to pay damages, prevent us from selling our commercially available products and/or reduce the margins we may realize from our products
3. 38If the combination of patents, trade secrets and contractual provisions upon which we rely to protect our intellectual property is inadequate, our ability to commercialize our products successfully will be harmed
4. 39We may rely on licenses for new technology, which may affect our continued operations with respect thereto
5. 40New technology may lead to our competitors developing superior products which would reduce demand for our products
6. 41If we are unable to protect our proprietary technology and preserve our trade secrets, we will increase our vulnerability to competitors which could materially adversely impact our ability to remain in business
7. 42If we are required to engage in expensive and lengthy litigation to enforce our intellectual property rights, such litigation could be very costly and the results of such litigation may not be satisfactory
8. 43Other companies may claim that our technology infringes on their intellectual property or proprietary rights and commence legal proceedings against us which could be time-consuming and expensive and could result in our being prohibited from developing, marketing, selling or distributing our products

Risks Related to U.S. Government Contracts

1. 44We may not obtain U.S. Government contracts to further develop our technology
2. 45U.S. Government agencies have special contracting requirements, including a right to audit us, which create additional risks; a negative audit would be detrimental to us
3. 46As a potential future U.S. Government contractor, we would be subject to a number of procurement rules and regulations

Risks Relating to Our Common Stock and Our Corporate Governance

1. 47If we are unable to maintain compliance with the listing requirements of the Nasdaq Capital Market, our common stock may be delisted from the Nasdaq Capital Market, which could have a material adverse effect on our financial condition and could make it more difficult for you to sell your shares
2. 48On June 24, 2025, the Company received notification that they had regained compliance with the Minimum Bid Price Requirement
3. 49Historically we have not paid dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future
4. 50Our stock price is speculative, and there is a risk of litigation
5. 51If at any time our common stock is subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected
6. 52Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock
7. 53Our common stock has had an unpredictable trading volume which means you may not be able to sell our shares at or near trading prices or at all
8. 54The market price for our common stock is volatile; you may not be able to sell our common stock at or above the price you have paid for it, which may result in losses to you
9. 55Our issuance of additional shares of common stock or convertible securities could be dilutive
10. 56As a result of the Holder exercising the Existing Warrants, the Company issued an aggregate of 6,200,000 shares of its common stock. The shares underlying the Existing Warrants have all been registered on Form S-1 registration statement (Registration Number 333-278188)
11. 57Subject to the terms of the Agreement, the Company will be required to pay certain liquidated damages if the shares underlying the New Warrants are not filed within the ninety (90) period, as more fully described in the Agreement
12. 58Our officers and directors are entitled to indemnification from us for liabilities under our articles of incorporation, which could be costly to us and may discourage the exercise of stockholder rights
13. 59Certain anti-takeover provisions of Nevada law could have the effect of delaying or preventing a third-party from acquiring us, even if the acquisition arguably could benefit our stockholders
14. 60We incur substantial costs as a result of being a public company and our management expects to devote substantial time to public company compliance programs
15. 61If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline