19 or otherwise. If patient enrollment is delayed for an extended period of time, our clinical trials could be delayed or otherwise adversely affected.

Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our product candidates and jeopardize our ability to obtain marketing approval for the sale of our product candidates. Furthermore, even if we are able to enroll a sufficient number of patients for our clinical trials, we may have difficulty maintaining participation in our clinical trials through the treatment and any follow-up periods.

Competition for patients in conducting clinical trials may prevent or delay product development and strain our limited financial resources.

Many pharmaceutical companies are conducting clinical trials in patients with the disease indications that our potential drug products target. As a result, we must compete with them for clinical sites, physicians and the limited number of patients who fulfill the stringent requirements for participation in clinical trials. Also, due to the confidential nature of clinical trials, we do not know-how many of the eligible patients may be enrolled in competing studies and who are consequently not available to us for our clinical trials. Our clinical trials may be delayed or terminated due to the inability to enroll enough patients. Patient enrollment depends on many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites and the eligibility criteria for the study. The delay or inability to meet planned patient enrollment may result in increased costs and delays or termination of the trial, which could have a harmful effect on our ability to develop products.

We rely on third parties to conduct our clinical trials and perform data collection and analysis, which may result in costs and delays that prevent us from successfully commercializing Ampion.

We currently rely, and will rely in the future, on medical institutions, clinical investigators, contract research organizations, contract laboratories, and collaborators to perform data collection and analysis and other aspects of our clinical trials.

Our clinical trials conducted by third parties may be delayed, suspended, or terminated if:

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the third parties do not successfully carry out their contractual duties or fail to meet regulatory obligations or expected deadlines;

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we replace a third party; or

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the quality or accuracy of the data obtained by third parties is compromised due to their failure to adhere to clinical protocols, regulatory requirements, or for other reasons.

~~Table~~In addition, our third parties are not our employees, and except for remedies available to us under our agreements with such third parties, we cannot control whether or not they devote sufficient time and resources to our on-going clinical, nonclinical and preclinical programs. If third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of ~~Contents~~

the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize Ampion. As a result, our results of operations and the commercial prospects for Ampion would be harmed, our costs could increase and our ability to generate revenues could be delayed or prevented.

Third party performance failures may increase our development costs, delay our ability to obtain regulatory approval, and delay or prevent the commercialization of Ampion. If we seek alternative sources to provide these services, we may not be able to enter into replacement arrangements without incurring delays or additional costs. Though we attempt to carefully manage our ongoing relationships with our third parties, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

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The production of Ampion depends on a limited source of supply that, when interrupted, may adversely affect our business.

The development of our product candidates depends on the availability of human serum albumin, which is a product that is derived from human blood. Any interruption in the supply of human serum albumin may adversely affect our business. In January 2022, the American Red Cross declared a national blood crisis for the first time. The COVID-19 pandemic has resulted in a decline in donor turnout, cancellation of blood drives and staffing challenges causing a national blood shortage. Furthermore, regulations intended to reduce the risk of introducing infectious diseases in the blood supply (including COVID-19) could also result in a decreased pool of potential donors or integrity of inventory. Due to any pandemic, epidemic or outbreak in one or more regions in which our business operates, the portion of the donor pool that typically donates may be unable, or unwilling to donate, thereby significantly reducing the availability of blood supply. In addition, health and healthcare concerns among the public may result in a further decline in donations. If this crisis continues, we may experience disruptions in the supply of human serum albumin which could have an adverse effect on our business, financial condition and results of operations. We cannot predict when the supply will stabilize.

Relying on third-party suppliers may result in delays in our ongoing clinical trial and introduction of our product to the market.

We currently obtain the key components/raw ~~material~~materials needed to produce Ampion for our clinical trials from ~~one supplier~~major suppliers in the ~~United States. Our current agreement with this supplier expires in December 2020~~industry and we ~~are in the process of securing a long-term supply agreement.~~continue to maintain strong relationships with those suppliers. Future clinical trials, if required, and FDA approval may be delayed if we are unable to obtain a sufficient quantity of the key components/raw ~~material~~materials needed to produce Ampion in a timely manner.

Some of the primary materials used to make Ampion, including human serum albumin and other production materials, such as caps, vials and stoppers, are each supplied by a sole supplier, and the failure of those sole suppliers to timely supply sufficient items and materials necessary for the manufacture of Ampion could in turn disrupt our supply of Ampion. The reliance on a ~~timely basis~~sole supplier, or limited number of suppliers, could result in delivery or quality problems or reduced control over product pricing, reliability, and performance, which would have a material adverse effect on our business, financial condition and results of operations. Because we often do not account for a significant part of our suppliers' businesses, we may not have access to sufficient capacity from these suppliers in periods of high demand. In addition, since we generally do not have guaranteed supply arrangements with suppliers, we risk serious disruption to operations if ~~we need to establish~~ an ~~alternative source~~important supplier terminates product lines, changes business focus, or goes out of ~~supply for the raw material.~~business.

Once regulatory approval is obtained, a marketed product and its suppliers and manufacturers are subject to continual review. The discovery of previously unknown problems with a product, supplier or ~~supplier and manufacturers~~manufacturer may result in restrictions on the product, supplier, or manufacturing facility, including withdrawal of the product from the market. Our key component/raw material ~~supplier is~~suppliers are required to operate in accordance with ~~cGMPs.~~cGMPs and applicable regulatory requirements per our quality agreements with each supplier. A failure of any of our contract suppliers to establish and follow cGMPs and applicable regulatory requirements, and to document their adherence to such practices, may lead to significant delays in the launch of Ampion into the market. Failure by third-party suppliers to comply with applicable regulations could result in sanctions being imposed on us or them, including fines, injunctions, civil penalties, revocation or suspension of marketing approval for our product, seizures or recalls of our product, operating restrictions, and criminal prosecutions.

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. Results of our trials could reveal a high and unacceptable severity and prevalence of these or other side effects. In such an event, our trials could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications. The drug-related side effects could affect patient recruitment or the ability of enrolled

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patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.

Additionally, if we receive marketing approval for our product candidates, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including:

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regulatory authorities may withdraw approvals of such products;

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regulatory authorities may require additional warnings on the label or impose other conditions;

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we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;

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we could be sued and held liable for harm caused to patients; and

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our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate or for particular indications of a product candidate, if approved, and could significantly harm our business, results of operations and prospects.

If Ampion is commercialized, this does not assure acceptance by physicians, patients, third-party payors, or the medical community in general.

We cannot be sure that Ampion, if and when approved for marketing, will be accepted by physicians, patients, third-party payors, or the medical community in general. Even if the medical community accepts a product as safe and efficacious for its indicated use, physicians may choose to restrict the use of the product if we or any collaborator are unable to demonstrate that, based on experience, clinical data, side-effect profiles, and other factors, our product is preferable to any existing medicines or treatments. We cannot predict the degree of market acceptance of Ampion once we receive marketing approval, which will depend on a number of factors, including, but not limited to:

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the clinical efficacy and safety of our product;

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the approved labeling for our product and any required warnings;

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the advantages and disadvantages of our product compared to alternative treatments;

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our and any collaborator’s ability to educate the medical community about the safety and effectiveness of our product;

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the reimbursement policies of government and third-party payors pertaining to our product; and

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the market price of our product relative to competing treatments.

If we do not achieve our projected development and commercialization goals in the timeframes we announce and expect, the commercialization of Ampion may be delayed, our business may be harmed, and our stock price may decline.

We frequently estimate for planning purposes the timing of the accomplishment of key scientific, clinical, regulatory, and other product development objectives. These milestones may include our expectations regarding the commencement or completion of scientific studies, clinical trials, the submission of regulatory filings, or commercialization objectives. From time to time, we may publicly announce the expected timing of some of these milestones, such as the completion of an ongoing clinical trial, the initiation of other clinical programs, submission of a BLA application, receipt of marketing approval, or a commercial launch of a product. The achievement of many of these milestones may be outside

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of our control. All of these milestones are based on a variety of assumptions which may cause the timing of achievement of the milestones to vary considerably from our estimates, including:

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our available capital resources or capital constraints we experience;

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the rate of progress, costs, and results of our clinical trials and research and development activities, including the extent of scheduling conflicts with participating clinicians and collaborators, and our ability to identify and enroll patients who meet clinical trial eligibility criteria;

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our receipt of approvals by the FDA and other regulatory agencies and the timing thereof;

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other actions, decisions, or rules issued by regulators;

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our ability to access sufficient, reliable and affordable supplies of the compound used to manufacture Ampion;

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the efforts of our collaborators with respect to the commercialization of our product; and

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costs related to, and timing issues associated with, product manufacturing as well as sales and marketing activities.

If we fail to achieve announced milestones in the timeframes we announce and expect, our business and results of operations may be harmed, and the price of our stock may decline.

We have never commercialized a product candidate as a company before and currently lack the comprehensive, fully-staffed expertise, personnel and resources to successfully commercialize any products.

We have never commercialized a product candidate as a company. We may license certain rights with respect to our product candidates to collaborators and may rely on the assistance and guidance of those collaborators. For product candidates for which we retain commercialization rights and marketing approval, we will have to develop our own sales, marketing and supply organization or outsource these activities to a third party.

Factors that may affect our ability to commercialize our product candidates, if approved, on our own include recruiting and retaining adequate numbers of effective sales, marketing, and market access personnel, developing and producing adequate educational and marketing programs to increase public acceptance of our approved product candidates, ensuring regulatory compliance of our company, all communications and materials in the promotional domain, employees and third parties under applicable healthcare laws, and other unforeseen costs associated with creating an independent sales and marketing organization. Developing a sales and marketing organization will be expensive and time-consuming and could delay the launch of our product candidates upon approval. We may not be able to build an effective sales and marketing organization. Alternatively, if we choose to collaborate, either globally or on a territory-by-territory basis, with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems, we will be required to negotiate and enter into arrangements with such third parties relating to the proposed collaboration and such arrangements may prove to be less profitable than commercializing the product on our own. If we are unable to build our own distribution and marketing capabilities or to find suitable partners for the commercialization of our product candidates, we may not generate revenues from them or be able to reach or sustain profitability.

We might enter into agreements with third-party collaborators to commercialize Ampion, which may affect the sales of our product and our ability to generate revenues. If those collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates.

We are not currently established to handle sales, marketing, and distribution of pharmaceutical products and may contract with, or license, third parties to market Ampion if we receive regulatory approvals. If we enter into any collaboration arrangements with any third parties, we will likely have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates. Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities and efforts to successfully

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perform the functions assigned to them in these arrangements. Outsourcing sales and marketing in this manner may subject us to a variety of risks, including:

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our inability to exercise control over sales and marketing activities and personnel;

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collaborators may have significant discretion in determining the efforts and resources that they will apply to, and the manner in which they perform their obligations under, these collaborations and may not perform their obligations as expected;

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collaborators may deemphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, including as a result of a business combination or sale or disposition of a business unit or development function, or available funding or external factors such as an acquisition that diverts resources or creates competing priorities;

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collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

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collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

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a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative to other products;

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collaborators may not provide us with timely and accurate information regarding development progress and activities under the collaboration or may limit our ability to share such information, which could adversely impact our ability to report progress to our investors and otherwise plan our own development of our product candidates;

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failure or inability of contracted sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe our product;

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disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources;

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unforeseen costs and expenses associated with sales and marketing;

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collaborators may not have sufficient resources or decide not to devote the necessary resources due to internal constraints such as budget limitations, lack of human resources, or a change in strategic focus;

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collaborators may believe our intellectual property or Ampion infringes on the intellectual property rights of others;

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collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and intellectual property in such a way as to invite litigation or other intellectual property related proceedings that could jeopardize or invalidate our proprietary information and intellectual property or expose us to potential litigation or other intellectual property related proceedings;

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collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property;

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collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all;

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a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.

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collaborators may dispute their responsibility to conduct commercialization activities pursuant to the applicable collaboration, including the payment of related costs or the division of any revenues;

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collaborators may decide to pursue a competitive product developed outside of the collaboration arrangement;

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collaborators may delay the commercialization of Ampion in favor of commercializing another party’s product candidate;

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collaborators may decide to terminate or not to renew the collaboration for these or other reasons and, if terminated, this may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; or

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we may grant exclusive rights to our collaborators that would prevent us from collaborating with others.

If we are unable to partner with a third party that has adequate sales, marketing, and distribution capabilities, we may have difficulty commercializing Ampion, which would adversely affect our business, financial condition, and ability to generate product revenues.

We may need others to market and commercialize Ampion in international markets.

In the future, if appropriate regulatory approvals are obtained, we may commercialize Ampion in international markets. However, we have not currently decided how to commercialize Ampion in those markets. We may decide to build our own sales force or sell Ampion through third parties. If we decide to sell Ampion in international markets through a third party, we may not be able to enter into any marketing arrangements on favorable terms or at all. In addition, these arrangements could result in lower levels of income to us than if we marketed our product candidates entirely on our own. If we are unable to enter into a marketing arrangement for Ampion in international markets, we may not be able to develop an effective international sales force to successfully commercialize those products in international markets. If we fail to enter into marketing arrangements for Ampion and are unable to develop an effective international sales force, our ability to generate revenue would be limited.

Even if we, or our collaborators, obtain marketing approvals for Ampion, in the future, Ampion could be subject to post-marketing restrictions or withdrawal from the market and we, and our collaborators, may be subject to substantial penalties if we, or they, fail to comply with regulatory requirements or if we, or they, experience unanticipated problems with our product following approval. The expenses and costs we will incur to comply with FDA post approval requirements could limit our financial resources for other development activities.

Even if we receive marketing approval for Ampion, Ampion, as well as the manufacturing processes, post-approval studies and measures, labeling, advertising, and promotional activities for our product, among other things, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping.

Even if marketing approval of Ampion is granted, the approval may carry conditions that limit the market for our product or put our product at a competitive disadvantage relative to alternative therapies. A regulatory approval may further limit the indicated uses for which we can market a product or the patient population that may utilize the product. These restrictions could make it more difficult to market Ampion effectively, which could materially impair our ability to generate revenue.

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The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of a product. The FDA and other agencies, including the Department of Justice, closely regulate and monitor the post-approval marketing and promotion of products to ensure that they are manufactured, marketed, and distributed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding off-label use and if we, or our collaborators, do not market Ampion in accordance with the marketing approval received for a product’s approved indications, we, or they, may be subject to warnings or enforcement action for off-label marketing. Violation of the FDCA, the Public Health Service Act, and other statutes, including the False Claims Act, relating to the promotion and advertising of prescription drugs may lead to investigations or allegations of violations of federal and state health care fraud and abuse laws and state consumer protection laws.

Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, warning letters from the FDA, mandated corrective advertising or communications with doctors and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures. The costs and expenses we may incur to comply with FDA post approval requirements could limit our financial resources for other development activities.

Government restrictions on pricing and reimbursement, as well as other healthcare payor cost-containment initiatives may increase the difficulty and cost for us to obtain marketing approval for and commercialize our product and may affect the prices we may set.

The commercial success of Ampion will largely depend on the level of reimbursement rates from health maintenance, managed care, pharmacy benefit, government health administration authorities, private health coverage insurers, and other third-party payors. If reimbursement is not available, or is available only at limited levels, we, or our collaborators, may not be able to successfully commercialize Ampion. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us, or our collaborators, to establish or maintain pricing to realize a sufficient return on our or their investments.

In the United States and some foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system, including cost-containment measures that may reduce or limit coverage and reimbursement for newly approved drugs and affect our ability to profitably sell any product candidates for which we obtain marketing approval. In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare.

For example, in March 2010, the Affordable Care Act was enacted in the United States. Among the provisions of the Affordable Care Act of importance to our potential product candidates are that it established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; expands eligibility criteria for Medicaid programs; increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; created a new Medicare Part D coverage gap discount program; established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation at the Centers for Medicare & Medicaid Services (“CMS”) to test innovative payment and service delivery models to lower Medicare and Medicaid spending. There have been extensive judicial and Congressional challenges to certain aspects of the Affordable Care Act.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, included reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through March 31, 2021 due to the COVID-19 pandemic, unless additional Congressional action is taken. In addition, on January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

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Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs. Such scrutiny has resulted in several recent congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products. Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition, and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our product, if approved, or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition, and prospects.

We expect that the Affordable Care Act and other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product. In addition, it is possible that additional governmental action will be taken in response to the COVID-19 pandemic. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from third-party payors. This could harm our or our collaborators’ ability to market our product and generate revenues. Cost containment measures that health care payors and providers are instituting, and the effect of further health care reform could significantly reduce potential revenues from the sale of Ampion in the future, and could cause an increase in our compliance, manufacturing, or other operating expenses. In addition, in certain foreign markets, the pricing of prescription drugs is subject to government control and reimbursement may in some cases be unavailable. We believe that pricing pressures at the federal and state level, as well as internationally, will continue and may increase, which may make it difficult for us to sell our potential product that may be approved in the future at a price acceptable to us or any of our future collaborators.

Our relationships with healthcare professionals, clinical investigators, CROs and third-party payors in connection with our current and future business activities may be subject to federal and state healthcare fraud and abuse laws, false claims laws, transparency laws, government price reporting, and health information privacy and security laws, which could expose us to significant losses, including, among other things, criminal sanctions, civil penalties, contractual damages, exclusion from governmental healthcare programs, reputational harm, administrative burdens and diminished profits and future earnings.

Healthcare providers and third-party payors play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our current and future arrangements with healthcare professionals, clinical investigators, CROs, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business, financial arrangements or relationships through which we research, as well as market, sell and distribute our products for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations may include the following:

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the federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under a federal healthcare program such as Medicare and Medicaid;

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the federal false claims laws, including the civil False Claims Act, which can be enforced by private citizens through civil whistleblower or qui tam actions, and civil monetary penalties laws, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

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HIPAA prohibits, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

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HIPAA, as amended by HITECH, and their implementing regulations, also imposes obligations, including mandatory contractual terms, on covered entities, which are health plans, healthcare clearinghouses, and certain health care providers, as those terms are defined by HIPAA, and their respective business associates and

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subcontractors, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

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the federal Physician Payments Sunshine Act requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS information regarding payments and other transfers of value to physicians, as well as information regarding ownership and investment interests held by physicians and their immediate family member;

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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers;

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state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance regulations promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures, or drug pricing;

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state and local laws that require the registration of pharmaceutical sales and medical representatives; and

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state laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Efforts to ensure that our current and future business arrangements with third parties will comply with applicable healthcare and data privacy laws and regulations will involve substantial ongoing costs and may require us to undertake or implement additional policies or measures. We may face claims and proceedings by private parties, and claims, investigations and other proceedings by governmental authorities, relating to allegations that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations, and it is possible that courts or governmental authorities may conclude that we have not complied with them, or that we may find it necessary or appropriate to settle any such claims or other proceedings. In connection with any such claims, proceedings, or settlements, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our operations. Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired. Further, if any of the physicians or other healthcare providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

Our current or former personnel, board members, independent contractors, consultants, commercial collaborators, principal investigators, CROs, suppliers and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, that results in a material negative impact to the Company.

We are exposed to the risk that our current or former personnel, independent contractors, consultants, commercial collaborators, principal investigators, CROs, suppliers and vendors may engage in misconduct or other improper activities that results in a material negative impact to the Company. Such misconduct by these parties could include certain failures to comply with:

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the laws and regulations of the FDA and non-U.S. regulators, including those laws requiring the reporting of true, complete and accurate information to such regulatory bodies;

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manufacturing standards we have established;

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healthcare fraud and abuse laws and regulations in the United States and similar foreign laws; or

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laws requiring the accurate reporting of financial information or data or the disclosure of unauthorized activities to us.

Our business activities may be subject to the U.S. Foreign Corrupt Practices Act and similar anti-bribery and anti-corruption laws of other countries in which we operate, as well as U.S. and certain foreign export controls, trade sanctions, and import laws and regulations. Compliance with these legal requirements could limit our ability to compete in foreign markets and subject us to liability if we violate them.

Our business activities are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (“FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate. These laws generally prohibit companies and their employees, agents, representatives, business partners, and third-party intermediaries from, directly or indirectly, offering, promising, giving or authorizing others to give anything of value, either directly or indirectly, to recipients in the public or private sector in order to influence official action or otherwise obtain or retain business. Our business is heavily regulated and therefore involves significant interaction with public officials, including officials of non-U.S. governments. Additionally, in many other countries, hospitals are owned and operated by the government, and doctors and other hospital employees would be considered foreign officials under the FCPA. Recently, the SEC and DOJ have increased their FCPA enforcement activities with respect to biotechnology and pharmaceutical companies. We sometimes leverage third parties to assist with the conduct of our business abroad. We, our employees, agents, representatives, business partners and third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and may be held liable for the corrupt or other illegal activities of these employees, agents, representatives, business partners or third-party intermediaries even if we do not explicitly authorize such activities. We cannot assure you that all of our employees, agents, representatives, business partners and third-party intermediaries will not take actions in violation of applicable law for which we may be ultimately held responsible. As we increase our international sales and business activities, including the expansion of our clinical trial activities into foreign jurisdictions, our risks under these laws may increase.

These laws also require that we make and keep books and records that accurately and fairly reflect the transactions of the corporation and that we devise and maintain an adequate system of internal accounting controls and compliance procedures designed to prevent violations of anti-corruption laws. There is no certainty that all of our employees, agents, representatives, business partners and third-party intermediaries, or those of our affiliates, will comply with applicable laws and regulations, for which we may be ultimately held responsible.

Violations of these laws and regulations could result in whistleblower complaints, fines, severe civil or criminal sanctions, settlements, prosecution, enforcement actions, damages, adverse media coverage, investigations, loss of export privileges, disgorgement, and other remedial measures and prohibitions on the conduct of our business including our ability to offer our products in one or more countries. Responding to any investigation or action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. As a general matter, investigations, enforcement actions and sanctions could damage our reputation, our brand, our international activities, our ability to attract and retain employees and our business, prospects, operating results and financial condition.

In addition, our products may be subject to U.S. and foreign export controls, trade sanctions and import laws and regulations. Governmental regulation of the import or export of our products, or our failure to obtain any required import or export authorization for our products, when applicable, could harm our international sales and adversely affect our revenue. Compliance with applicable regulatory requirements regarding the export of our products may create delays in the introduction of our products in international markets or, in some cases, prevent the export of our products to some countries altogether. Furthermore, U.S. export control laws and economic sanctions prohibit the shipment of certain products and services to countries, governments, and persons targeted by U.S. sanctions. If we fail to comply with export and import regulations and such economic sanctions, penalties could be imposed, including fines and/or denial of certain

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export privileges. Moreover, any new export or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or in the countries, persons, or products targeted by such regulations, could result in decreased use of our products by, or in our decreased ability to export our products to, existing or potential customers with international operations. Any decreased use of our products or limitation on our ability to export or sell our products would likely adversely affect our business.

Lawsuits or investigations could divert our resources, result in substantial liabilities and reduce the commercial potential of Ampion.

We may be subject to legal or administrative proceedings and litigation in the future, which may be costly to defend and could materially harm our business, financial condition and operations. While we do not anticipate legal or administrative proceedings, the cost of responding to and defending ourselves in such proceedings could be costly and exceed our retention levels under our insurance program(s).

Additionally, the risk that we may be sued on product liability claims is inherent in the development and commercialization of pharmaceutical products. Side effects of, or manufacturing defects in, the product that we develop which is commercialized by us, or our collaborators could result in the deterioration of a patient’s condition, injury, or even death. Once a product is approved for sale and commercialized, the likelihood of product liability lawsuits increases. Claims may be brought by individuals seeking relief for themselves or by individuals or groups seeking to represent a class. These lawsuits may divert our management from pursuing our business strategy and may be costly to defend. In addition, if we are held liable in any of these lawsuits, we may incur substantial liabilities and may be forced to limit or forgo further commercialization of Ampion.

Although we maintain D&O insurance as well as general liability and product liability insurance, this insurance coverage only covers potential liabilities after our retention has been met and only to the extent of the insurance coverage, therefore, our insurance coverage may not fully cover potential liabilities. In addition, our inability to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential legal or administrative liability claims could prevent or inhibit the commercial production and sale of Ampion, if and when it receives regulatory approval, which could in turn adversely affect our business. Lawsuits and investigations, or threats thereof, could also harm our reputation, which may adversely affect our collaborators’ ability to commercialize our product successfully.

Ampion is regulated by the FDA, and as such, may be subject to competition sooner than anticipated.

With the enactment of the BPCIA, an abbreviated pathway for the approval of biosimilar and interchangeable biological products was created. The abbreviated regulatory pathway established legal authority for the FDA to review and approve biosimilars, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an existing brand product. The BPCIA provides a period of exclusivity for products granted “reference product exclusivity,” under which an application for a biosimilar product referencing such products cannot be approved by the FDA until 12 years after the original branded product is approved under a BLA.

This period of regulatory exclusivity does not apply to companies pursuing regulatory approval via their own traditional BLA, rather than via the abbreviated pathway. Therefore, if Ampion were to receive reference product exclusivity, a competitor may seek approval of a product candidate under a full BLA. In such a case, although the competitor would not enjoy the benefits of the abbreviated pathway for biosimilar approval created under the BPCIA, the FDA would not be precluded from making effective an approval of the competitor product pursuant to a BLA prior to the expiration of our 12-year period of market exclusivity.

We could face substantial competition from companies with considerably more resources and experience than we have, which may result in others discovering, developing, receiving approval for, or commercializing products before or more successfully than us.

If we develop an approved product, we cannot provide assurance it will be first to market, clinically superior or scientifically preferable to existing or future products and/or treatments developed or introduced by our competitors. Our ability to succeed in the future depends on our ability to discover, develop, and commercialize a pharmaceutical product that offers superior efficacy, convenience, tolerability, and safety when compared to existing, or a lack of demonstrated, treatment methodologies. Because our strategy is to develop a new product candidate primarily for the

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treatment of conditions that affect a large patient population, our product is likely to compete with a number of existing medicines or treatments, and a large number of product candidates that are being developed by others.

Many of our potential competitors have substantially greater financial, technical, personnel, and marketing resources than we do. In addition, many of these competitors have significantly greater resources devoted to product development and pre-clinical research. Our ability to compete successfully will depend largely on our ability to:

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develop Ampion to be superior to other products in the market;

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attract and retain qualified personnel;

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obtain patent and/or other proprietary protection for Ampion;

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obtain required regulatory approvals; and

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obtain collaboration arrangements to commercialize Ampion.

Established pharmaceutical companies devote significant financial resources to discovering, developing, or licensing novel compounds that could make Ampion obsolete. Our competitors may obtain patent protection, receive FDA approval, and commercialize medicines before us. Other companies are engaged in the discovery of compounds that may compete with Ampion.

Any new product that competes with a currently approved treatment or medicine must demonstrate compelling advantages in efficacy, convenience, tolerability, and/or safety to address price competition and be commercially successful. If we are not able to compete effectively against our current and future competitors, our business will not grow, and our financial condition and operations will suffer.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

We have limited financial and managerial resources. Therefore, we focus on research programs and product candidates that we identify for specific indications. If, due to our limited resources and access to capital, we prioritize development of certain product candidates that ultimately prove to be unsuccessful, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential or a greater likelihood of success. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

If we do not receive marketing approval for Ampion, we may not realize the investment we have made in our manufacturing facility.

In May 2014, we commenced a 125-month lease of a multi-purpose facility containing approximately 19,000 square feet. We have built out this facility in anticipation of receiving approval of our BLA and commencing commercialization of Ampion for treatment of severe OAK. If the submission of our BLA for Ampion is significantly delayed, the FDA does not approve our BLA for Ampion, and/or does not approve of our manufacturing operation, we will not be able to manufacture Ampion for commercial sale in our facility and we will remain obligated to make payments under our lease, which is set to expire in 2024. Any delay or failure to receive BLA approval for Ampion could have a material adverse effect on the carrying value of the manufacturing facility as well as on our results of operations.

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The manufacture of drugs is complex, and we, or any third-party manufacturers, may encounter difficulties in production. If there are any such difficulties, our ability to provide adequate supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or prevented.

Manufacturing drugs, especially in large quantities, is complex and may require the use of innovative technologies. Each lot of an approved drug product must undergo thorough testing for identity, strength, quality, purity and potency. Manufacturing drugs requires facilities specifically designed for and validated for this purpose, as well as sophisticated quality assurance and quality control procedures. Slight deviations anywhere in the manufacturing process, including filling, labeling, packaging, storage and shipping and quality control and testing, may result in lot failures or product recalls. When changes are made to the manufacturing process, we may be required to provide preclinical and clinical data showing the comparable quality and efficacy of the products before and after such changes. If we or any third-party manufacturers are unable to produce sufficient quantities for clinical trials or for commercialization as a result of these challenges, or otherwise, our development and commercialization efforts would be impaired, which would have an adverse effect on our business, financial condition, results of operations and growth prospects.

In the unlikely instance we use hazardous and/or biological materials in a manner that causes injury or violates applicable law, we may be liable for damages or fines.

The activities conducted at our facility (i.e., research and development and manufacturing) may, from time to time, involve the controlled use of potentially hazardous substances, including, but not limited to, chemical and biological materials and hazardous waste products. Federal, state, and local laws and regulations govern the use, manufacture, storage, handling and disposal of hazardous materials. If we experience a release of hazardous substances, it is possible that this release could cause personal injury or death, and require decontamination of the facility. In the unlikely event of an accident while manufacturing Ampion, we could be held liable for damages or face substantial penalties. We do not have any insurance for liabilities arising from the procurement, handling, or discharge of hazardous materials. Compliance with applicable environmental laws and regulations, in the event of an accident, is expensive, and current or future environmental regulations may delay our research, development and production efforts, which could harm the financial condition of our business or impair our operations.

We currently, and from time to time in the future may, outsource portions of our internal business functions to third-party providers. Outsourcing these functions has significant risks, and our failure to manage these risks successfully could materially adversely affect our business, results of operations, and financial condition.

We currently, and from time to time in the future may, outsource portions of our internal business functions to third-party providers including information technology, human resources, internal audit testing, legal services and certain calculations and other information that support our accounting and financial reporting, among other things. Third-party providers may not comply on a timely basis with all of our requirements or may not provide us with an acceptable level of service. In addition, our reliance on third-party providers could have significant negative consequences, including significant disruptions in our operations and significantly increased costs to undertake our operations. For example, any failure by the third-party providers that assist us with financial reporting to provide us with accurate information or implement and maintain effective controls may cause us to be unable to meet our reporting obligations as a publicly traded company and we could experience deficiencies in our operations that could have an adverse effect on the effectiveness of our internal control over financial reporting. As a result of our outsourcing activities, it may be more difficult for us to recruit and retain qualified employees for our business needs at any time and if we have a failure in our outsourced financial reporting activities, our independent registered public accounting firm may not be able to provide us with an unqualified report regarding the effectiveness of our internal control over financial reporting, which may cause investors to lose confidence in the reliability of our financial statements and could result in a decrease in the value of our common stock. Our failure to successfully outsource any material portion of our business functions could materially adversely affect our business, results of operations, and financial condition.

~~If we do not receive marketing approval for Ampion, we may not realize the investment we have made in our manufacturing facility.~~

In May 2014, we commenced a 125- month lease of a multi-purpose facility containing approximately 19,000 square feet. We have built out this facility in anticipation of receiving approval of our BLA and commencing commercialization of Ampion for treatment of severe OAK. If the submission of our BLA for Ampion is significantly delayed, the FDA does not approve our BLA for Ampion, and/or does not approve of our manufacturing operation, we will not be able to manufacture Ampion for commercial sale in our facility and we will remain obligated to make payments under our lease, which is set to expire in 2024. Any delay or failure to receive BLA approval for Ampion could have a material adverse effect on the carrying value of the manufacturing facility as well as on our results of operations.

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While the likelihood of the use hazardous materials is deemed minimal, in the unlikely instance we use hazardous and/or biological materials in a manner that causes injury or violates applicable law, we may be liable for damages or fines.

The use of hazardous and biological materials is deemed unlikely. However, the activities conducted at our facility (i.e. research and development and manufacturing) may, from time to time, involve the controlled use of potentially hazardous substances, including, but not limited to, chemical and biological materials and hazardous waste products. Federal, state, and local laws and regulations govern the use, manufacture, storage, handling and disposal of hazardous materials. If we experience a release of hazardous substances, it is possible that this release could cause personal injury or death, and require decontamination of the facility. In the unlikely event of an accident while manufacturing Ampion, we could be held liable for damages or face substantial penalties. We do not have any insurance for liabilities arising from the procurement, handling, or discharge of hazardous materials. Compliance with applicable environmental laws and regulations, in the event of an accident, is expensive, and current or future environmental regulations may delay our research, development and production efforts, which could harm the financial condition of our business or impair our operations.

Even if we, or our collaborators, obtain marketing approvals for Ampion, the terms of approvals and ongoing regulation of our product may limit how we, or our collaborators, manufacture and market our product, which could materially impair our ability to generate revenue.

Even if we receive regulatory approval for Ampion, this approval may carry conditions that limit the market for the product or put the product at a competitive disadvantage relative to alternative therapies for treatment of severe OAK. For instance, the indicated use for Ampion that we have negotiated with the FDA is “treatment of the signs and symptoms of severe OAK”, which will mean that our product will not be marketed to persons having less than severe OAK, a regulatory approval may further limit the indicated uses for which we can market a product or the patient population that may utilize the product. These restrictions could make it more difficult to market Ampion effectively.

Accordingly, assuming we, or our collaborators, receive marketing approval for Ampion, we, our collaborators and contract manufacturers will continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance, and quality control.

Ampion for which we obtain marketing approval in the future could be subject to post-marketing restrictions or withdrawal from the market and we, and our collaborators, may be subject to substantial penalties if we, or they, fail to comply with regulatory requirements or if we, or they, experience unanticipated problems with our product following approval. The expenses and costs we will incur to comply with FDA post approval requirements could limit our financial resources for other development activities.

Ampion for which we, or our collaborators, obtain marketing approval in the future, as well as the manufacturing processes, post-approval studies and measures, labeling, advertising, and promotional activities for such product, among other things, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping. Even if marketing approval of Ampion is granted, the approval may be subject to limitations on the indicated use for which the product may be marketed and there may be conditions of approval.

The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of a product. The FDA and other agencies, including the Department of Justice, closely regulate and monitor the post-approval marketing and promotion of products to ensure that they are manufactured, marketed, and distributed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding off-label use and if we, or our collaborators, do not market Ampion in accordance with the marketing approval received for the product’s approved indications, we, or they, may be subject to warnings or enforcement action for off-label marketing. Violation of the FDCA, the Public Health Service Act, and other statutes, including the False Claims Act, relating to the promotion and advertising of prescription drugs may lead to investigations or allegations of violations of federal and state health care fraud and abuse laws and state consumer protection laws.

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We sometimes estimate for planning purposes the timing of the accomplishment of various scientific, clinical, regulatory, and other product development objectives. These milestones may include our expectations regarding the commencement or completion of scientific studies, clinical trials, the submission of regulatory filings, or commercialization objectives. From time to time, we may publicly announce the expected timing of some of these milestones, such as the completion of an ongoing clinical trial, the initiation of other clinical programs, submission of a BLA application, receipt of marketing approval, or a commercial launch of a product. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions which may cause the timing of achievement of the milestones to vary considerably from our estimates, including:

~~our available capital resources or capital constraints we experience;~~

~~our receipt of approvals by the FDA and other regulatory agencies and the timing thereof;~~

~~other actions, decisions, or rules issued by regulators;~~

~~our ability to access sufficient, reliable and affordable supplies of the compound used to manufacture Ampion;~~

~~the efforts of our collaborators with respect to the commercialization of our product; and~~

~~costs related to, and timing issues associated with, product manufacturing as well as sales and marketing activities.~~

~~If we fail to achieve announced milestones in the timeframes we announce and expect, our business and results of operations may be harmed, and the price of our stock may decline.~~

Even if collaborators with which we currently contract with or may contract with in the future successfully complete clinical trials of Ampion, our product may not be commercialized successfully for other reasons.

Even if the contractors that we currently contract with for the AP-013 study, or contractors that we may contract with in the future, successfully complete clinical trials for Ampion, our product may not be commercialized for other reasons, including:

~~failure to receive the regulatory clearances required to market Ampion;~~

~~being subject to proprietary rights held by others;~~

~~being difficult or expensive to manufacture on a commercial scale;~~

~~having adverse side effects that make Ampion’s use less desirable; or~~

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~~failing to compete effectively with products or treatments commercialized by competitors.~~

~~We might enter into agreements with collaborators to commercialize Ampion, which may affect the sales of our product and our ability to generate revenues.~~

~~our inability to exercise control over sales and marketing activities and personnel;~~

~~failure or inability of contracted sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe our product;~~

~~disputes with collaborators concerning sales and marketing expenses, calculation of royalties, and sales and marketing strategies;~~

~~unforeseen costs and expenses associated with sales and marketing;~~

~~collaborators may believe our intellectual property or Ampion infringes on the intellectual property rights of others;~~

~~collaborators may dispute their responsibility to conduct commercialization activities pursuant to the applicable collaboration, including the payment of related costs or the division of any revenues;~~

~~collaborators may decide to pursue a competitive product developed outside of the collaboration arrangement;~~

~~collaborators may delay the commercialization of Ampion in favor of commercializing another party’s product candidate; or~~

~~collaborators may decide to terminate or not to renew the collaboration for these or other reasons.~~

~~Ampion is regulated by the FDA, and as such, may subject it to competition sooner than anticipated.~~

With the enactment of the BPCIA an abbreviated pathway for the approval of biosimilar and interchangeable biological products was created. The abbreviated regulatory pathway established legal authority for the FDA to review and approve biosimilars, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an existing brand product. The BPCIA provides a period of exclusivity for product granted “reference product exclusivity,” under which an application for a biosimilar product referencing such products cannot be approved by the FDA until 12 years after the original branded product is approved under a BLA.

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~~develop Ampion to be superior to other products in the market;~~

~~attract and retain qualified personnel;~~

~~obtain patent and/or other proprietary protection for Ampion;~~

~~obtain required regulatory approvals; and~~

~~obtain collaboration arrangements to commercialize Ampion.~~

Any new product that competes with a currently-approved treatment or medicine must demonstrate compelling advantages in efficacy, convenience, tolerability, and/or safety to address price competition and be commercially successful. If we are not able to compete effectively against our current and future competitors, our business will not grow, and our financial condition and operations will suffer.

~~Lawsuits or investigations could divert our resources, result in substantial liabilities and reduce the commercial potential of Ampion.~~

We are currently and may be additionally in the future subject to legal or administrative proceedings and litigation which may be costly to defend and could materially harm our business, financial conditions and operations. While we do not anticipate that the current legal and administrative proceedings and litigation that we are currently subject to are likely to result in liability for the Company, the cost of responding to and defending ourselves in such proceedings was approximately $600,000 in 2019 and $84,000 in 2018, which was material, and, as of December 31, 2019, had not met our retention levels under our insurance.

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Although we maintain general liability and product liability and directors and officers insurance, this insurance may not fully cover potential liabilities. In addition, our inability to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential legal or administrative liability claims could prevent or inhibit the commercial production and sale of Ampion, if and when it receives regulatory approval, which could in turn adversely affect our business. Lawsuits and investigations, or threats thereof, could also harm our reputation, which may adversely affect our collaborators’ ability to commercialize our product successfully.

~~We may have difficulties obtaining and maintaining sufficient insurance coverage.~~

As a result of a number of factors, such as ongoing litigation, certain of the insurance products that we purchase have become less available and their cost has increased significantly in 2019. Although we maintain directors and officers insurance as well as general liability and product liability insurance, these insurance coverages only cover potential liabilities after our retention has been met and only to the extent of the insurance coverage, therefore, our insurance coverages may not fully cover potential liabilities. In addition, our inability to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product or other legal or administrative liability claims could prevent or inhibit the manufacture and sale of Ampion if it receives regulatory approval, which could adversely affect our business.

~~If Ampion is commercialized, this does not assure acceptance by physicians, patients, third-party payors, or the medical community in general.~~

~~the clinical efficacy and safety of the product;~~

~~the approved labeling for the product and any required warnings;~~

~~the advantages and disadvantages of the product compared to alternative treatments;~~

~~our and any collaborator’s ability to educate the medical community about the safety and effectiveness of the product;~~

~~the reimbursement policies of government and third-party payors pertaining to our product; and~~

~~the market price of our product relative to competing treatments.~~

Government restrictions on pricing and reimbursement, as well as other healthcare payor cost-containment initiatives, may negatively impact our ability to generate revenues if we obtain regulatory approval to market our product.

The commercial success of Ampion will depend on the reimbursement rates from health maintenance, managed care, pharmacy benefit, government health administration authorities, private health coverage insurers, and other third-party payors. If reimbursement is not available, or is available only at limited levels, we, or our collaborators, may not be able to successfully commercialize Ampion. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us, or our collaborators, to establish or maintain pricing to realize a sufficient return on our or their investments.

The continuing efforts of the government, insurance companies, managed care organizations, and other payors of health care costs to contain or reduce costs of health care may adversely affect one or more of the following:

~~our or our collaborators’ ability to set a price we believe is fair for Ampion, if approved;~~

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~~our ability to generate revenues and achieve profitability; and~~

~~the availability of capital.~~

The 2010 enactment of the Affordable Care Act is expected to significantly impact the provision of, and payment for, health care in the United States. Various provisions of these laws are designed to expand Medicaid eligibility, subsidize insurance premiums, provide incentives for businesses to provide health care benefits, prohibit denials of coverage due to pre-existing conditions, establish health insurance exchanges, and provide additional support for medical research. Additional legislative proposals to reform healthcare and government insurance programs, along with the trend toward managed healthcare in the United States, could influence the purchase of medicines and reduce demand and prices for our products, if approved. This could harm our or our collaborators’ ability to market our product and generate revenues. Cost containment measures that health care payors and providers are instituting, and the effect of further health care reform could significantly reduce potential revenues from the sale of Ampion in the future, and could cause an increase in our compliance, manufacturing, or other operating expenses. In addition, in certain foreign markets, the pricing of prescription drugs is subject to government control and reimbursement may in some cases be unavailable. We believe that pricing pressures at the federal and state level, as well as internationally, will continue and may increase, which may make it difficult for us to sell our potential product that may be approved in the future at a price acceptable to us or any of our future collaborators.

The approval process outside the United States varies among countries and may limit our ability to develop, manufacture and sell our product internationally. Failure to obtain marketing approval in international jurisdictions would prevent Ampion from being marketed abroad.

In order to market and sell our product outside the United States, we, or our collaborators, may need to obtain separate marketing approvals and comply with numerous and varying regulatory requirements in global markets which do not recognize the FDA approval process. The approval procedures in these jurisdictions vary among countries and can require separate clinical trials and approval submission/approval process involve additional testing. If we or our collaborators seek marketing approvals for Ampion outside the United States, we will be subject to the regulatory requirements of health authorities in each country in which we seek approvals. With respect to marketing authorizations in Europe, we will be required to submit a European marketing authorization application (“MAA”) to the EMA which conducts a validation and scientific approval process in evaluating a product for safety and efficacy. As further noted above, the approval procedure varies among regions and countries and can involve additional testing, and the time required to obtain approvals may differ from that required to obtain FDA approval. Obtaining regulatory approvals from health authorities in countries outside the United States is likely to subject us to all of the risks associated with obtaining FDA approval described above. In addition, marketing approval by the FDA does not ensure approval by the health authorities of any other country.

Our future success depends on our ability to retain key employees, consultants and advisors and to attract, retain, and motivate qualified personnel.

We are highly dependent on our executive officers; the loss of whose services may adversely impact the achievement of our objectives. Recruiting and retaining other qualified employees, consultants, and advisors for our business, including scientific and technical personnel, will also be critical to our success. There is currently a shortage of skilled executives and scientific personnel in our industry, which is likely to continue. As a result, competition for skilled personnel is

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intense and the turnover rate can be high. We may not be able to attract and retain personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for individuals with similar skill sets. In addition, our current financial needs and potential benefit packages at other pharmaceutical and biotechnology companies may make it more challenging to recruit and retain qualified personnel. The inability to recruit or the loss of the services of any executive, key employee, consultant, or advisor may impede the progress of our research, development and commercialization objectives.

In order to induce valuable employees to remain employed at Ampio, in addition to salary and cash incentives, we have provided stock options and restricted stock awards that vest over time. The value to employees of stock options that vest over time may be significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract more lucrative offers from other companies.

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Despite our efforts to retain valuable employees, members of our management, scientific, and development teams have in the past and may in the future terminate their employment with us. The loss of the services of any of our executive officers or other key employees and our inability to find suitable replacements could potentially harm our business, prospects, financial condition or results of operations. We do not maintain “key man” insurance policies on the lives of these individuals or any of our other employees. Our success also depends on our ability to continue to attract, retain, and motivate highly skilled junior, mid-level, and senior managers as well as junior, mid-level, and senior scientific and medical personnel.

Many of the other biotechnology and pharmaceutical companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They may also provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high quality candidates than what we can offer. If we are unable to continue to attract and retain high quality personnel, the rate and success at which we can discover, develop and commercialize ~~product candidates~~Ampion will be limited.

~~Our drug development program~~Uncertainties relating to ~~date has been dependent~~recent changes in ~~large part upon the services of Dr. David Bar-Or, who retired as Chief Scientific Officer in September 2018.~~our management team may adversely affect our operations.

Our drug development program to date has been dependent in large part upon the services of Dr. David Bar-Or, who retired from his full-time role as Chief Scientific Officer effective September 30, 2018. Although Dr. Bar-Or continues to serve as a member of our Board and our Scientific Advisory Board, the loss of his services as our full-time Chief Scientific Officer could diminish when, and if,As previously announced, we have recently experienced several changes to our senior management team which are designed to strengthen the ~~financial resources~~management team and realign responsibilities while Michael Macaluso, our former Chairman and Chief Executive Officer, undergoes medical treatment during a one-year medical leave of absence. While we expect to ~~do so, our ability~~engage in an orderly transition process as we integrate newly appointed officers, we face a variety of risks and uncertainties relating to ~~develop~~the lack of management continuity, including diversion of management attention from business concerns, failure to retain other key personnel or inability to hire new key personnel. These risks and ~~commercialize new product candidates.~~

~~Business interruptions could limit our ability to operate our business.~~

Our operations are vulnerable to damage or interruption from computer viruses, human error, natural disasters, telecommunications failures, intentional acts of misappropriation, and similar events. We have not established a formal disaster recovery plan or back-up operations. Additionally, our business interruption insurance may not be adequate to compensate us for losses that occur. A significant business interruptionuncertainties could result in ~~losses or damages~~operational and ~~require us to curtail our operations.~~

~~While we are not aware of any cybersecurity incidents, the cybersecurity landscape continues to evolve,~~administrative inefficiencies and ~~we may find it necessary to make further investments to protect our data and infrastructure.~~

We continuously work to install new and upgrade existing information technology systems and provide employee awareness training around phishing, malware, and other cyber risks to ensure that we are protected, to the greatest extent possible, against cyber risks and security breaches. Any actual or suspected security breach or other compromise of our security measures or those of our third-party vendors, whether as a result of hacking efforts, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks or otherwise, could harm our reputation and business, require us to expend significant capital and other resources to address the breach, and result in a violation of applicable laws, regulations or other legal obligations.

~~Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities.~~

We are exposed to the risk that our employees, contract research organizations, principal investigators, consultants, and commercial partners may engage in fraudulent conduct or other illegal activity or may fail to disclosure unauthorized activities to us. Misconduct by these parties could include intentional, reckless and/or negligent failures to comply with:

~~the laws and regulations of the FDA and non-U.S. regulators, including those laws requiring the reporting of true, complete and accurate information to such regulatory bodies;~~

~~manufacturing standards we have established;~~

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~~healthcare fraud and abuse laws and regulations in the United States and similar foreign laws; or~~

~~laws requiring the accurate reporting of financial information or data or the disclosure of unauthorized activities to us.~~

In particular, sales, marketing, and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs, and other business arrangements. Such misconduct could also involve the improper use of information obtained in the course of clinical trials,added costs, which could ~~result in regulatory sanctions~~adversely impact our results of operations and cause serious harm to our reputation. We have adopted a Code of Business Conduct and Ethics applicable to all of our employees, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.stock price.

~~Our ability to use our net operating loss carryforwards may be subject to limitation.~~

Under Section 382 of the Internal Revenue Code of 1986, as amended, substantial changes in our ownership may limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset our taxable income. Specifically, this limitation may arise in the event of a cumulative change in ownership of our company of more than 50% within a three-year period. Any such annual limitation may significantly reduce the utilization of our net operating loss carryforwards before they expire. We believe it is likely that transactions that have occurred in the past and other transactions that may occur in the future, could trigger an ownership change pursuant to Section 382, which could limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset our taxable income, if any.

Further, the Tax Act changed the federal rules governing net operating loss carryforwards. For net operating loss carryforwards arising in tax years beginning after December 31, 2017, the Tax Act limits a taxpayer’s ability to utilize such carryforwards to 80% of taxable income. In addition, net operating loss carryforwards arising in tax years ending after December 31, 2017 can be carried forward indefinitely, but carryback is generally prohibited. Net operating loss carryforwards generated before January 1, 2018 will not be subject to the Tax Act’s taxable income limitation and will continue to have a twenty-year carryforward period. Nevertheless, our net operating loss carryforwards and other tax assets could expire before utilization and could be subject to limitations, which could harm our business, revenue, and financial results.

Risks Related to Our Intellectual Property

Our ability to compete may decline if we do not adequately protect our proprietary rights.

Our commercial success in the U.S. and abroad depends on obtaining and maintaining proprietary rights for Ampion including, but not limited to, its composition and uses. If our intellectual property rights are invalidated or circumvented, our business will be adversely affected. We must successfully defend these rights against third-party challenges. We will only be able to protect Ampion’s proprietary composition and its uses from unauthorized use to the extent that valid and enforceable patents, or effectively protected trade secrets, cover them.

Our ability to obtain patent protection for Ampion and its composition is uncertain due to a number of factors, including:

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we may not be the first to make the inventions covered by pending patent applications or issued patents;

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we may not be the first to file patent applications for Ampion or for its uses;

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others may independently develop identical, similar, or alternative products or compositions;

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our disclosures in patent applications may not be sufficient to meet the ~~statutory~~legal requirements for ~~patentability;~~

patentability in the U.S. or elsewhere;

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any or all of our pending patent applications may not result in issued patents;

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we may not seek or obtain patent protection in countries that may eventually provide us a significant business opportunity;

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any patents issued to us may not provide ~~a basis~~adequate protection for commercially viable products, may not provide any competitive advantages, or may be successfully challenged by third parties;

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our proprietary compositions may not be patentable;

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others may design around our patent claims to produce competitive products which fall outside of the scope of our patents;

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others may identify prior art which could invalidate our patents; ~~and~~

and/or

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the availability and length of patent term extension ~~(PTE)~~(“PTE”) under the Hatch-Waxman Act for approved products are subject to a number of factors and PTE could be unavailable or less than the maximum amount of 5 years for ~~PTE for~~ Ampion.

Even if we have or obtain patents covering Ampion or its uses, patent terms, which are typically measured as 20 years from their original filing date, may be inadequate to protect our competitive position on our product candidates for an adequate amount of time. Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and other requirements imposed by regulations and governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical product candidates would be adversely affected.

Additionally, even if we have or obtain patents covering Ampion or its uses, we may still be barred from making, using ~~and~~and/or selling Ampion because of the patent rights of others. Intellectual property rights are complex and uncertain and therefore may subject us to infringement claims. Others have or may have filed, and in the future may file, patent applications covering compositions or products that are similar or identical to ours. There are many issued U.S. and foreign patents and pending patent applications relating to chemical compounds, biological compositions and therapeutic products, and some of these may relate to compositions we intend to commercialize. These could materially affect our ability to develop Ampion or sell our product if approved. Because patent applications can take many years to issue, there may be currently pending applications unknown to us that may later result in issued patents that Ampion or its uses may infringe. These patent applications may have priority over patent applications filed by us.

We have conducted searches ~~in the past~~ to identify patents or patent applications that may prevent us from obtaining patent protection for our compositions, or that could limit the rights we have claimed in our patents and patent applications, ~~however,~~or that could impact our freedom-to-operate with respect to Ampion. While our searches have not identified any patents or patent applications that are particularly relevant to Ampion, there may be issued patents, and/or currently ~~there are no ongoing searching efforts.~~ pending applications that may later result in issued patents, not identified by our searches that Ampion or its uses may infringe.

Disputes may arise regarding the source or ownership of our inventions. It is difficult to determine if and how such disputes would be resolved. Others may challenge the validity of our patents. If our patents are found to be invalid, we will lose the ability to exclude others from making, using and/or selling the compositions or uses addressed in those patents.

Confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information and may not adequately protect our intellectual property, which could limit our ability to compete.

Because we operate in the highly technical field of drug discovery and development of therapies that can address inflammation and other conditions, we rely in part on trade secret protection to protect our proprietary technology and processes. However, trade secrets are difficult to ~~protect.~~protect and if we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. We enter into confidentiality and intellectual property

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assignment agreements with our employees, consultants, outside scientific collaborators, sponsored researchers, and other advisors. These agreements generally require that the other party keep confidential, and not disclose to third parties, all confidential information developed by the party or made known to the party by us during the party’s relationship with us. These agreements also generally provide that inventions conceived by the party while rendering services for us will be our exclusive property.

However, these agreements may not be honored and may not effectively assign intellectual property rights to us. Enforcing a claim that a party illegally obtained and is using our trade secrets is difficult, expensive, and time consuming and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. The failure to obtain or maintain trade secret protection could adversely affect our competitive position.

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A dispute concerning the infringement or misappropriation of our proprietary rights or the proprietary rights of others could be time consuming and costly, and an unfavorable outcome could harm our business.

There is significant litigation in the pharmaceutical industry regarding patent and other intellectual property rights. Our commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property rights of third parties. Claims by third parties that we infringe their patents and/or intellectual property rights may result in liability for damages or prevent or delay our developmental and commercialization efforts. While we are not currently subject to any pending intellectual property litigation, and are not aware of any such threatened litigation, we may be exposed to future litigation by third parties based on claims that Ampion, methods of making Ampion and/or methods of using Ampion infringe the intellectual property rights of others. There are many patents relating to pharmaceuticals used to treat inflammation. Some of these may encompass Ampion or components of Ampion. If our development activities are found to infringe any such patents, we may have to pay significant damages or seek licenses to such patents. A patentee could prevent us from using pharmaceuticals encompassed by their claims. ~~We may need to resort to litigation to enforce a patent issued to us, to protect our trade secrets, or to determine the scope and validity of third-party proprietary rights.~~

From time to time, we may hire scientific personnel or consultants formerly employed by other companies involved in one or more areas similar to the activities conducted by us. ~~Either~~Because of that, we may be subject to claims that we have wrongfully hired an employee from a competitor or that either we, or these individuals, ~~may be subject to allegations of~~have misappropriated one or more trade ~~secret misappropriation~~secrets from a competitor, that we/they have wrongfully used or disclosed alleged confidential information, or other similar claims as a result of prior affiliations.

If we become involved in litigation, it could consume a substantial portion of our managerial and financial resources, regardless of whether we win or lose. Our position as a relatively small company may cause us to be at a disadvantage in defending our intellectual property rights and in defending against infringement claims by third parties. We may not be able to afford the costs of ~~litigation.~~litigation or, because of the expense and uncertainty of litigation, we may not be in a position to enforce our intellectual property rights against third parties. Any legal action against us or our collaborators could lead to:

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payment of damages, potentially treble damages, if we are found to have willfully infringed a party’s patent rights;

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injunctive or other equitable relief that may effectively block our ability to further develop, commercialize, and sell Ampion; and/or

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us or our collaborators having to enter into license arrangements that may not be available on commercially acceptable terms, if at all.

As a result, we could be prevented from commercializing Ampion. Additionally, intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our common shares to decline.

Pharmaceutical patents and patent applications involve highly complex legal and factual questions, which, if determined adversely to us, could negatively impact our patent position.

The patent positions of pharmaceutical companies can be highly uncertain and involve complex legal and factual questions. For example, some of our patents and patent applications cover methods of ~~use of~~using Ampion, while other patents and patent applications cover the composition of Ampion. The interpretation and breadth of claims allowed in some patents covering pharmaceutical compositions may be uncertain and difficult to determine and are often affected

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materially by the facts and circumstances that pertain to the patented composition and the related patent claims. The standards of the United States Patent and Trademark Office (“USPTO”) and of foreign patent offices are sometimes uncertain and could change in the future. Consequently, the issuance and scope of patents cannot be predicted with certainty. Patents, if issued, may be challenged, revoked, invalidated, or circumvented. U.S. patents and patent applications may also be subject to interference proceedings, and U.S. patents may be subject to reexamination or other post-grant proceedings by the USPTO. Foreign patents may be subject to opposition or comparable proceedings in the corresponding foreign patent offices, which could result in either loss of the patent, or rejection of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, such interference, reexamination and opposition proceedings may be costly. Accordingly, rights under any issued patents may not provide us with sufficient protection against competitive products or processes.

In addition, changes in, or different interpretations of, patent laws in the United States and foreign countries could diminish the value of patents in general, thereby impairing our ability to protect our product candidates, may permit others to use our discoveries or to develop and commercialize our technology and product without providing any compensation to us, or may limit the number of patents or claims we can obtain. The laws of some countries do not protect intellectual property rights to the same extent as U.S. ~~laws~~law and those countries may lack adequate rules and procedures for defending our intellectual property rights. For example, some countries do not grant patent claims directed to methods of treating humans and, in these countries, patent protection may not be available at all to protect Ampion. In addition, U.S. patent laws may change, which could prevent or limit us from filing patent applications or patent claims to protect our products and/or compounds.

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If we fail to obtain and maintain patent protection and trade secret protection for Ampion, its proprietary composition and its uses, we could lose our competitive advantage and the competition we face could increase, reducing any potential revenues and adversely affecting our ability to attain or maintain profitability.

From time to time we may need to license patents, intellectual property and proprietary technologies from third parties, which may be difficult or expensive to obtain.

We may need to obtain licenses to patents and other proprietary rights held by third parties to successfully develop, manufacture and market Ampion. As an example, it may be necessary to use a third party’s proprietary technology to reformulate our product candidate in order to improve upon the capabilities of the product candidate. If we are unable to timely obtain these licenses on reasonable terms, our ability to commercially exploit Ampion may be inhibited or prevented.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world is expensive. Our intellectual property rights in some countries outside the U.S. can be less extensive than those in the U.S. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the U.S. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the U.S., or from selling or importing products made using our inventions in and into the U.S. or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as that in the U.S. These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biopharmaceutical products, which could make it difficult for us or our licensors to stop the infringement of our patents or marketing of competing products against third parties in violation of our proprietary rights generally. The initiation of proceedings by third parties to challenge the scope or validity of our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and any patent applications at risk of not issuing and could provoke third parties to assert claims against us or our licensors. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our

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intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Risks Related to Our Common Stock

The price of our stock has been extremely volatile and may continue to be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our common stock.

The price of our common stock has been extremely volatile and may continue to be so. The stock market in general and the market for pharmaceutical companies have experienced extreme volatility that has often been unrelated to the operating performance of a particular company. The following factors, in addition to the other risk factors described in this section, may also have a significant impact on the market price of our common stock:

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any actual or perceived adverse developments in clinical trials for Ampion;

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any actual or perceived difficulties or delays in obtaining regulatory approval of Ampion in the United States or other countries;

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any finding that Ampion is not safe or effective, or any inability to demonstrate the clinical effectiveness of Ampion when compared to existing treatments;

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any actual or perceived adverse developments in repurposed drug technologies, including any change in FDA policy or guidance on approval of repurposed drug technologies for new indications;

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any announcements of developments with, or comments by, the FDA, the EMA, or other regulatory authorities with respect to our development of Ampion;

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changes in laws or regulations applicable to Ampion, including but not limited to clinical trial requirements for approvals;

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any announcements concerning our retention or loss of key employees;

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our success or inability to obtain collaborators to conduct clinical trials, or commercialize Ampion once regulatory approval is obtained;

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announcements of patent issuances or denials, product innovations, or introduction of new commercial products by our competitors that will compete with Ampion;

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publicity regarding actual or potential study results or the outcome of regulatory reviews relating to the development of Ampion or our competitors’ products;

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announcements of the introduction of new products by our competitors;

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announcements concerning product development results or intellectual property rights of others;

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future issuances of common stock or other securities;

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economic and other external factors beyond our control; and

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sales of stock by us or by our stockholders.

~~In addition, we~~A significant drop in the price of our stock could expose us to the risk of securities class action lawsuits, which could result in substantial costs and divert management’s attention and resources, which could adversely affect our business.

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The price of our stock may be vulnerable to manipulation, including through short sales.

We believe there has been and may continue to be substantial off-market transactions in derivatives of our stock, including short selling activity or related similar activities, which are beyond our control and which may be beyond the full control of the SEC and the Financial Institutions Regulatory Authority (“FINRA”). While SEC and FINRA rules prohibit some forms of short selling and other activities that may result in stock price manipulation, such activity may nonetheless occur without detection or enforcement. Significant short selling or other types of market manipulation could cause our stock trading price to decline, to become more volatile, or both.

~~The price of our stock may be vulnerable to manipulation.~~

~~We believe that our common stock has been the subject of significant short selling by certain market participants.~~ Short sales are transactions in which a market participant sells a security that it does not own. To complete the transaction, the market participant must borrow the security to make delivery to the buyer. The market participant is then obligated to replace the security borrowed by purchasing the security at the market price at the time of required replacement. If the

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price at the time of replacement is lower than the price at which the security was originally sold by the market participant, then the market participant will realize a gain on the transaction. Thus, it is in the market participant’s interest for the market price of the underlying security to decline as much as possible during the period prior to the time of replacement. While SEC and FINRA rules prohibit some forms of short selling and other activities that may result in stock price manipulation, such activity may nonetheless occur without detection or enforcement. Significant short selling or other types of market manipulation could cause our stock trading price to decline, to become more volatile, or both.

~~Because our unrestricted public float has been small relative to other issuers, previous~~Previous short selling efforts have impacted, and may in the future continue to impact, the value of our stock in an extreme and volatile manner to our detriment and the detriment of our stockholders. In addition, market participants with admitted short positions in our stock have published, and may in the future continue to publish, negative information regarding us and our management team on internet sites or blogs that we believe is inaccurate and misleading. We believe that the publication of this negative information has led, and may in the future continue to lead, to significant downward pressure on the price of our stock to our detriment and the further detriment of our stockholders. These and other efforts by certain market participants to manipulate the price of our common stock for their personal financial gain may cause our stockholders to lose a portion of their investment, may make it more difficult for us to raise equity capital when needed without significantly diluting existing stockholders, and may reduce demand from new investors to purchase shares of our stock.

If we cannot continue to satisfy the NYSE American listing maintenance requirements and other rules, including the director independence requirements, our securities may be delisted, which could negatively impact the price of our securities.

~~Although our~~Our common stock is listed on the NYSE ~~American,~~American. However, we may bebecome unable to continue to satisfy the listing maintenance requirements and rules. If we are unable to satisfy the NYSE American criteria for maintaining our listing, our securities could be subject to delisting. To qualify for continued listing on the NYSE American, we must remain in compliance. There can be no assurances that we will be able to continue to comply with the NYSE American listing requirements.

In order to maintain this listing, we must maintain certain share prices, financial and share distribution targets, including maintaining a minimum amount of stockholders’ equity and a minimum number of public stockholders. In addition to these objective standards, the NYSE American may delist the securities of any issuer if, in its opinion, the issuer’s financial condition and/or operating results appear unsatisfactory; if it appears that the extent of public distribution or the aggregate market value of the security has become so reduced as to make continued listing on the NYSE American inadvisable; if the issuer sells or disposes of principal operating assets or ceases to be an operating company; if an issuer fails to comply with the NYSE American’s listing requirements; if an issuer's common stock sells at what the NYSE American considers a “low selling price” (generally trading below $0.20 per share for an extended period of time); or if any other event occurs or any condition exists which makes continued listing on the NYSE American, in its opinion, inadvisable.

If the NYSE American delists our securities, we could face significant consequences, including:

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a limited availability for market quotations for our securities;

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reduced liquidity with respect to our securities;

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a determination that our common stock is a “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in reduced trading;

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activity in the secondary trading market for our common stock;

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limited amount of news and analyst coverage; and

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a decreased ability to issue additional securities or obtain additional financing in the future.

In addition, we would no longer be subject to the NYSE American rules, including rules requiring us to have a certain number of independent directors and to meet other corporate governance standards.

~~Concentration~~A sale of ~~our ownership limits the ability~~a substantial number of ~~our stockholders to influence corporate matters.~~

~~As of February 14, 2020, holders of more than 5%~~shares of our common stock ~~and our directors, executive officers and their affiliates beneficially owned 27.4%~~may cause the price of our common stock to decline.

If our stockholders sell, or the market perceives that our stockholders intend to sell for various reasons, substantial amounts of our common stock in the public market, including shares issued in connection with the exercise of outstanding options or warrants, the market price of our common ~~stock.~~stock could fall. Sales of a substantial number of shares of our common stock may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. We may become involved in securities class action litigation that could divert management’s attention and harm our business.

The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the common stock of biotechnology and biopharmaceutical companies. These ~~stockholders~~broad market fluctuations may cause the market price of our common stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and biopharmaceutical companies have experienced significant ~~effect on~~stock price volatility in recent years. We may become involved in this type of litigation again in the ~~outcome of actions taken by us that require stockholder approval.~~future. Litigation often is expensive and diverts management’s attention and resources, which could adversely affect our business.

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Anti-takeover provisions in our charter and bylaws and in Delaware law could prevent or delay a change in control of Ampio.

Provisions of our certificate of incorporation and bylaws may discourage, delay, or prevent a merger or acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions include:

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requiring supermajority stockholder voting to effect certain amendments to our certificate of incorporation and bylaws;

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restricting the ability of stockholders to call special meetings of stockholders;

and

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establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings.

If securities or industry analysts do not publish research or reports or publish unfavorable research or reports about our business, our stock price and trading volume could decline.

The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us, our business, our market or our competitors. We currently have limited research coverage by securities and industry analysts. If other securities or industry analysts do not commence coverage of our company, the trading price for our stock could be negatively impacted. If one or more of the analysts who covers us downgrades our stock, our stock price would likely decline. If one or more of these analysts ceases to cover us or fails to regularly publish reports on us, interest in our stock could decrease, which could cause our stock price or trading volume to decline.

We have no plans to pay cash dividends on our common stock.

We have no plans to pay cash dividends on our common stock. We intend to invest future earnings, if any, to fund our growth. Any payment of future dividends will be at the discretion of our Board and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends, and other considerations our Board deem relevant. Any future credit facilities or preferred stock financing we obtain may further limit our ability to pay cash dividends on our common stock.

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General Risk Factors

Business interruptions could limit our ability to operate our business.

Our operations are vulnerable to damage or interruption from computer viruses, human error, natural disasters, telecommunications failures, intentional acts of misappropriation, and similar events. We have not established a formal disaster recovery plan or back-up operations. Additionally, our business interruption insurance may not be adequate to compensate us for losses that occur. A significant business interruption could result in losses or damages and require us to curtail our operations.

While we are not aware of any cybersecurity incidents, the cybersecurity landscape continues to evolve, and we may find it necessary to make further investments to protect our data and infrastructure.

We continuously work to install new, and upgrade existing, information technology systems and provide employee awareness training around phishing, malware, and other cyber risks to ensure that we are protected, to the greatest extent possible, against cyber risks and security breaches. Any actual or suspected security breach or other compromise of our security measures or those of our third-party vendors, whether as a result of hacking efforts, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks or otherwise, could harm our reputation and business, require us to expend significant capital and other resources to address the breach, and result in a violation of applicable laws, regulations or other legal obligations.

As cyber-attacks become more sophisticated, the need to develop our infrastructure to secure our business and customer data can lead to increased cybersecurity protection costs. Such costs may include making organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third-party experts and consultants. These efforts come at the potential cost of revenues and human resources that could be utilized to continue to enhance our product offerings.

If our security measures are compromised, or our information technology systems or those of our CROs, CMOs, vendors, contractors, consultants, or other third party partners fail or suffer security breaches, cyber-attacks, loss or leakage of data and other disruptions, this could result in a material disruption of our development programs, compromise sensitive information related to our business or other personal information or prevent us from accessing critical information, potentially exposing us to liability, harming our reputation, or otherwise adversely affecting our business.

In the ordinary course of business, we may collect, process, store, and transmit proprietary, confidential, and sensitive information (including but not limited to intellectual property, trade secrets, proprietary business information, personal information, and protected health information). It is critical that we do so in a secure manner to maintain the confidentiality, integrity, and availability of such information. We depend on information technology and telecommunications systems for significant elements of our operations, and we have installed, and expect to expand, a number of enterprise software systems that affect a broad range of business processes and functional areas, including, for example, systems handling human resources, financial reporting and controls, customer relationship management, regulatory compliance, and other infrastructure operations. We face a number of risks relative to protecting this critical information, including loss of access risk, inappropriate use or disclosure, inappropriate modification, and the risk of our being unable to adequately monitor, audit, and modify our controls over our critical information. This risk extends to the third parties with whom we work, as we rely on a number of third parties to operate our critical business systems and process confidential, proprietary, and sensitive information.

Despite the implementation of security measures, sensitive and confidential information maintained by our internal information technology systems and those of our CROs, CMOs, vendors, contractors, consultants, and other third party partners are potentially vulnerable to breakdown, service interruptions, system malfunction, accidents by our personnel or third party partners, natural disasters, terrorism, global pandemics, war and telecommunication and electrical failures, as well as security breaches from inadvertent or intentional actions by our personnel or those of our CROs, CMOs, vendors, contractors, consultants, business partners and/or other third party partners, or from cyber-attacks by malicious third parties (including through viruses, worms, malicious code, malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and the confidentiality, integrity and availability of information),

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which may compromise our system infrastructure, or that of our CROs, CMOs, vendors, contractors, consultants, and other third party partners, or lead to data leakage.

The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, viruses, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. The COVID-19 pandemic is generally increasing the attack surface available for exploitation, as more companies and individuals work online and work remotely, and as such, the risk of a cybersecurity incident potentially occurring, and our investment in risk mitigations against such an incident, is increasing. For example, there has been an increase in phishing and spam emails as well as social engineering attempts from “hackers” hoping to use the recent COVID-19 pandemic to their advantage. We may not be able to anticipate all types of security threats, nor may we be able to implement preventive measures effective against all such security threats. The techniques used by cyber criminals change frequently, may not be recognized until launched, and can originate from a wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations or hostile foreign governments or agencies. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or those of our CROs, CMOs, vendors, contractors, consultants, and other third-party partners, or inappropriate disclosure of confidential, sensitive, or proprietary information, we could incur liability and reputational damage and the further development and commercialization of our product candidates, or any future product candidates, could be delayed. Any breach, loss or compromise of proprietary, sensitive, or confidential information may also subject us to civil fines and penalties, including under HIPAA and other relevant state and federal privacy laws in the United States.

The costs related to significant security breaches or disruptions could be material and exceed the limits of the cybersecurity insurance we maintain against such risks. If the information technology systems of our CROs, CMOs, vendors, contractors, consultants, and other third-party partners become subject to disruptions or security breaches, we may have insufficient recourse against such third parties and we may have to expend significant resources to mitigate the impact of such an event, and to develop and implement protections to prevent future events of this nature from occurring.

We cannot assure you that our data protection efforts and our investment in information technology will prevent significant breakdowns, data leakages, breaches in our systems, or those of our CROs, CMOs, vendors, contractors, consultants, and other third-party partners, or other cyber incidents that could have a material adverse effect upon our reputation, business, operations or financial condition. For example, if such an event were to occur and cause interruptions in our operations, or those of our third-party CROs, CMOs, vendors and other contractors and consultants, it could result in a material disruption of our programs and the development of our product candidates could be delayed. In addition, the loss of clinical trial data for our product candidates could result in delays in our marketing approval efforts and significantly increase our costs to recover or reproduce the data. Furthermore, significant disruptions of our internal information technology systems or those of our third-party CROs, CMOs, vendors and other contractors and consultants, or security breaches could result in the loss, misappropriation and/or unauthorized access, use, or disclosure of, or the prevention of access to, confidential information (including trade secrets or other intellectual property, proprietary business information and personal information), which could result in financial, legal, business and reputational harm to us. For example, any such event that leads to unauthorized access, use, or disclosure of personal information, including personal information regarding our clinical trial subjects or personnel, could harm our reputation directly, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information, which could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business.

We are required to comply with laws, rules and regulations that require us to maintain the security of personal information. We may have contractual and other legal obligations to notify relevant stakeholders of security breaches. Failure to prevent or mitigate cyber-attacks could result in the unauthorized access to sensitive, confidential, or proprietary information. Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities and others of security breaches involving certain types of data. In addition, our agreements with CROs, CMOs, vendors, contractors, consultants, and other third-party partners may require us to notify them in the event of a security breach. Such mandatory disclosures are costly, could lead to negative publicity, may cause our customers to lose confidence in the effectiveness of our security measures and could require us to expend significant capital and other resources to respond to and/or alleviate problems caused by the actual or perceived security breach.

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The costs to respond to a security breach and/or to mitigate any security vulnerabilities that may be identified could be significant, our efforts to address these issues may not be successful, and these issues could result in interruptions, delays, negative publicity, loss of customer trust, diminished use of our products as well as other harms to our business and our competitive position. Remediation of any potential security breach may involve significant time, resources, and expenses. Any security breach may result in regulatory inquiries, litigation or other investigations, and could affect our financial and operational condition.

Litigation resulting from security breaches may adversely affect our business. Unauthorized access to our systems, networks, or physical facilities could result in litigation with our customers or other relevant stakeholders. These proceedings could force us to spend money in defense or settlement, divert management’s time and attention, increase our costs of doing business, or adversely affect our reputation.

We may not have adequate insurance coverage for security incidents or breaches, including fines, judgments, settlements, penalties, costs, attorney fees and other impacts that arise out of incidents or breaches. The successful assertion of one or more large claims against us that exceeds available insurance coverage, or results in changes to insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business. In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim. Our risks are likely to increase as we continue to expand, grow our customer base, and process, store, and transmit increasingly large amounts of proprietary and sensitive data.

Increased costs associated with corporate governance compliance may significantly impact our results of operations.

As a public company, we incur significant legal, accounting, and other expenses due to our compliance with regulations and disclosure obligations applicable to us, including compliance with the Sarbanes-Oxley Act of 2002 ~~or the Sarbanes-Oxley Act,~~(the “Sarbanes-Oxley Act”), as well as rules implemented by the SEC, and the NYSE American. The SEC and other regulators have continued to adopt new rules and regulations and make additional changes to existing regulations that require our compliance. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), was enacted. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that have required the SEC to adopt additional rules and regulations in these areas. Stockholder activism, the current political environment, and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact, in ways we cannot currently anticipate, the manner in which we operate our business. Our management and other personnel devote a substantial amount of time to these compliance programs and monitoring of public company reporting obligations, and as a result of the new corporate governance and executive compensation related rules, regulations, and guidelines prompted by the Dodd-Frank Act, and further regulations and disclosure obligations expected in the future, we will likely need to devote additional time and costs to comply with such compliance programs and rules. These rules and regulations will cause us to incur significant legal and financial compliance costs and will make some activities more time-consuming and costly.

The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. We continuously refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act of 1934, as amended (the “Exchange Act”), is accumulated and communicated to our principal executive and financial officers. Our current controls and any new controls that we develop may become inadequate and weaknesses in our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting, which we may be required to include in our periodic reports that we file with the SEC under Section 404 of the Sarbanes-Oxley Act, and could harm our operating results, cause us to fail to meet our reporting obligations, or result in a restatement of our prior period financial statements. If we are not able to demonstrate compliance with the Sarbanes-Oxley Act, ~~that~~ our internal controls over financial reporting are not perceived as adequate, or ~~that~~ we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and the price of our common stock could decline.

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We are required to comply with certain of the SEC rules that implement Section 404 of the Sarbanes-Oxley Act, which requires management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. This assessment needs to include the disclosure of any material weaknesses in our internal control over financial reporting identified by our management or our independent registered public accounting firm. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting or if we are unable to complete our evaluation,

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testing, and any required remediation in a timely fashion, we will be unable to assert that our internal controls over financial reporting are effective.

These developments could make it more difficult for us to retain qualified members of our Board, qualified executive officers and/or qualified internal and independent auditors. We are presently evaluating and monitoring regulatory developments and cannot estimate the timing or magnitude of additional costs we may incur as a result. To the extent these costs are significant, our general and administrative expenses are likely to increase.

~~We have no plans to pay cash dividends on our common stock.~~

~~Item 1B.Unresolved Staff Comments~~
Item 1B.
Unresolved Staff Comments.

None.

Item 2.~~Properties~~Properties.

We maintain our headquarters, research laboratories, and manufacturing facilities in leased space located in Englewood, Colorado, for monthly lease payments of approximately ~~$27,000.~~$29,000. The lease expires in September 2024. We anticipate that the lease can be renewed on terms similar to those now in effect.

Item 3. Legal ~~Proceedings~~Proceedings.

Information regarding Legal Proceedings is contained in Note 14 to the Financial Statements.

Item 4.Mine Safety Disclosures.

Not applicable.

PART II

~~Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Data

On June 17, 2013, our common stock began trading on the NYSE American under the ticker symbol ~~“AMPE”.~~“AMPE.” It was previously quoted on the NASDAQ Capital Market under the same ticker symbol ~~“AMPE”.~~“AMPE.”

Holders of Common Stock

As of February ~~14, 2020,~~15, 2022, there were approximately ~~11,600~~200 registered holders ~~of record~~ of our common stock. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held of record by banks, brokers, and other financial institutions.

Dividend Policy

We have never paid cash dividends and have no plans to pay cash dividends in the near future. We intend to utilize all current and future available ~~resources~~sources of liquidity to develop and commercialize Ampion. If we issue any preferred stock and/or obtain financing from a bank in the future, the terms of those financings may contain restrictions on our ability to pay dividends asin the near or long ~~as the preferred stock or bank financing is outstanding.~~

term.

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Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~During fiscal 2021, as a result of net exercises of placement agent warrants, we issued a total of 304,121 shares of common stock to former placement agents with an exercise price ranging from $0.50 to $0.76 per share of common stock, where the total number of shares of common stock issued reflects a reduction of shares to cover the exercise price. We did not receive any cash related to the exercise of the placement agent warrants.


Date of Issuance	Shares of Common Stock
January 2021		4,648
February 2021		17,957
April 2021		29,158
July 2021		56,663
November 2021		195,695
Total		304,121

The issuance of the above securities was exempt as private placements from the registration requirements under Rule 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 as promulgated under Regulation D.

Equity Compensation ~~Plans~~Plan Information

Information regarding our equity compensation plans isas contained in Item 12 under “Securities Authorized for Issuance Under Equity Compensation Plans” (which information may be included in our 2022 Proxy Statement under the section entitled “Equity Compensation Plan Information”) and further described Note 11 to the Financial Statements. ~~The Company’s 2010 Stock and Incentive Plan (the “2010 Plan”) was terminated~~

Purchases of Equity Securities by the ~~Board in December 2019 following approval by the Company’s stockholders~~Issuer

The Company acquired 113,577 shares from employees for tax withholding purposes related to vesting of ~~the new 2019 Stock and Incentive Plan (the “2019 Plan”).~~restricted stock grants.

Item 6.~~Selected Financial Data~~[Reserved]

~~We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information required under this item.~~

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this report. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and related financings, includes forward-looking statements that involve risks and uncertainties. You should read the “Risk Factors” section of this Form ~~10‑K~~10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

EXECUTIVE SUMMARY

We are a pre-revenue ~~development~~ stage biopharmaceutical company focused ~~entirely~~ on the research, development and advancement of ~~Ampion, our lead product candidate, to treat prevalent inflammatory conditions for which there are limited treatment options.~~

~~The pharmaceutical market is a highly competitive industry with strict regulations that are time intensive and costly. However, we are committed to offer a compelling therapeutic option~~immunomodulatory therapies for the ~~patients most in need~~treatment of ~~new treatment options for OAK.~~

~~Since we are in the research and development phase, we~~pain from osteoarthritis. We have not generated operating revenue to ~~date. Our~~date, and our operations have been substantially funded ~~solely~~ through equity raises, which have occurred from time to time since inception.

The biopharmaceutical market, both domestic and globally, is a highly competitive industry with strict regulations that are unpredictable in nature, time intensive and costly. We are focused on offering a compelling therapeutic option for patients most in need of new treatments for inflammatory conditions, including, but not limited to, OAK and the treatment of respiratory complications arising from COVID-19.

Moving forward, we ~~plan~~will continue to ~~maintain~~place a ~~lean~~disciplined focus on maintaining our business operations in a manner that is streamlined and efficient ~~operating model by streamlining our operations and~~while continuing to allocate ~~all~~a requisite level of our liquidity, human capital and other operational resources towards the advancement of key immunology-based therapies with the ultimate goal of achieving ~~regulatory~~

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marketing approval ~~for~~from the FDA ~~marketing approval~~and/or comparable foreign regulatory authorities and the subsequent commercialization of ~~Ampion.~~Ampion for these conditions.

Discussion regarding our business is contained in Part I, Item 1. Business.

Recent Financing Activities

Information regarding our Recent Financing Activities is contained in Note 10 to the Financial Statements.

Known Trends or Future Events; Outlook

We are a pre-revenue ~~development~~ stage biopharmaceutical company that has ~~not generated revenues and therefore, we have~~ incurred an accumulated deficit of ~~$184.6~~$217.6 million as of December 31, ~~2019.~~2021. We expect to generate continued operating losses for the foreseeable future as we continue the ongoing development and advancement of Ampion ~~toward filing a BLA~~with the ultimate goal of achieving marketing approval from the FDA and/or comparable foreign regulatory authorities and the subsequent commercialization of Ampion for ~~regulatory approval of Ampion’s treatment of severe OAK.~~the indications previously discussed. In addition, ~~we are exploring collaboration agreements with multiple strategic partners~~while working in parallel with the ~~goal~~continued advancement of immunology-based indications for Ampion, we continue to ~~try~~actively explore licensing and other partnering opportunities with both domestic and globally-based organizations in order to ~~limit~~further leverage and maximize the ~~extent~~value of ~~these losses.~~ Ampion to our stockholders.

While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a continued widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital in a timely and effective manner with minimal dilution to our existing and future shareholders. In addition, a recession or market correction resulting from the spread of COVID-19 could have a material adverse impact on our ability to raise requisite financing to support our ongoing business operations, which would adversely impact the value of our common stock.

As of December 31, ~~2019,~~2021, we had ~~$6.5~~$33.9 million of cash and cash ~~equivalents~~equivalents. During the year ended December 31, 2021, we sold 25.0 million shares of common stock and warrants to purchase up to 15.0 million shares of our common stock, at an exercise price of $1.10 per share, in connection with a registered direct offering, which yielded gross proceeds of $22.5 million; offset by offering-related costs of $1.8 million. The warrants have a term of five years and are immediately exercisable. In addition, we ~~expect~~sold approximately 6.2 million shares of common stock pursuant to the ATM equity offering program, which yielded gross proceeds of approximately $10.5 million; offset by offering-related costs of $0.5 million. Based on our current cash position and projection of operating expenses, capital expenditures and the settlement of firm commitments, we believe we will have sufficient liquidity to fund ~~our operation~~operations into the second ~~quarter~~half of ~~2020. These existing~~2023. This projection is based on many assumptions that may prove to be incorrect. As such, it is possible that we could exhaust our available cash and ~~on-going~~cash equivalents earlier than presently anticipated.

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~~factors continue to raise substantial doubt about our~~Our shelf registration statement, which was declared effective by the SEC in May 2020, provides us with the ability to ~~continue as a going concern (see~~ ~~Note 3~~sell up to an aggregate amount of $100.0 million of shares of common stock, preferred stock, debt securities, warrants and units, or any combination thereof, less any sales from the ~~Financial Statements).~~

AsATM equity offering program that occurred prior to May 6, 2020, which was the effective date of ~~December 31, 2019, we have approximately $66.7~~the shelf registration statement. The shelf registration statement is effective until May 2023. We had $44.3 million ~~available~~remaining under the shelf registration statement ~~with 118,382,387 authorized shares remaining.~~as of December 31, 2021. However, we cannot be certain that we will be able to secure additional financing or that any funding, ~~if secured,~~or securities offered pursuant to the shelf registration statement or otherwise, will be adequate to execute our business strategy. Even if we are able to

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obtain additional financing, such additional financing may be costly and may require us to agree to covenants or other provisions that favor new investors over existing ~~shareholders.~~ stockholders.


	December 31, 2021

Authorized shares		300,000,000

Common stock outstanding		227,325,381
Options outstanding		7,506,989
Warrants outstanding		18,302,897
Shares reserved for issuance under 2019 Stock and Incentive Plan		4,417,332
Available shares		42,447,401

Effective registration statement	$	100,000,000
ATM activity (May 6, 2020 - December 31, 2021)		(33,213,000)
Registered direct offering		(22,500,000)
Remaining amount on registration statement	$	44,287,000

Average stock price immediately preceding December 31, 2021
30 day	$	0.77
60 day	$	1.06
90 day	$	1.24

~~Our primary focus~~Even though we had approximately 42.4 million shares of common stock authorized and available for ~~fiscal year 2020~~future issuance as of December 31, 2021, our ability to raise additional funds by issuing securities pursuant to the current shelf registration statement is ~~completion~~limited to the $44.3 million remaining, of which $13.3 million is currently reserved for the ~~AP-013 clinical study and~~ATM equity offering program. Based on the ~~filing~~table above, the average stock price could represent a range of ~~a BLA~~our ability to draw down on the residual shelf capacity. In connection with the ~~FDA~~registered direct offering that we completed in December 2021, we are prohibited from issuing shares of common stock or any other securities convertible into, or exercisable, or exchangeable for, ~~Ampion~~shares of common stock until March 16, 2022, and we are prohibited from utilizing our ATM equity offering program until May 15, 2022.

In addition, we, at our discretion, may file a new shelf registration statement to ~~treat~~register the ~~signs~~issuance and ~~symptoms~~sale of ~~severe OAK.~~any remaining shares of common stock that are authorized for issuance and/or any other equity or debt securities that may be issued by us.

~~Significant~~Critical Accounting Policies, Estimates and ~~Estimates~~Judgments

Our financial statements were prepared in accordance with GAAP. The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses incurred during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to recoverability of long-lived assets, valuation allowance(s), useful lives of assets and remaining useful lives, stock compensation, warrant derivative liability, right-of-use asset, lease liability, clinical trial accrual and the ability for the Company to continue as a going concern.judgments. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable and appropriate under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The methods, estimates, and judgments used by us in applying these ~~most~~ critical accounting policies have a significant impact on the results we report in our financial statements. Though the impact of COVID-19 to our business and operating results presents additional uncertainty, we continue to use the best information available to address our critical accounting estimates. Additional information regarding our ~~Significant Accounting Policies~~critical accounting policies and ~~Estimates~~estimates is contained in ~~Note~~Notes 2, 37 and 711 to the Financial Statements. We consider the following accounting policies to be those that are most important to the portrayal of our financial condition and that require a higher degree of judgment.

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Clinical trial accrual

As part of the process of preparing our financial statements, we are required to estimate our expenses resulting from our obligations under contracts with various vendors, which primarily include clinical research organizations, consultants and clinical site/investigatory agreements in connection with our active and ongoing clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract, and may result in payments that do not match the periods over which materials or services are provided under such contracts. Our objective is to reflect the appropriate trial expenses in the financial statements by matching those expenses with the period in which services are performed and efforts are expended. We account for these expenses according to the progress of the trials as measured by subject enrollment and progression/timing of various aspects of the trials. We determine accrual estimates by taking into account discussions with applicable personnel and outside service providers as to the progress or state of the trials, or the services completed. During the course of a clinical trial, we adjust the clinical expense recognition if actual results differ from estimates. We make estimates of our accrued expenses as of each balance sheet date based on the facts and circumstances known to us at that time. Our clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in the reporting of amounts that are too high or too low for any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

Share-based compensation

We account for share-based payments by recognizing compensation expense based upon the estimated fair value of the share-based payments on the date of grant. We determine the estimated fair value of the share-based payments granted using the fair market value of the stock in the case of restricted stock awards or Black-Scholes option pricing model in the case of stock options and recognize compensation costs ratably over the requisite service period which approximates the vesting period using the graded method. To calculate the fair value of the options, certain assumptions are made regarding components of the model, including the fair value of the underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. We calculate our volatility assumptions using the actual changes in the market value of our stock. Forfeitures are recognized as they occur. Our historical option exercises do not provide a reasonable basis to estimate an expected term due to the lack of sufficient data. Therefore, we estimate the expected term by using the simplified method. The simplified method calculates the expected term as the average of the vesting term plus the contractual life of the options. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for treasury securities of similar maturity. The assumptions used in determining the fair value of share-based awards represent our best estimates, but the estimates involve inherent uncertainties and the application of our judgment. As a result, if factors change and we use significantly different assumptions or estimates, our share-based compensation expense could be materially different in the future.

Recent Accounting Pronouncements

Information regarding recently issued and relevant accounting standards (adopted and not adopted as of December 31, ~~2019)~~2021) is contained in Note 2 to the Financial Statements.

Results of Operations—Year Ended December 31, ~~2019~~2021 Compared to December 31, ~~2018~~2020

We recognized a net loss for the year ended December 31, ~~2019~~2021 (the ~~“2019~~“2021 period”) of ~~$13.6~~$17.1 million compared to the net ~~income~~loss recognized of ~~$34.0~~$15.9 million for the year ended December 31, ~~2018~~2020 (the ~~“2018~~“2020 period”). The net loss during fiscal ~~2019~~2021 was attributable to operating expenses of ~~$18.6 million,~~$20.6 million; partially offset by the recognition of a non-cash derivative gain of $4.9 million. The 17.3 million warrant exercises during fiscal 2019 caused the valuation of the warrant liability to decrease, resulting in a non-cash derivative gain. This non-cash derivative gain was slightly offset by the increase in our stock price from $0.39 as of December 31, 2018 to $0.58 as of December 31, 2019, which caused the valuation of the warrant liability to increase. The net income during fiscal 2018 was primarily attributable to the non-cash derivative gain of ~~$45.3~~$3.5 million. The net loss during fiscal 2020 was attributable to operating expenses of $15.8 million ~~which was~~and the non-cash derivative loss of $0.5 million, partially offset by ~~operating expenses of $11.2 million. The decrease in our stock price from $4.07 as of December 31, 2017 to $0.39 as of December 31, 2018 caused~~ the ~~valuation~~receipt of the ~~warrant liability to decrease resulting in a derivative gain during fiscal 2018. The operating~~Paycheck Protection Program (“PPP”) proceeds of $0.5 million. Operating expenses increased ~~$7.4~~$4.7 million from the ~~2018~~2020 period to the ~~2019~~2021 period primarily due to a ~~$5.8~~$2.7 million increase in research and development costs and ~~a $1.6~~$2.0 million increase in general and administrative costs, both of which are ~~both~~ further explained below.

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Research and Development

Research and development costs ~~consist of clinical trials, direct labor costs, consultants,~~are summarized as follows and ~~stock-based compensation. These costs relate solely to direct research and development without~~exclude an allocation of general and administrative ~~expenses and are summarized as follows:~~expenses:


	Years Ended December 31,
	2019		2018
Clinical trial	$	7,149,000	$	1,754,000

					Year Ended December 31,
					2021		2020
Clinical trial and sponsored research expenses					$	5,787,000	$	3,722,000
Salaries and benefits		2,743,000		1,828,000		2,981,000		2,771,000
Depreciation		1,216,000		1,189,000		1,070,000		1,166,000
QC and R&D labs		507,000		771,000
Operations / manufacturing		326,000		379,000
Regulatory / FDA		294,000		453,000
Operations/manufacturing						816,000		447,000
Laboratory						779,000		356,000
Professional fees		184,000		192,000		335,000		215,000
Equipment rental and repair		114,000		72,000		86,000		94,000
Stock-based compensation		89,000		191,000
Share-based compensation						46,000		401,000
Total research and development	$	12,622,000	$	6,829,000	$	11,900,000	$	9,172,000

~~Comparison of Years Ended December 31, 2019 and 2018~~2021 Period Compared to 2020 Period

Research and development costs increased ~~$5.8~~by approximately $2.7 million, or ~~84.8%~~30%, for the ~~2019~~2021 period compared to the ~~2018~~2020 period. Research and development costs with variances above $175,000 and 10% compared with the previous period are further explained below.

Clinical ~~trials expense~~trial and sponsored research expenses

The clinical trial and sponsored research expenses increased ~~$5.4~~by approximately $2.1 million, ~~for the 2019 period compared to the 2018 period~~or 55%, primarily due to the ~~commencement~~incremental costs associated with the COVID-19 Phase 1 and 2 studies totaling $3.0 million, which were initiated late in the 2020 period and during the 2021 period. In addition, we incurred incremental costs associated with the AP-013 study contract, which totaled $1.8 million and considered moderately less than the clinical trial costs of $2.7 million incurred during the 2020 period prior to the pause of the ~~AP-013 Phase III clinical study (“AP-013 study”) in June 2019. Salaries and benefits also~~study.

Operations/manufacturing

Operations/manufacturing expenses increased ~~$915,000~~$369,000, or 83%, for the ~~2019~~2021 period compared with the ~~2018~~2020 period as a result of securing inventory of raw materials and components for the current period production of clinical trial products to be utilized in the current ongoing COVID-19 clinical studies.

Laboratory

Laboratory expenses increased $423,000, or 119%, for the 2021 period compared with the 2020 period as a result of incremental spend associated pre-clinical research and discovery with a primary focus on additional novel applications to further leverage the Ampion platform technology.

Share-based compensation

Share-based compensation decreased $355,000, or 89%, for the 2021 period compared with the 2020 period primarily due to ~~the favorable accrual adjustment resulting from the elimination of the 2018 annual incentive compensation accrual as a result of the repricing of employee~~previously awarded stock options in October 2018, which resulted in an adjustment totaling $488,000 for the 2018 period. This 2018 favorable adjustment was partially offset by a de minimis stock-based compensation expense from the repricing of employee stock options. In addition, during the 2019 period, we added three new positions to assist with the direct management and oversight of the AP-013 study and certain of our employees received merit increases effective at the commencement of 2019. These three new positions and merit increases were partially offset by the reduction of the CSO position, which occurred during the end of the 2018 period. The increases in the clinical trial expenses and salaries and benefits were partially offset by a decrease in laboratory, regulatory/FDA, and stock-based compensation expenses. Laboratory expenses decreased for the 2019 period compared to the 2018 period as we finalized a quality control project related to the manufacturing of Ampion. Regulatory/FDA expenses decreased for the 2019 period compared to the 2018 period as we finalized our discussions with the FDA regarding our prior clinical trials. Stock-based compensation decreased for the 2019 period compared with the 2018 period as previously awarded high-priced options becamebecoming fully vested during 2021, resulting in lower share-based compensation in the ~~2019~~2021 period. In addition, the number of options awarded to the research and development department during the 2021 period was considerably less than the 2020 period.

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General and Administrative

General and administrative expenses consist of direct labor, director fees, stock-based compensation, patent costs, professional fees (for example: legal, auditing, and accounting) and occupancy, travel and other (for example: rent, insurance, investor/public relations, and professional subscriptions). These costs are summarized as follows:


	Years Ended December 31,
	2019		2018

					Year Ended December 31,
					2021		2020
Share-based compensation					$	2,758,000	$	956,000
Professional fees	$	2,474,000	$	1,979,000		2,517,000		2,260,000
Insurance						1,186,000		1,275,000
Salaries and benefits		1,062,000		493,000		1,141,000		1,200,000
Insurance		826,000		529,000
Facilities		502,000		474,000		512,000		497,000
Stock-based compensation		397,000		313,000
Director fees		335,000		229,000		350,000		295,000
Other		163,000		171,000		132,000		100,000
Travel and meetings		139,000		75,000		51,000		67,000
Depreciation		56,000		92,000		24,000		12,000
Total general and administrative	$	5,954,000	$	4,355,000	$	8,671,000	$	6,662,000

~~Comparison of Years Ended December 31, 2019 and 2018~~2021 Period Compared to 2020 Period

General and administrative costs increased ~~$1.6~~$2.0 million, or ~~36.7 %,~~30%, for the ~~2019~~2021 period compared to the ~~2018~~2020 period. ~~Professional fees~~General and administrative costs with variances above $175,000 and 10% are further explained below.

Share-based Compensation

Share-based compensation expense increased primarily due to an increase in legal fees related to ongoing current litigation and government investigation matters. The increase in professional fees was partially offset by a one-time cost related to a strategic assessment of the osteoarthritis environment report that occurred during the 2018 period. Labor costs$1.8 million, or 188%, for the 2019 period increased compared to the 2018 period due to the favorable adjustment totaling $325,000 during the 2018 period resulting from an accrual adjustment resulting from the elimination of the annual discretionary corporate bonus accrual. In addition, there was a separation agreement that was executed with our former Chief Financial Officer (“CFO”) during the 2019 period resulting in an increase of $160,000 in labor costs. Insurance expense increased from the 20192021 period compared to the ~~2018~~2020 period ~~primarily due to an increase of $500,000 in our D&O insurance premiums covering our new policy period as a result of the current litigation and government investigation matters.~~ ~~Stock-based compensation increased~~ due to the issuance of stock options ~~related~~and restricted stock awards to executives and Board of Director members during the ~~employment agreement for our new CFO, along with the cancellation and reissuance of previously awarded stock options for certain non-employee directors, which~~2021 period. The increase was partially offset by previously awarded ~~high-priced~~stock options becoming fully vested during ~~2019.~~ ~~Directors~~the 2021 period.

Professional fees

Professional fees increased ~~as more board meetings were held during~~$257,000, or 11%, for the ~~2019 period as compared to the 2018 period. Travel and meetings expenses increased from the 2019~~2021 period compared to the ~~2018~~2020 period due primarily to an increase in legal costs associated with the transition at the executive level. In addition, we engaged an investor relations firm, along with a strategic advisory firm during the 2021 period.

Cash Flows

Cash flows for the respective periods are as ~~our clinical team performed site visits, increased frequency of non-deal roadshows and incremental travel and relocation related expenses consistent with our employment agreement with our new CFO.~~ follows:


	Year Ended December 31,
	2021		2020
Net cash used in operating activities	$	(14,089,000)	$	(14,729,000)
Net cash used in investing activities		(97,000)		(63,000)
Net cash provided by financing activities		30,732,000		25,606,000
Net change in cash and cash equivalents	$	16,546,000	$	10,814,000

Net Cash Used in Operating Activities

During ~~2019,~~the 2021 period, our operating activities used approximately ~~$15.4~~$14.1 million in cash and cash equivalents, which was less than our reported net loss of $17.1 million. The difference is primarily a result of periodic non-cash charges related to depreciation and amortization and share-based compensation totaling $3.9 million and an increase in working capital of $2.6 million; partially off-set by the non-cash adjustment for the warrant derivative gain totaling $3.5 million.

During the 2020 period, our operating activities used approximately $14.7 million in cash, which was ~~more~~less than our net loss of ~~$13.6~~$15.9 million primarily as a result of the non-cash gain from the warrant derivative totaling $4.9 million, non-cash charges related to depreciation and amortization, and stock-based compensation totaling $1.7 million; partially offset by changes in operating assets and liabilities totaling $1.4 million.

During 2018, our operating activities used approximately $12.1 million in cash, which was less than the net income of $34.0 million primarily as a result of the non-cash gain from warrant derivative totaling $45.3 million, non-cash charges related to depreciation and amortization, stock-based

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compensation, warrant derivative and ~~loss from disposal~~issuance of ~~fixed assets~~common stock for services totaling ~~$1.9~~$3.1 million; partially offset by ~~change~~an increase in ~~operating assets and~~working capital totaling $2.0 million, resulting primarily from the decrease in accounts payable/accrued liabilities ~~totaling $2.7 million.~~attributable to the pause of the AP-013 study in April 2020.

Net Cash Used in Investing Activities

During ~~2019,~~the 2021 period, $97,000 in cash and cash equivalents was used to acquire manufacturing machinery and ~~equipment totaled $22,000.~~

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equipment.

During ~~2018,~~the 2020 period, $63,000 in cash and cash equivalents was used to acquire manufacturing machinery and ~~equipment totaled $564,000.~~equipment.

Net Cash from Financing Activities

During the ~~2019,~~2021 period, we received gross proceeds of $22.5 million in connection with a registered direct offering, which was partially offset by offering-related costs of $1.8 million. We also received approximately $10.5 million from the sale of approximately 6.2 million shares of common stock ~~in a public~~pursuant to the ATM equity offering ~~of $12.0 million,~~program, which was partially offset by offering-related costs of $0.5 million. In addition, we received proceeds of $0.2 million from investor warrant exercises and stock option exercises; which was offset by the shares held back in the settlement of tax obligations related to the restricted stock awards totaling $0.2 million.

During the 2020 period, we received gross proceeds of $26.2 million from the sale of 32.1 million shares of common stock pursuant to the ATM equity offering program, which was partially offset by offering related costs of ~~$1.2~~$1.4 million. In addition, we also received ~~gross~~ proceeds of $785,000 from investor warrant exercises ~~of $3.9 million, which was offset by related costs of $277,000.~~

~~During 2018, we received gross proceeds from the sale~~representing 1,962,500 shares of common ~~stock in a public offering of $8.0 million, which was offset by offering costs of $844,000. In addition, we also received $4.9 million from option and warrant exercises.~~stock.

Contractual Obligations and Commitments

~~Information regarding Contractual Obligations~~Our contractual obligations primarily consist of clinical research trial obligations, employment agreements and ~~Commitments is contained~~leases entered into in the ordinary course of business. As of December 31, 2021, the amount of our outstanding future contractual commitments related to clinical trials was $4.4 million. We lease our manufacturing facility under a non-cancellable operating lease arrangement. As of December 31, 2021, the value of our obligations under the operating lease was $925,000. In February 2022, we entered into two related-party agreements totaling $650,000. For a more detailed description of our contractual obligations see Note 7 and16 to the Financial Statements.

Liquidity and Capital Resources

WeSince inception, we have not generated operating revenue or profits. ~~Our primary activities since inception~~Over this period, we have ~~been~~continued to be focused on research and clinical development activities for the advancement of Ampion towards multiple BLA ~~submission,~~submissions; all of which has required raising a substantial amount of capital. AsIn December 2021, we sold 25.0 million shares of common stock and warrants to purchase up to 15.0 million shares of our common stock, at an exercise price of $1.10 per share, in a registered direct offering that generated gross proceeds of $22.5 million, offset by offering-related costs of $1.8 million (see Note 10), which contributed to a cash and cash equivalent balance of $33.9 million as of December 31, ~~2019,~~2021. The warrants have a term of five years and are immediately exercisable.

Furthermore, in February 2020, we ~~do not~~entered into the Sales Agreement to implement an ATM equity offering program under which we, at our sole discretion, may issue and sell from time-to-time shares of its authorized common stock. During the year ended December 31, 2021, we sold approximately 6.2 million shares of common stock pursuant to the ATM equity offering program, which yielded gross proceeds of $10.5 million, offset by costs of $0.5 million (see Note 10).

We have prepared an updated liquidity projection, which reflects cash requirements for fixed, recurring base level business expenses such as payroll, legal and accounting, patents and overhead, and incremental costs supporting the current and projected clinical development programs. We continue to assess the impact of the COVID-19 pandemic, including the continued COVID-19 cases in the United States and the impact that it may have on current and projected future studies. Based on our current cash position and projection of operating expenses, capital expenditures and the settlement of firm commitments, we believe we will have sufficient liquidity to ~~meet our obligations for the next twelve months. Specifically, we had $6.5 million of cash and cash equivalents which we expect will~~ fund ~~our~~ operations into ~~April 2020.~~the second half of

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2023. This projection is based on many assumptions that may prove to be ~~wrong, and~~incorrect. As such, it is possible that we could exhaust our available cash and cash equivalents earlier than presently anticipated.

In ~~addition, we anticipate that we will seek additional capital investments in both~~May 2020, the ~~near~~shelf registration statement was declared effective by the SEC and, long-term to enable us to primarily support (i) our existing AP-013 study, (ii) BLA preparation and submission, (iii) existing base business operations and (iv) commercial development activities for Ampion. We intend to evaluate the capital markets on an ongoing basis to determine the appropriate timing for such capital raise and which will depend on existing market conditions relative to our need for funds at such time.

The audit reports on our financial statements for the fiscal year ended December 31, 2019 and 2018 contained an explanatory paragraph indicating that there was substantial doubt about our ability continue as a going concern. In order to address the going concern, we have prepared a projection through March 31, 2021. This projection reflects cash requirements for fixed, on-going expenses such as payroll, legal and accounting, patents and overhead at an average cash burn rate of approximately $900,000 per month. The projection also reflects costs related to regulatory approvals, clinical trials and outsourced research and development costs of approximately $900,000 per month through the second quarter of 2020, which then decreases to $300,000 per month from the third quarter of 2020 through the fourth quarter of 2020. Accordingly, we believe that it will be necessary to raise additional capital and/or enter into licensing or collaboration agreements to fund the further development and regulatory activities that we plan to conduct. As of December 31, ~~2019,~~2021, we ~~have~~had approximately ~~$66.7~~$44.3 million available for issuance under the shelf registration statement with ~~118,382,387~~approximately 42.4 million authorized shares ~~remaining. At this time,~~of common stock remaining available for issuance. In connection with the registered direct offering that we ~~expect to satisfy~~completed in December 2021, we are prohibited from issuing shares of common stock or any other securities convertible into, or exercisable, or exchangeable for, shares of common stock until March 16, 2022, and we are prohibited from utilizing our ~~future cash needs through private or public sales of our securities, option/warrant exercises, debt financings and/or partnering/licensing transaction. In February 2020, the Company entered into a~~ ~~Sales Agreement with two agents to implement an “at-the-market”~~ATM equity offering program ~~under which~~ until May 15, 2022.

In the ~~Company may issue and sell from time~~event that we are unable to ~~time shares of its common stock (see~~ ~~Note 16~~ to the Financial Statements). Volatility in the financial markets has adversely affected the market capitalizations of many pre-revenue stage biopharmaceutical companies, particularly small capitalization companies such as Ampio, and has generally made equity and debt financing very difficult to obtain without significant dilution to existing shareholders. This volatility, coupled with other factors, may limit our access to additional financing.

~~If we cannot~~ obtain funding through capital raises and/or partnering/licensing transactions in the future when ~~we require it,~~deemed appropriate, we will likely be required to delay, reduce the scope of or eliminate our development, manufacturing and/or regulatory programs for Ampion and/or ~~our future commercialization efforts and/or~~ suspend operations for a period of time until we are able to secure additional funding. If we are not successful in raising sufficient funds to pay for further development and licensing of Ampion, we may choose to license or otherwise relinquish greater, or all, rights to Ampion at an earlier stage of development or on less favorable terms than we would otherwise choose. This ~~would~~could lead to impairment or other charges, which could materially affect our balance sheet and operating results.

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~~Off Balance Sheet Arrangements~~

~~We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “variable interest entities.”~~

Impact of Inflation

To the extent feasible, we have consistently followed the practice of reviewing salaries and fringe benefits for employees and the cost of purchased materials/services. In general, we believe that our operating expenses can be negatively impacted by increases in the cost of clinical trials due to inflation and rising health care costs. Inflation and changing prices did not have a material adverse impact on our business operations during the 2021 period or the 2020 period.

Item 7A. Quantitative and Qualitative Disclosures ~~about~~About Market ~~Risks~~Risk.

We are a smaller reporting company, as defined by Rule 12b-2 of the ~~Securities~~ Exchange Act ~~of 1934, as amended,~~ and are not required to provide the information required under this item.

Item 8. Financial Statements and Supplementary ~~Data~~Data.

The Financial Statements and Supplementary Data required by this item are in Item 15 of Part IV, “Index to Financial Statements” at page ~~F‑1~~F-1 of this annual report on Form ~~10‑K~~10-K and are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial ~~Disclosure~~Disclosure.

The Audit Committee (the “Audit Committee”) of the Board of Directors conducted a comprehensive process to determine the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019. On July 10, 2019, the Audit Committee approved the engagement of Moss Adams LLP as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2019. The Company’s stockholders also approved of the engagement of Moss Adams LLP during the Company’s annual meeting on December 14, 2019.None.

During the fiscal years ended December 31, 2018, and 2017, and the subsequent interim periods through July 10, 2019, neither the Company nor anyone on its behalf has consulted with Moss Adams LLP regarding: (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report or oral advice was provided to the Company that Moss Adams LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K, or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K.

In conjunction with the appointment of Moss Adams LLP as described herein, on July 10, 2019, Plante & Moran PLLC (“Plante Moran”) notified the Company of its resignation as the Company’s independent registered public accounting firm effective July 10, 2019.

As previously reported, on October 1, 2018, EKS&H LLLP (“EKS&H”), the Company’s prior independent registered public accounting firm, resigned in connection with EKS&H’s combination with Plante Moran. Plante Moran had served as the Company’s registered public accounting firm since that time.

The audit report of Plante Moran on the Company’s financial statements for the fiscal year ended December 31, 2018 did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles except the audit report of Plante Moran on the Company’s financial statements for the year ended December 31, 2018 contained an explanatory paragraph indicating that there was substantial doubt about the ability of the Company to continue as a going concern. EKS&H’s audit report on the Company’s financial statements for the year ended December 31, 2017 contained a similar explanatory paragraph regarding the ability of the Company to continue as a going concern.

During the Company’s two most recent fiscal years and through July 10, 2019, there were no disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K with Plante Moran (or its predecessor EKS&H) on any matters of accounting principles or practices, financial statement disclosure or auditing scope and procedure which, if not resolved to the satisfaction of Plante Moran (or EKS&H), would have caused Plante Moran (or EKS&H) to make reference to the

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~~subject matter in connection with its reports, and there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.~~

Item 9A. Controls and ~~Procedures~~Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such terms are defined in Rules ~~13a‑15(e)~~13a-15(e) and ~~15d‑15(e)~~15d-15(e) of ~~the Securities Exchange Act of 1934, or~~ the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our ~~Chief Executive Officer~~CEO and ~~Chief Financial Officer,~~CFO, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of senior management, including the ~~Chief Executive Officer~~CEO and the ~~Chief Financial Officer,~~CFO, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules ~~13a‑15(b)~~13a-15(b) and ~~15d‑15(b)~~15d-15(b). Based upon this evaluation, the CEO and the ~~remediation efforts relating to the identified material weakness (as discussed further below), the Chief Executive Officer and the Chief Financial Officer~~CFO concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective.

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Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting (as such term is defined in Rules ~~13a‑15(f)~~13a-15(f) under the Exchange Act). Our management assessed the effectiveness of our internal controls over financial reporting as of December 31, ~~2019.~~2021. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Our management has concluded that, as of December 31, ~~2019,~~2021, our internal controls over financial reporting are effective based on these criteria.

Moss Adams LLP, the independent registered public accounting firm that audited our financial statements included in this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting as of December 31, 2019, which is included herein at F-2.

~~Remediation of Previously Reported Material Weakness~~

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

In May 2019, we identified a material weakness relating to identification of information for determining appropriate disclosure. The material weakness related to a deficiency in the procedures in place to ensure the timely and complete disclosure of certain information to our Disclosure Committee. While the material weakness did not result in a misstatement, we recognize the material weakness impacted the timeliness and completeness of certain disclosures and the subsequent determination of proper disclosure in the financial statements.

~~Management implemented the following procedures to remediate the material misstatement and, after further evaluation, concluded that the material weakness was remediated as of December 31, 2019:~~

The management team provides the Disclosure Committee with finalized drafts of each of the periodic reports that the Company files with the SEC, press releases and other public statements planned to be made by the Company in advance of the Company’s filing of such items. Where appropriate, as in the a case of the Form 10-K and Form 10-Q filings, the draft periodic reports provided to the Disclosure Committee have been reviewed by the Company’s legal team. Drafts of each of the proposed periodic reports, press releases and other public statements are provided sufficiently in advance of the planned filing, or release, date so as to provide the Disclosure Committee members sufficient time to review, comment and ask questions regarding each of such periodic reports, press releases and other public filings prior to filing, or release.

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Disclosure Committee members provide either a physical or e-mail certification to the Senior Officers of the Company prior to the filing of each public filing as to the Committee’s conclusions regarding their evaluation of the effectiveness of the Company’s disclosure controls.

Changes in Internal Control over Financial Reporting

As noted above, the Company implemented remedial procedures to address the material weakness disclosed in our quarterly reports on Form 10-Q for the last three quarters of fiscal 2019 related to our disclosure controls and procedures, which has been fully remediated as of this Annual Report. Other than these remedial procedures, there hasThere have been no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the ~~fourth quarter of 2019~~period covered by this report that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other ~~Information~~Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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Not Applicable.

PART III

Item 10. Directors, ~~and~~ Executive Officers and Corporate ~~Governance~~Governance.

The ~~following table sets forth the names, ages and positions of~~information required by this item is to be included in our 2022 Proxy Statement as follows:

• The information relating to our directors and nominees for director is to be included in the section entitled “Proposal 1—Election of Directors;”

• The information relating to our executive officers asis to be included in the section entitled “Executive Officers;”

• The information relating to our audit committee, audit committee financial expert and procedures by which shareholders may recommend nominees to our board of ~~February 1, 2020.~~directors is to be included in the section entitled “Board of Directors and Committees; Corporate Governance;” and

~~Name~~	~~Age~~	~~Position With Ampio~~	~~Principal Occupation and Areas of~~ ~~Relevant Experience For Directors~~	~~Director/Officer Since~~

~~Michael Macaluso~~ ~~(4)~~	68	~~Chief Executive Officer and Chairman of the Board~~	~~Mr. Macaluso founded Life Sciences and has been a member of the board of directors of Life Sciences, our predecessor, since its inception.~~ ~~Mr. Macaluso has also been a member of our Board since the merger~~ • If required, the information regarding compliance with Chay Enterprises in March 2010, our Chief Executive Officer (“CEO”) since January 9, 2012 and the Chairman of our Board since May 2010. In addition, Mr. Macaluso has served as the Chairman of Aytu BioScience’s (AYTU) Compensation Committee since 2019. Mr. Macaluso was appointed President of Isolagen, Inc. (ILE) and served in that position from June 2001 to August 2001, when he was appointed CEO. In June 2003, Mr. Macaluso was re-appointed as President of Isolagen and served as both CEO and President until September 2004. Mr. Macaluso also served on the board of directors of Isolagen from June 2001 until April 2005. From October 1998 until June 2001, Mr. Macaluso was the owner of Page International Communications, a manufacturing business. Mr. Macaluso was a founder and principal of International Printing and Publishing, a position Mr. Macaluso held from 1989 until 1997, when he sold that business to a private equity firm.	~~March 2010~~

			Mr. Macaluso’s experience in executive management and marketing within the pharmaceutical industry, monetizing company opportunities and corporate finance led to the conclusion of our Board that he should serve as a director of our company considering our business and structure.

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~~Name~~	~~Age~~	~~Position With Ampio~~	~~Principal Occupation and Areas of~~ ~~Relevant Experience For Directors~~	~~Director/Officer Since~~

~~David Bar-Or, MD~~	71	~~Director and Former Chief Scientific Officer~~	Dr. Bar-Or served as our Chief Scientific Officer (“CSO”) from March 2010 until September 2018. Dr. Bar-Or also served as our chairman of the Board from March 2010 until May 2010. From April 2009 until March 2010, he served as Chairman of the Board and CSO of DMI Life Sciences, Inc. Dr. Bar-Or is currently the owner of Trauma Research, LLC and the director of Trauma Research at Swedish Medical Center, Englewood, Colorado, St. Anthony’s Hospital, Lakewood, Colorado, Penrose Hospital, Colorado Springs, Colorado, Research Medical Center, Kansas City, Missouri, Wesley Medical Center, Wichita, Kansas and The Medical Center of Plano, Plano, Texas. Dr. Bar-Or is the founder of Ampio Pharmaceuticals, Inc. Dr. Bar-Or was principally responsible for all patented and proprietary technologies acquired by us from DMI BioSciences, Inc. in April 2009. He was also responsible for all patents issued and applied for since then, having been awarded over 500 patents and having been an inventor on almost 120 patent applications. Dr. Bar-Or has authored or co-authored over 180 peer-reviewed journal articles and several book chapters. Dr. Bar-Or is a reviewer for over 45 peer reviewed scientific and clinical journals. He is the recipient of the Gustav Levi Award from the Mount Sinai Hospital, New York, New York, the Kornfeld Award for an outstanding MD Thesis, the Outstanding Resident Research Award from the Denver General Hospital, and the Outstanding Clinician Award for the Denver General Medical Emergency Resident Program. Dr. Bar-Or received his medical degree from The Hebrew University, Hadassah Medical School, Jerusalem, Israel, following which he completed a biochemistry fellowship at Hadassah Hospital under Professor Alisa Gutman and undertook post-graduate residency training at Denver Health Medical Center, specializing in emergency medicine, a discipline in which he is board certified. He completed the first research fellowship in Emergency Medicine at Denver Health Medical Center under the direction of Professor Peter Rosen.	~~March 2010~~

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~~Name~~	~~Age~~	~~Position With Ampio~~	~~Principal Occupation and Areas of~~ ~~Relevant Experience For Directors~~	~~Director/Officer Since~~

			Among other experience, qualifications, attributes and skills, Dr. Bar-Or’s medical training, extensive involvement and inventions in researching and developing Ampion, and leadership role in his hospital affiliations led to the conclusion of our Board that he should serve as a director of our company considering our business and structure.

~~Philip H. Coelho~~ ~~(1)(2)(3)(4)~~	75	~~Director~~	~~Mr. Coelho~~ has served as a member of our Board since April 2010. Mr. Coelho is the Chief Technology Officer of ThermoGenesis Corp., a firm he founded in 1986 and retired from in 2007, which invents and commercializes products that isolate, purify and cryopreserve stem, progenitor and immune cells derived from a donor or the patient’s own body to treat human disease. Prior to rejoining ThermoGenesis Corp., Mr. Coelho founded SynGen Inc. in October 2009, and merged that company with ThermoGenesis Corp. in 2017. Mr. Coelho was the President and CEO of PHC Medical, Inc., a consulting firm, from August 2008 through October 2009. From August 2007 through May 2008, Mr. Coelho served as the Chief Technology Architect of ThermoGenesis Corp. From 1989 through July 2007, he was Chairman and CEO of ThermoGenesis Corp. Mr. Coelho served as Vice President of Research & Development of ThermoGenesis from 1986 through 1989. Mr. Coelho has been in the senior management of high technology consumer electronic or medical device companies for over 30 years. He was President of Castleton Inc. from 1982 to 1986, and President of ESS Inc. from 1971 to 1982. Mr. Coelho also serves as a member of the board of directors of NASDAQ-listed company, Catalyst Pharmaceuticals Partners, Inc. (CPRX) (since October 2002), and served as a member of the board of directors of NASDAQ-listed Mediware Information Systems, Inc. (MEDW) (from December 2001 until July 2006, and commencing again in May 2008 until it was sold in December 2012). Mr. Coelho received a B.S. degree in thermodynamic and mechanical engineering from the University of California, Davis and has been awarded more than 50 U.S. patents in the areas of cell cryopreservation, cryogenic robotics, cell selection, blood protein harvesting, and surgical homeostasis.	~~April 2010~~

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~~Name~~	~~Age~~	~~Position With Ampio~~	~~Principal Occupation and Areas of~~ ~~Relevant Experience For Directors~~	~~Director/Officer Since~~

			Mr. Coelho’s long tenure as a CEO of a public medical device company, as director of a public pharmaceutical company, prior and current public company board experience, and knowledge of corporate finance and governance as an executive and director, as well as his demonstrated success in developing patented technologies, led to the conclusion of our Board that he should serve as a director of our company considering our business and structure.

~~Richard B. Giles~~ ~~(1)(2)(3)(4)~~	70	~~Director~~	~~Mr. Giles, CPA,~~ has served as a member of our Board since August 2010. Mr. Giles is the Chief Financial Officer (“CFO”) and Treasurer of Ludvik Electric Co., an electrical contractor headquartered in Lakewood, Colorado, a position he has held since 1985. Ludvik Electric is a private electrical contractor that has completed electrical contracting projects throughout the United States, South Africa and Germany. As CFO and Treasurer of Ludvik Electric, Mr. Giles oversees accounting, risk management, financial planning and analysis, financial reporting, regulatory compliance, and tax-related accounting functions. He serves also as the trustee of Ludvik Electric Co.’s 401(k) plan. Prior to joining Ludvik Electric, Mr. Giles was an Audit Partner for three years with Higgins Meritt & Company, then a Denver, Colorado CPA firm, and during the preceding nine years he was an Audit Manager and a member of the audit staff of Price Waterhouse, one of the legacy firms which now comprises PricewaterhouseCoopers. While with Price Waterhouse, Mr. Giles participated in a number of public company audits, including one for a leading computer manufacturer. Mr. Giles received a B.S. degree in accounting from the University of Northern Colorado. He is a member of the American Institute of Certified Public Accountants, Colorado Society of Certified Public Accountants, and Construction Financial Management Association.	~~August 2010~~

			Mr. Giles’ experience in executive financial management, accounting and financial reporting, corporate accounting and internal controls led to the conclusion of our Board that he should serve as a director of our company considering our business and structure.

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~~Name~~	~~Age~~	~~Position With Ampio~~	~~Principal Occupation and Areas of~~ ~~Relevant Experience For Directors~~	~~Director/Officer Since~~

~~David R. Stevens, Ph.D.~~ ~~(1)(2)(3)(4)~~	70	~~Director~~	~~Dr. Stevens~~ has served as a member of our Board since June 2011. Dr. Stevens has worked in the FDA regulated life science industries since 1978. He has also been a consulting research pathologist since December 2006 for Premier Laboratory, LLC. He has been a board member of Cetya, Inc. since December 2013. He has served on the boards of several other public and private life science companies, including Micro-Imaging Solutions, LLC (2007‑2018), Poniard Pharmaceuticals, Inc. (2004‑2013), Aqua Bounty Technologies, Inc. (2002‑2012) and Smart Drug Systems, Inc. (1999‑2006), and was an advisor to Bay City Capital (1999‑2006). Dr. Stevens was previously President and CEO of Deprenyl Animal Health, Inc., a public veterinary pharmaceutical company, from 1990 to 1998, and Vice President, Research and Development, of Agrion Corp., a private biotechnology company, from 1986 to 1988. He began his career in pharmaceutical research and development at the former Upjohn Company, where he contributed to the preclinical evaluation of Xanax and Halcion. Dr. Stevens received B.S. and D.V.M. degrees from Washington State University, and a Ph.D. in Comparative Pathology from the University of California, Davis. He is a Diplomate of the American College of Veterinary Pathologists.	~~June 2011~~

			Dr. Stevens’ experience in executive management in the pharmaceutical industry and knowledge of the medical device industry led to the conclusion of our Board that he should serve as a director of our company considering our business and structure.

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~~Name~~	~~Age~~	~~Position With Ampio~~	~~Principal Occupation and Areas of~~ ~~Relevant Experience For Directors~~	~~Director/Officer Since~~

~~Daniel G. Stokely~~ ~~(4)~~	51	~~Chief Financial Officer, Treasurer and Secretary~~	Mr. Stokely has more than 30 years of experience in finance and accounting. He began his career at Deloitte & Touche and since that time, he has spent the majority of his career in positions of financial leadership within both publicly traded and privately held pharmaceutical companies. Most recently, since 2012, he served as Executive Vice President and CFO of Sentynl Therapeutics Inc., a privately held specialty pharmaceutical company focused on in-licensing, acquisition, marketing, and distribution of development stage and commercially marketed prescription pain products, which was sold to Cadila Healthcare Ltd. in January 2017. From 2004 to 2012, Mr. Stokely served as Vice President of Finance and Chief Accounting Officer (“CAO”) of Victory Pharma, a privately-held specialty pharmaceutical company focused on in-licensing, internal product development, marketing, and distribution of pain specialty products, which was sold to Shionogi, Inc., a Japanese pharmaceutical company, in 2011. From 2001 to 2004, Mr. Stokely served as the Corporate Controller and CAO for Wireless Facilities, Inc. (currently Kratos Defense & Security Solutions), a publicly traded, global provider of communications and security services for the wireless communications industry. From 1994 to 2001, Mr. Stokely served as Corporate Controller of Dura Pharmaceuticals, a publicly traded pharmaceutical company that was sold to Elan Pharmaceuticals in late 2000. He has a bachelor’s degree in accounting from San Diego State University and is a Certified Public Accountant licensed in California.	~~July 2019~~

~~Table of Contents~~

~~Name~~

~~Age~~

~~Position With Ampio~~

~~Principal Occupation and Areas of~~
~~Relevant Experience For Directors~~

~~Director/Officer Since~~

~~Holli Cherevka~~

~~(4)~~

~~Chief Operating Officer~~

Ms. Cherevka has served as our Chief Operating Officer (“COO”) since September 2017. Prior to taking her current role, Ms. Cherevka served as our Vice President of Operations and oversaw the clinical, regulatory and manufacturing operations. Since starting at Ampio in January 2013, she has held roles the following additional roles of increasing responsibility including: Director of Clinical Trials (January 2013 – November 2013), Senior Director of Clinical Trials (November 2013 – May 2015), Vice President of Operations (May 2015 – September 2017) and COO (September 2017 – current). Previously, Ms. Cherevka was the Director of Business Development at the American College of Radiology (ACR) Image Metrix from 2011 to 2013. Ms. Cherevka earned a Bachelor of Arts from California State University, Chico, and holds a Master of Science in Biomedical and Molecular Sciences Research from King’s College, London. Ms. Cherevka is a member of the Parenteral Drug Association, Colorado Bioscience Association and the International Society of Pharmaceutical Engineers, and a board member of the Professional Science Master’s in Biomedical Sciences (PSM) program at the University of Denver. She has represented Ampio Pharmaceuticals at conferences for the International Society of Pharmaceutical Engineers as well as at Global Investment Conferences and shareholder meetings.

~~September 2017~~

~~(1)~~

~~Member of our Audit Committee~~

~~(2)~~

~~Member of our Compensation Committee~~

~~(3)~~

~~Member of our Nominating and Governance Committee~~

~~(4)~~

~~Member of our Disclosure Committee~~

~~Family Relationships~~

There are family relationships to note between our directors or executive officers and employees. Raphael Bar-Or, a non-executive officer, is the son of Dr. Bar-Or, our former CSO and a director. Lindsay Thorne, a consultant, is the sister in-law of Holli Cherevka, our COO.

~~Section 16(a) Beneficial Ownership Reporting Compliance~~

Section 16(a) of the Exchange Act ~~requires~~is to be included in the section entitled “Delinquent Section 16(a) Reports.”

Such information is incorporated herein by reference to our ~~executive officers, directors and persons who beneficially own greater than 10% of our Common Stock to file certain reports, Forms 3, 4 and 5, with~~2022 Proxy Statement, provided that if the ~~SEC with respect to ownership and changes in ownership of our Common Stock. To our knowledge, we have no one stockholder who beneficially owns more than 10% of our Common Stock.~~ ~~See Item 12 for further information on beneficial ownership. Based solely on our review~~2022 Proxy Statement is not filed within 120 days after the end of the ~~copies~~fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-K filed not later than the end of such ~~forms received by us, or written representations from certain reporting persons, we believe~~

~~Table of Contents~~

~~during the period from January 1, 2019 to December 31, 2019, all filing requirements applicable to our officers, directors, and 10% beneficial owners were complied with.~~120-day period.

~~Code of Business Conduct and Ethics~~

~~We have adopted a~~Our Code of Business Conduct and Ethics ~~that is applicable~~applies to all of our employees, directors and officers, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and ~~directors.~~those of our subsidiaries. The ~~code~~Code of Business Conduct and Ethics is available on our ~~web site,~~ website at www.ampiopharma.com, under the ~~“Investor Relations” tab.~~section entitled “Investors” under “Corporate Governance.” We intend to ~~disclose future amendments~~satisfy the disclosure requirements under Item 5.05 of the SEC Form 8-K regarding an amendment to, or ~~waivers~~waiver from, ~~certain provisions~~a provision of our ~~code~~Code of ~~business conduct~~Business Conduct and ~~ethics, if any, on the above website within four business days following the date of~~Ethics by posting such ~~amendment or waiver.~~

~~Meetings~~

During the year ended December 31, 2019, there were (i) thirteen meetings of the Board, (ii) five meetings of the Audit Committee, (iii) nine meetings of the Compensation Committee, (iv) four meetings of the Nominating and Governance Committee, and (v) two meetings of the Disclosure Committee. No incumbent director attended fewer than seventy-five percent (75%) of the aggregate of (1) the total number of meetings of the Board, and (2) the total number of meetings held by all committees of the Board during the period that such director served.

~~Annual Meeting Attendance, Executive Sessions and Stockholder Communications~~

Since 2011, our policy has been that our directors attend the annual meeting of stockholders. We previously did not have a policy concerning director attendance at annual meetings. Commencing in 2011, our policy has also been that our non-employee directors are required to meet in separate sessions without management on a regularly scheduled basis four times a year. Generally, these meetings are expected to take place in conjunction with regularly scheduled meetings of the Board throughout the year. Our 2019 annual meeting was attended by all five of the directors servinginformation on our ~~Board.~~

We have not implemented a formal policy or procedure by which our stockholders can communicate directly with our Board. Nevertheless, every effort has been made to ensure that the views of stockholders are heard by the Board or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely manner. We believe that we are responsive to stockholder communications, and therefore have not considered it necessary to adopt a formal process for stockholder communications with our Board. During the upcoming year, our Board will continue to monitor whether it would be appropriate to adopt such a policy. Communications will be distributed to the Board, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. Items that are unrelated to the duties and responsibilities of the Board may be excluded, such as:

~~junk mail and mass mailings~~

~~resumes and other forms of job inquiries~~

~~surveys; and~~

~~solicitations or advertisements.~~

In addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, provided that any communication that is excluded will be made available to any outside director upon request.

~~Involvement in Certain Legal Proceedings~~

No director, executive officer, promoter, or person of control of our Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding; (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding of any violation with respect to such law, nor (iii) any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whetherwebsite at the ~~time of the bankruptcy or for the two years prior thereto.~~

website address and location specified above.

4970

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Item 11.

Executive Compensation.

We are not engaged in, nor are we aware of any pending or threatened litigation in which any of our directors, executive officers, affiliates, or owner of more than 5% of our Common Stock is a party adverse to us or has a material interest adverse to us.

~~Leadership Structure of the Board~~

The Board does not currently have a policy on whether the same person should serve as both the CEO and Chairman of the Board. Periodically, our Board assesses these roles and the Board leadership structure to ensure the interests of the Company and its stockholders are best served.

~~Both the Chairman and CEO positions are currently held by Michael Macaluso. Our lead independent director is Mr. Coelho. In that role, he presides over the executive sessions of the Board,~~ ~~during which our independent directors meet without management, and he serves as the principle liaison between management and the independent directors of the Board.~~

~~Risk Oversight~~

The Board oversees risk management directly and through its committees associated with their respective subject matter areas. Generally, the Board oversees risks that may affect our business, including operational matters. The Audit Committee is responsible for oversight of our accounting and financial reporting processes and discusses with management our financial statements, internal controls and other accounting and auditing matters. The Compensation Committee oversees certain risks related to compensation programs and the Nominating and Governance Committee oversees certain corporate governance risks. The Disclosure Committee assists in establishing, implementing, maintaining and evaluating controls or other procedures to ensure that the information required by this item is to be ~~disclosed~~included in ~~the Company’s reports furnished or filed~~our 2022 Proxy Statement under the ~~Securities Exchange Act of 1934~~sections entitled “Executive Compensation,” and “Non-Employee Director Compensation,” and is properly communicated to the chief executive officer and the chief financial officer. As part of their roles in overseeing risk management, these committees periodically report to the Board regarding briefingsincorporated herein by reference, provided by management and advisors as well as the committees’ own analysis and conclusions regarding certain risks faced by us. Management is responsible for implementing the risk management strategy and developing policies, controls, processes and procedures to identify and manage risks.

~~Committees of the Board~~

Our Board has an Audit Committee, a Compensation Committee, a Nominating and Governance Committee, and a Disclosure Committee, each of which has the composition and the responsibilities described below. The Audit Committee, Compensation Committee, Nominating and Governance Committee, and Disclosure Committee operate under separate charters approved by our Board, which charters are available on our website.

~~Audit Committee.~~ We have separately designated standing audit committee established in accordance with section 3(a)(58)(A) of the Exchange Act. Our Audit Committee oversees our corporate accounting and financial reporting process. This committee also assists our Board in monitoring our financial systems and our legal and regulatory compliance. Our Audit Committee is responsible for, among other things:

~~selecting and hiring our independent auditors;~~

~~appointing, compensating and overseeing the work of our independent auditors;~~

~~approving engagements of the independent auditors to render any audit or permissible non-audit services;~~

~~reviewing the qualifications and independence of the independent auditors;~~

~~monitoring the rotation of partners of the independent auditors on our engagement team, as required by law;~~

~~reviewing our financial statements and reviewing our critical accounting policies and estimates;~~

~~reviewing the adequacy and effectiveness of our internal controls over financial reporting;~~

~~Table of Contents~~

~~reviewing and discussing with management and the independent auditors the results of our annual audit, our quarterly financial statements and our publicly filed reports; and~~

~~reviewing related party transactions.~~

The members of our Audit Committee are Messrs. Giles, Coelho and Dr. Stevens. Mr. Giles is our Audit Committee chairman and was appointed to our Audit Committee in August 2010. Our Board has determined that each member of the Audit Committee meets the financial literacy requirements of the national securities exchanges and the SEC, and Mr. Giles qualifies as our Audit Committee financial expert as defined under SEC rules and regulations. Our Board has concluded that the composition of our Audit Committee meets the requirements for independence under the current requirements of the NYSE American and SEC rules and regulations. We believe that the functioning of our Audit Committee complies with the applicable requirements of SEC rules and regulations, and applicable requirements of the NYSE American.

~~Compensation Committee.~~ ~~Our Compensation Committee oversees our corporate compensation policies, plans and programs. The Compensation Committee is responsible for, among other things:~~

~~reviewing and recommending policies, plans and programs relating to compensation and benefits of our directors, officers and employees;~~

~~reviewing and recommending compensation and the corporate goals and objectives relevant to compensation of our CEO;~~

~~reviewing and approving compensation, corporate goals, and objectives relevant to compensation for executive officers other than our CEO;~~

~~evaluating the performance of our executive officers considering established goals and objectives;~~

~~developing and periodically reviewing with our Board a succession plan for our CEO; and~~

~~administering our equity compensations plans for our employees and directors.~~

The members of our Compensation Committee are Messrs. Coelho, Giles and Dr. Stevens. Mr. Coelho is the chairman of our Compensation Committee. Each member of our Compensation Committee is a non-employee director, as defined in Rule 16b‑3 promulgated under the Exchange Act, is an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, and satisfies the independence requirements of the NYSE American. We believe that the composition of our Compensation Committee meets the requirements for independence under, and the functioning of our Compensation Committee complies with, any applicable requirements of the NYSE American and SEC rules and regulations.

Our Compensation Committee and the Board have not yet established a succession plan for our CEO. Mr. Macaluso is performing to the satisfaction of the Board and, as such, the Compensation Committee does not believe there is a pressing need to have a succession plan for the CEO position.

In fulfilling its responsibilities, the Committee is permitted under the Compensation Committee charter to delegate any or all of its responsibilities to a subcommittee comprised of members of the Compensation Committee or the Board, except that the Committee may not delegate its responsibilities for any matters that involve compensation of any officer or any matters where it has determined such compensation is intended to comply with Section 162(m) of the Code or is intended to be exempt from Section 16(b) under the Exchange Act pursuant to Rule 16b‑3 by virtue of being approved by a committee of independent or nonemployee directors.

~~Table of Contents~~

~~Nominating and Governance Committee~~. Our Nominating and Governance Committee oversees and assists our Board reviewing and recommending corporate governance policies and nominees for election to our Board. The Nominating and Governance Committee is responsible for, among other things:

~~evaluating and making recommendations regarding the organization and governance of the Board and its committees;~~

~~assessing the performance of members of the Board and making recommendations regarding committee and chair assignments;~~

~~recommending desired qualifications for Board membership and conducting searches for potential members of the Board; and~~

~~reviewing and making recommendations for our corporate governance guidelines.~~

The members of our Nominating and Governance Committee are currently Messrs. Coelho, Giles and Dr. Stevens. Mr. Coelho is the chairman of our Nominating and Governance Committee. Our Board has determined that each member of our Nominating and Governance Committee is independent within the meaning of the independent director guidelines of the NYSE American.

~~Disclosure Committee~~. Our Disclosure Committee provides assistance to the CEO and the CFO, or the Senior Officers, in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of such disclosures. The Disclosure Committee is responsible for, among other things:

designing, adopting and maintaining appropriate procedures and standards that are designed to ensure that: (i) information that we are required to disclose to the SEC, and other written information that we will disclose to the public is recorded, processed, summarized and reported accurately and on a timely basis; (ii) risks and risk factors are adequately disclosed; and (iii) such information is accumulated and communicated to our management, including our Senior Officers, as appropriate, to allow timely decisions regarding required disclosure (the “Disclosure Controls”);

~~monitoring the integrity and evaluating the effectiveness of the Disclosure Controls;~~

reviewing our: (i) Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, proxy statement, material registration statements, and any other information filed with the SEC; (ii) press releases containing financial information, earnings guidance, information about material developments, or other information material to our security holders; and (iii) correspondence broadly disseminated to stockholders and all presentations to analysts and the investment community (collectively, the “Covered Reports”);

discussing with the Senior Officers all relevant information relative to the Disclosure Committees’ responsibilities and proceedings, including: (i) the preparation of our disclosures in the Covered Reports; (ii) the evaluation of the effectiveness of the Disclosure Controls; and (iii) any false statement or omission of material fact discovered upon review of a Covered Report;

providing or overseeing an annual mandatory training session to our Board and employees, which shall include coverage of the following topics: (i) risk assessment and compliance, (ii) our Code of Ethics, (iii) any and all manuals or policies established by us concerning legal or ethical standards of conduct to be observed in connection with work performed for the Company, and (iv) the obligations of the Disclosure Committee and the rules, regulations and other factors that impact disclosures contained in the Covered Reports; and

certifying to the Senior Officers prior to the filing of each Form 10-K and Form 10-Q filings as to the Committee’s conclusions regarding its evaluation of the effectiveness of the Company’s Disclosure Controls.

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~~The members of our Disclosure Committee are currently Messrs. Macaluso, Stokely, Coelho, Giles and Stevens, as well as Ms. Cherevka. Dr. Stevens is the chairman of our Disclosure Committee.~~

~~Our Board may from time to time establish other committees.~~

~~Non-Employee Director Compensation~~

~~Our Compensation Committee established the following fees for payment to non-employee members of our Board or committees, for the fiscal year ended December 31, 2019:~~

Cash

Common

Committee or Committees

Compensation

Stock
Board Annual Retainer:






Chairman



$
20,000


Each non-employee director



$
10,000


Board Meeting Fees:






Each meeting attended in-person



$
1,500


Each meeting attended telephonically or via web



$
1,000


Committee Annual Retainer:






Chairman of each committee

Audit; Compensation; Nominating and Governance; Disclosure

$
20,000


Each non-chair member

Audit

$
12,000


Each non-chair member

Compensation; Nominating and Governance; Disclosure

$
10,000


Committee Chairman Meeting Fees:






Each meeting attended in-person

Audit; Compensation; Nominating and Governance; Disclosure

$
2,500


Each meeting attended telephonically or via web

Audit; Compensation; Nominating and Governance; Disclosure

$
1,500


Committee Member Meeting Fees:






Each meeting attended in-person

Audit; Compensation; Nominating and Governance; Disclosure

$
1,500


Each meeting attended telephonically or via web

Audit; Compensation; Nominating and Governance; Disclosure

$
1,000


Annual Stock Award:





$
20,000

The non-employee director compensation for fiscal 2019 included a grant to each independent director of options to purchase 30,000 shares of our common stock on the date of our prior year annual meeting of stockholders, vesting monthly over the succeeding twelve months. The date of the prior annual meeting of stockholders occurred on December 15, 2018. Dr. Bar-Or additionally received an option grant to purchase 30,000 shares of our common stock in October 2019 for his service as a non-employee director during all of fiscal 2019. Dr. Bar-Or’s grant was 10/12th ~~vested on the date of grant, with the remaining 2/12~~th ~~vesting in full as of December 31, 2019.~~

~~Table of Contents~~

~~Director Compensation for 2019~~

The table below summarizes the compensation paid by us to non-employee directors for the year ended December 31, 2019. Our employee director, Mr. Macaluso, does not receive additional compensation for his services as a member of our Board.

Fees Earned or

Stock Option

Stock Awards

All Other


Name

Paid in Cash

Awards (1)

(2)

Compensation

Total
David Bar-Or, M.D. (3)

$
23,000

$
11,000

$
20,000

$

$
54,000
Philip H. Coelho (4)

$
112,000

$
49,000

$
20,000

$
—

$
181,000
Richard B. Giles (5)

$
102,000

$
49,000

$
20,000

$
—

$
171,000
David Stevens, Ph.D. (6)

$
98,000

$
34,000

$
20,000

$
—

$
152,000

~~(1)~~

On December 14, 2019, the date of the 2019 annual meeting, each of Messrs. Coelho and Giles and Drs. Bar-Or and Stevens was granted options to purchase 36,000 shares of common stock. These options have an exercise price of $0.465 per share. These options vest over the succeeding 12 months and have a term of 10 years from the grant date. The amounts reported under “Stock Option Awards” in the above table reflect the grant date fair value of these awards as determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation – Stock Compensation. The value of stock option awards was estimated using the Black-Scholes option pricing model. The valuation assumptions used in the valuation of options granted may be found in ~~Note 11~~ to our financial statements included in this annual report on Form 10-K for the year ended December 31, 2019. Each of Messrs. Coelho and Giles and Dr. Stevens received additional value of Stock Option Awards in 2019 in connection with an option repricing program undertaken by the Company in September 2019 and further described in each of table notes (4), (5) and (6) below.

~~(2)~~

On January 2, 2019, Messrs. Coelho, Giles and Dr. Stevens were each awarded 45,454 shares of common stock, at a price of $0.44 which was the closing price of our common stock on the date of grant per share, equivalent to $20,000. Since fiscal 2012, the aggregate number of stock awards to each Messrs. Coelho, Giles and Dr. Stevens totaled 86,990 shares of common stock with a value of $120,000. On October 17, 2019, Dr. Bar-Or was awarded 45,228 shares of common stock, at a price of $0.4422, which was the closing price of our common stock on the date of grant per share, equivalent to $20,000. Since fiscal 2019, the aggregate number of stock awards to Dr. Bar-Or totaled 45,228 shares of common stock with a value of $20,000.

~~(3)~~

~~Dr. Bar-Or became a non-employee director in October 2018 following his resignation from the position of CSO of the Company.~~ ~~The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2019 for Dr. Bar-Or was 66,000, of which 30,000 were fully vested.~~

~~(4)~~

Pursuant to an option repricing program undertaken by the Company in September 2019, 435,000 of Mr. Coelho’s options were cancelled and, in replacement thereof 369,750 options, which were fully vested upon grant, were issued. The value of the replacement stock option award was estimated using the Black-Scholes option pricing model and totaled $40,000. ~~The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2019 for Mr. Coelho was 656,304, of which 620,304 were fully vested.~~

~~(5)~~

Pursuant to an option repricing program undertaken by the Company in September 2019, 430,000 of Mr. Giles’ options were cancelled and, in replacement thereof 365,500 options, which were fully vested upon grant, were issued. The value of the replacement stock option award was estimated using the Black-Scholes option pricing model and totaled $40,000. ~~The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2019 for Mr. Giles was 741,500, of which 705,500 were fully vested.~~

~~(6)~~

Pursuant to an option repricing program undertaken by the Company in September 2019, 255,000 of Dr. Stevens’ options were cancelled and, in replacement thereof 216,750 options, which were fully vested upon grant, were issued. The value of the replacement stock option award was estimated using the Black-Scholes option pricing model and totaled $25,000. ~~The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2019 for Dr. Stevens was 342,750, of which 306,750 were fully vested.~~

~~Table of Contents~~

~~Item 11.Executive Compensation~~

~~Executive Compensation~~

~~Named Executive Officers~~

For our fiscal year ended December 31, 2019, our Named Executive Officers were: (i) Michael Macaluso, our CEO, who has served as our CEO since January 2012, (ii) Daniel G. Stokely, our CFO, who has served as our CFO, Secretary and Treasurer since July 2019, (iii) Thomas E. Chilcott, our former CFO, Secretary and Treasurer who served as our CFO from June 2017 to June 2019, and (iv) Holli Cherevka, our current COO, who has served as our COO since September 2017. We had no other executive officers serving during the year ended December 31, 2019.

~~The following table shows for the fiscal years ended December 31, 2019 and December 31, 2018, compensation awarded to, paid to, or earned by our Name Executive Officers.~~

~~Summary Compensation of Named Executive Officers~~

Option

All Other

Stock

Awards

Compensation

Name and Principal Position

Year

Salary ($)

Bonus ($)

Award ($)

($)(1)

($)

Total ($)
(a)

(b)

(c)

(d)

(e)

(f)

(i)

(j)
Named Executive Officers















Michael Macaluso














CEO, effective January 2012

2019

300,000

5,000

—

—

—

305,000

2018

300,000

5,000

—

—

—

305,000

Daniel G. Stokely














CFO, effective July 2019

2019

120,000
(2)
5,000

—

149,000
(2)
31,000
(2)
305,000

2018

—

—

—

—

—

—

Thomas E. Chilcott














Former CFO, resigned June 2019

2019

101,000
(3)
—

—

39,000
(3)
161,000
(3)
301,000

2018

225,000

30,000
(4)
—

34,000
(5) (8)
—

289,000

Holli Cherevka














COO, effective September 2017

2019

223,000
(6)
55,000
(7)
—

89,000
(6)
—

367,000

2018

200,000

5,000

—

22,000
(8)
—

227,000

~~(1)~~

The amounts reported under “Option Awards” in the above table reflect the grant date fair value of these awards as determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation – Stock Compensation, rather than amounts paid to or realized by the named individual. The value of the option awards was estimated using the Black-Scholes option pricing model. The valuation assumptions used in the valuation of options granted may be found in ~~Note 11~~ ~~to our financial statements included in this annual report on Form 10-K for the year ended December 31, 2019.~~

~~(2)~~

Mr. Stokely was appointed CFO, effective July 2019, with an annual salary of $285,000. In connection with Mr. Stokely’s employment, he was awarded 400,000 options with a fair value of $149,000. In addition, we have agreed to reimburse Mr. Stokely for certain commuting and housing expense up to a maximum of $6,000 per month for up to eight months. Of the $31,000 that was reimbursed for commuting and housing expense, $19,000 related to corporate housing, $9,000 related to traveling expense and $3,000 related to other expenses.

~~(3)~~

Mr. Chilcott resigned from his position as CFO, Secretary and Treasurer, effective June 2019. In connection with his separation from the Company and the early termination of his employment agreement, Mr. Chilcott and the Company entered into a Separation Agreement, dated June 12, 2019 (the “Separation Agreement”). Under the Separation Agreement, Mr. Chilcott received severance pay in the amount of approximately $161,000, which was equivalent to (1) the amount of salary Mr. Chilcott would have received prior to the expiration of his employment agreement, plus (2) his earned and unused vacation benefits, plus (3) an additional six months of salary. Further, the Company agreed to accelerate the vesting of all of Mr. Chilcott’s outstanding equity award grants, which would otherwise fully vest on June 15, 2019. Mr. Chilcott’s outstanding stock options will remain exercisable until June 13, 2020. The incremental value of the modification of the stock option awards was estimated using the Black-Scholes option pricing model and totaled $39,000.

~~(4)~~

~~Mr. Chilcott received a $25,000 bonus related to his performance during fiscal 2018.~~

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~~(5)~~

~~Mr. Chilcott was granted 75,000 options related to his performance during fiscal 2018, which had a fair value of $33,000.~~

~~(6)~~

Ms. Cherevka entered into an employment agreement with the Company, effective September 2019, to continue her position as COO, at an annual salary of $280,000. In connection with Ms. Cherevka’s employment, she was awarded 200,000 options with a fair value of $89,000.

~~(7)~~

Ms. Cherevka received a $50,000 bonus related to her performance during fiscal 2019. She, and each of the other executives of the Company additionally received a $5,000 holiday bonus during fiscal 2019.

~~(8)~~

The Compensation Committee approved a one-time option repricing where the exercise price of each relevant option was amended to reduce such exercise price to $0.75. “Relevant Options” are all outstanding stock options as of October 1, 2018 (vested or unvested) to acquire shares of our common stock that have exercise prices above $0.75; provided, however, that the maximum dollar value of the repricing for any individual will not exceed $500,000 (with such value calculated by multiplying (i) the difference between the initial exercise price and $0.75 by (ii) the number of options being repriced (see further information in ~~Note 11~~ of the financial statements and within the Outstanding Equity Awards table contained in this section). The incremental value of repricing the options for Mr. Chilcott and Ms. Cherevka totaled $1,000 and $22,000, respectively.

~~Our executive officers are reimbursed by us for any out-of-pocket expenses incurred, reviewed and approved in connection with business activities conducted on our behalf.~~

~~Employment Agreements~~

We entered into an employment agreement with Mr. Michael Macaluso, CEO, effective January 9, 2012. This agreement provided for an annual salary of $195,000, with an initial term ending January 9, 2015. On October 1, 2013, we increased Mr. Macaluso’s annual salary from $195,000 to $300,000. On December 20, 2014, we extended the employment agreement of Mr. Macaluso for three additional years, expiring January 9, 2017. On March 9, 2017, we extended his employment agreement for another three years until January 9, 2020. In connection with his 2017 Amendment, Mr. Macaluso was awarded 400,000 options to purchase our common stock at an exercise price of $0.81 vesting annually over three years beginning on March 9, 2018.

On December 14, 2019, we entered into a new three-year employment agreement with Mr. Macaluso, which became effective on January 10, 2020 (“Start Date”) immediately following the expiration of his prior employment agreement. In connection with his continued service as the Company’s CEO and as a member of the Board, Mr. Macaluso will continue to receive an annual base salary of $300,000 with a term ending January 10, 2023. At the Start Date, Mr. Macaluso received a one-time equity award of 200,000 stock options at an exercise price per share equal to the closing price of the Company’s common stock as reported on the New York Stock Exchange on the Start Date (50% of which will vest on the Start Date and 50% of which will vest on January 10, 2021). Mr. Macaluso will also be able to allocate incentive compensation to others through (i) a special cash bonus pool of $50,000, which he shall be able to allocate in his sole discretion to employees of the Company, and (ii) recommendations to the Compensation Committee of issuance of up to 100,000 stock options. Each of the cash and stock option bonus pools shall be fully allocated before December 31, 2020. As consideration for the incentive compensation pools, on the Start Date, Mr. Macaluso forfeited previously granted options to purchase 100,000 shares of common stock, which were originally granted on August 12, 2010 with an exercise price of $1.70 and were fully vested.

We entered into a three-year employment agreement with Mr. Daniel G. Stokely, CFO, and Corporate Secretary, on July 9, 2019 for his services beginning on July 31, 2019, which provided for an annual salary of $285,000 and a term ending July 31, 2022. In connection with the employment, Mr. Stokely was awarded 400,000 options to purchase common stock at an exercise price of $0.43, with 50% vesting upon grant and 50% after one year from effective date of employment. In addition, we initially agreed to reimburse Mr. Stokely for certain commuting and housing expense up to a maximum of $6,000 per month for up to six months. In December 2019, we extended the period of reimbursement for commuting and housing expenses for an additional two months.

We entered into an employment agreement with Mr. Thomas Chilcott, former CFO, on August 23, 2017, which provided for an annual salary of $200,000 and a term ending August 16, 2019. In connection with the employment agreement, Mr. Chilcott was awarded 200,000 options to purchase common stock at an exercise price of $0.48, with 50% vesting upon grant and 50% after one year from effective date of employment. On December 29, 2017, the Compensation Committee approved a salary increase for Mr. Chilcott of $25,000, effective January 1, 2018. On June 12, 2019, Mr. Chilcott resigned from his position as CFO, Secretary and Treasurer. Mr. Chilcott received severance pay of

~~Table of Contents~~

~~approximately $161,000. In addition, Mr. Chilcott’s outstanding stock options will remain exercisable for one year from his resignation date.~~

We entered into an employment agreement with Ms. Holli Cherevka, COO, on September 19, 2017, which provided for an annual salary of $200,000 and a term ending September 16, 2019. In connection with the employment agreement, Ms. Cherevka was awarded 200,000 options to purchase common stock at an exercise price of $0.55, with 50% vesting upon grant and 50% after one year from effective date of employment. We entered into a new two-year employment agreement with Ms. Cherevka on September 16, 2019, which provides for an annual salary of $280,000 and has a term ending September 16, 2021. In connection with this new employment agreement, Ms. Cherevka was awarded 200,000 options to purchase Common Stock at an exercise price of $0.51, with 50% vesting upon grant and 50% after one year from effective date of employment.

Each officer is eligible to receive a discretionary annual bonus each year that will be determined by the Compensation Committee of the Board based on individual achievement and Company performance objectives established by the Compensation Committee. Included in those objectives, as applicable for the responsible officer, are (i) obtaining successful clinical trial results, and (ii) preparation and compliance with a fiscal budget. The targeted amount of the annual bonus for Mr. Macaluso, Mr. Stokely, and Ms. Cherevka is 50% of the applicable base salary, although the actual bonus may be higher or lower.

~~Outstanding Equity Awards~~

~~The following table provides a summary of equity awards outstanding for each of the Named Executive Officers as of December 31, 2019:~~

Option Awards

Stock Awards


















Equity

Equity

Incentive

Incentive Plan

Plan Awards:

Equity Incentive

Awards:

Market or

Number of

Plan Awards:

Number of

Payout Value

Number of

Securities

Number of

Unearned

of Unearned

Securities

Underlying

Securities

Number of

Market Value

Shares, Units

Shares, Units

Underlying

Unexercised

Underlying

Shares or

of Shares or

or Other

or Other

Unexercised

Options

Unexercised

Option

Option

Units of Stock

Units of Stock

Rights That

Rights That

Options Exercisable

Unexercisable

Unearned

Exercise

Expiration

That Have Not

That Have Not

Have Not

Have Not
Name

(#)

(#)

Options (#)

Price ($)

Date

Vested (#)

Vested ($)

Vested (#)

Vested ($)
(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

Current Named Executive Officers



















Michael Macaluso

266,666

133,334
(1)
—

0.81

3/9/2027

—

—

—

—
Michael Macaluso

180,000

—

—

3.46

12/20/2024

—

—

—

—
Michael Macaluso

250,000

—

—

2.76

5/7/2022

—

—

—

—
Michael Macaluso

180,000

—

—

1.70

8/27/2020

—

—

—

—
Michael Macaluso

220,000

—

—

1.03

8/12/2020

—

—

—

—
Daniel G. Stokely

200,000

200,000
(2)
—

0.43

8/20/2029








Thomas E. Chilcott

75,000

—

—

0.51

6/12/2020
(3)

Thomas E. Chilcott

200,000

—

—

0.48

6/12/2020
(3)
—

—

—

—
Thomas E. Chilcott

100,000

—
(3)
—

0.60

6/12/2020
(3)
—

—

—

—
Thomas E. Chilcott

75,000

—

—

0.75
(4)
6/12/2020
(3)
—

—

—

—
Holli Cherevka

100,000

100,000
(5)
—

0.51

9/16/2029

Holli Cherevka

200,000

—

—

0.55

9/19/2027

—

—

—

—
Holli Cherevka

30,000

—

—

0.51

8/8/2027

—

—

—

—
Holli Cherevka

170,000

—

—

0.75
(4)
7/15/2026

—

—

—

—
Holli Cherevka

30,000

—

—

0.75
(4)
10/6/2024

—

—

—

—
Holli Cherevka

9,402

—

—

0.75
(4)
11/8/2023

—

—

—

—
Holli Cherevka

70,598

—

—

8.62

11/8/2023

Holli Cherevka

45,000

—

—

0.75
(4)
4/2/2023

—

—

—

—
Holli Cherevka

35,000

—

—

0.75
(4)
1/14/2023

—

—

—

—

~~(1)~~

The unexercisable options vest annually starting on the first anniversary of the grant date and will become fully vested on March 9, 2020. The option awards remain exercisable until their expiration on the ten year anniversary of the date of grant subject to earlier forfeiture following termination of employment.

~~(2)~~

The unexercisable options will become fully vested on July 31, 2020. The option awards remain exercisable until their expiration on the ten year anniversary of the date of grant subject to earlier forfeiture following termination of employment.

~~Table of Contents~~

~~(3)~~

In the separation agreement that we entered into with Mr. Chilcott, we agreed to accelerate the vesting of all of his outstanding equity award grants, which would have otherwise fully vested on June 15, 2019. Mr. Chilcott’s outstanding stock options remain exercisable until June 12, 2020.

~~(4)~~

~~These options were included in the one-time option repricing on October 1, 2018 (see further information in~~ ~~Note 11~~ ~~in the financial statements).~~

~~(5)~~

~~The unexercisable options will become fully vested on September 16, 2020.~~ ~~The option awards remain exercisable until their expiration on the ten year anniversary of the date of grant subject to earlier forfeiture following termination of employment.~~

~~Potential Payments upon Termination or Change in Control~~

In June 2019, Mr. Chilcott resigned from his position as CFO of the Company and his employment terminated. In connection with his separation from the Company and early termination of his employment agreement, Mr. Chilcott and the Company entered into a Separation Agreement dated June 12, 2019 (the “Chilcott Separation Agreement”). Under the Chilcott Separation Agreement, Mr. Chilcott received approximately $161,000 of severance pay. Further, the Company agreed to accelerate the vesting of all of Mr. Chilcott’s outstanding equity award grants, which would have otherwise vested on June 15, 2019. Mr. Chilcott’s outstanding stock options remain exercisable until June 2020.

In July 2019, Mr. Stokely entered into an employment agreement with the Company (the “Stokely Agreement”) and began his employment as the Company’s new CFO. On September 16, 2019, Ms. Cherevka entered into a new employment agreement with the Company (the “Cherevka Employment Agreement”) and on December 14, 2019, Mr. Macaluso entered into a new employment agreement that became effective on January 10, 2020 (the “Macaluso Employment Agreement”, and collectively with the Stokely Employment Agreement and the Cherevka Employment Agreement, the “Executive Employment Agreements”).

Under each of our Executive Employment Agreements, the respective member of our executive team (each, an “Executive”), if their employment is terminated without Cause, will be entitled to a lump sum severance payment equal to six months of his or her base salary in effect at the date of termination, less applicable withholding and certain offsetting payments (including offsets for any and all compensation that he or she may receive from other employment subsequent to his or her employment with the Company pursuant to a duty to mitigate such severance payment). In addition, the vesting and exercisability of all then outstanding equity awards (excluding the performance-based awards) held by our Executive will accelerate in full. Any performance-based award held by such Executive shall become vested and exercisable only if the ~~applicable performance-based criteria are satisfied at~~2022 Proxy Statement is not filed within 120 days after the end of the ~~applicable period relating~~fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to ~~such award, at which time such performance-based award shall become vested and exercisable~~this Annual Report on a pro-rated basis by multiplying such award by a fraction, the numerator of which is the number of full months such executive was employed by the Company during the applicable performance period, and the denominator of which is the total number of months in such performance period. Any performance-based award for which the performance criteria areForm 10-K filed not ~~satisfied within the applicable performance period shall terminate at~~later than the end of such 120-day period. If our Executive terminates his or her employment for Good Reason, such Executive will be entitled to three months of his or her base salary less applicable taxes and withholdings. All severance payments, less applicable taxes and withholdings, are subject to Our Executive’s execution and delivery of a general release in a form acceptable to us, and is further conditioned upon complying with the confidentiality, non-solicitation, non-competition, intellectual property and post-termination cooperation obligations under his employment agreement. If the employment is terminated for Cause, no severance shall be payable by us.

~~“Good Reason” means, without our Executives written consent:~~

Item 12.

~~a material reduction~~Security Ownership of ~~his or her compensation (except where there is a general reduction also applicable to the other members of the senior executive team); or~~Certain Beneficial Owners and Management and Related Stockholder Matters.

a material reduction in his or her overall responsibilities or authority or scope of duties (it being understood that the occurrence of a change in control shall not, by itself, necessarily constitute a reduction in his or her responsibilities or authority).

~~“Cause” means,~~The information required by this item with respect to equity compensation plans is to be included in our 2022 Proxy Statement under the ~~sole discretion~~section entitled “Equity Compensation Plan Information” and the information required by this item with respect to security ownership of ~~a majority of membership of~~certain beneficial owners and management is to be included in our 2022 Proxy Statement under the ~~Board:~~

~~Our Executives failure or refusal to substantially perform his or her duties;~~

~~Table of Contents~~

~~personal or professional dishonesty that could reasonably be expected to have a materially adverse impact on the financial interests or business reputation of the Company;~~

~~incompetence, willful misconduct, breach of fiduciary duty (including duties involving personal profit);~~

~~breach of the Company’s Code of Business Conduct and Ethics and personnel policies or compliance policies;~~

material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the Board will likely cause substantial financial harm or substantial injury to the reputation of the Company;

~~willfully engaging in actions that in the reasonable opinion of the Board will likely cause substantial financial harm or substantial injury to the business reputation of the Company;~~

~~willful violation of any law, rule, or regulation, or final cease-and-desist order (other than routine traffic violations or similar offenses);~~

the unauthorized use or disclosure of any trade secret, proprietary, or confidential information of the Company (or any other party as to which our Executive owes an obligation of nondisclosure as a result of his or her relationship with the Company);

~~failure to follow the reasonable and lawful directives of the CEO or the Board pertaining to his or her duties with the Company;~~

commission of an act of fraud, embezzlement, or misappropriation by our Executive with respect to his or her relations with the Company or any of its employees, customers, agents, or representatives; or

~~any material breach of any provision of the employment agreement with our Executive.~~

~~Our employment agreements with our Executives do not provide for the payment of a “gross-up” payment under Section 280G of the Code.~~

Cause; Without Good

Without Cause; Good




Recipient and Benefit

Reason;

Reason

Death; Disability

Change in Control

Michael Macaluso








Salary

$
—

$
150,000

$
—

$
—
Stock Options (1)

—

—

—

—
Total

$
—

$
150,000

$
—

$
—

Daniel G. Stokely








Salary

$
—

$
142,500

$
—

$
—
Stock Options (1)

—

60,000

—

—
Total

$
—

$
202,500

$
—

$
—

Holli Cherevka








Salary

$
—

$
140,000

$
—

$
—
Stock Options (1)

—

22,000

—

—
Total

$
—

$
162,000

$
—

$
—

~~(1)~~

Amounts represent the intrinsic value (that is, the value based upon the company’s stock price on December 31, 2019 of $0.58 per share), minus the exercise price of the equity awards that would have become exercisable as of December 31, 2019.

~~Table of Contents~~

~~Item 12.Security~~section entitled “Security Ownership of Certain Beneficial Owners and ~~Management~~Management” and in each case is incorporated herein by reference, provided that if the 2022 Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-K filed not later than the end of such 120-day period.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is to be included in our 2022 Proxy Statement under the sections entitled “Certain Relationships and Related ~~Stockholder Matters.~~Party Transactions” and “Director Independence” and is incorporated herein by reference, provided that if the 2022 Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-K filed not later than the end of such 120-day period.

~~The following table sets forth information regarding beneficial ownership of our common stock as of February 14, 2020 by:~~

Item 14.

~~each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our common stock;~~Principal Accountant Fees and Services.

~~each of our named executive officers;~~

~~each of our directors; and~~

~~all executive officers and directors as a group.~~

~~We have determined beneficial ownership in accordance with SEC rules.~~ The information does not necessarily indicate beneficial ownership for any other purpose. Under these rules, the number of shares of common stock deemed outstanding includes shares issuable upon exercise of options and warrants heldrequired by ~~the respective person or group which may be exercised or converted within 60 days after February 14, 2020.~~

For purposes of calculating each person’s or group’s percentage ownership, stock options and warrants exercisable within 60 days after February 14, 2020 are included for that person or group but not the stock options or warrants of any other person or group. Ownership is based on 158,780,993 shares of common stock outstanding at February 14, 2020.

Unless otherwise indicated and subject to any applicable community property laws, to our knowledge, each stockholder named in the following table possesses sole voting and investment power over the shares listed. Unless otherwise noted below, the address of each stockholder listed on the table is c/o Ampio Pharmaceuticals, Inc., 373 Inverness Parkway, Suite 200, Englewood, Colorado 80112.

Number of Shares Beneficially

Percentage of Shares

Name and Address of Beneficial Owner

Owned

Beneficially Owned (1)

5% Stockholders

Empery Asset Management, LP (2)
1 Rockefeller Plaza, Suite 1205
New York, NY 10020

12,827,571

8.1
%
CVI Investments, Inc. (3)
C/O Heights Capital Management, Inc.
101 California Street, Suite 3250
San Francisco, CA 94111

12,454,835

7.8
%
Bruce Terker (4)
950 W. Valley Road, Suite 2900
Wayne, PA 19087

11,525,331

7.3
%
Directors and Name Executive Officers

Michael Macaluso (5)

3,016,752

1.9
%
David Bar-Or (6)

118,287

0.1
%
Richard B. Giles (7)

1,068,108

0.6
%
Philip H. Coelho (8)

819,291

0.5
%
Holli Cherevka (9)

690,000

0.4
%
Thomas Chilcott (10)

450,000

0.3
%
David R. Stevens (11)

436,799

0.3
%
Daniel G. Stokely (12)

215,000

0.1
%

Directors and executive officers as a group (eight people)

6,814,237

4.2
%

~~Table of Contents~~

~~(1)~~

~~Based on shares issued and outstanding as the most recent practicable date, February 14, 2020.~~

~~(2)~~

~~Based on a Schedule 13G filed on January 23, 2020 by Empery Asset Management, LP.~~

~~(3)~~

Based on a Schedule 13G filed on February 14, 2019 by CVI Investments, Inc. and 6,250,000 shares of common stock issued as a result of a warrant exercise on October 29, 2019. Amount also includes warrants to purchase 600,000 shares that are exercisable within 60 days of February 14, 2020.

~~(4)~~

~~Based solely on a Schedule 13G filed on January 7, 2020 by Bruce Terker, reporting beneficial ownership as of December 31, 2019.~~

~~(5)~~

~~Includes options to purchase 1,230,000 shares that are exercisable within 60 days of February 14, 2020.~~

~~(6)~~

~~Includes options to purchase 39,000 shares that are exercisable within 60 days of February 14, 2020.~~

~~(7)~~

~~Includes options to purchase 714,500 shares that are exercisable within 60 days of February 14, 2020.~~

~~(8)~~

~~Includes options to purchase 629,304 shares that are exercisable within 60 days of February 14, 2020.~~

~~(9)~~

~~Includes options to purchase 690,000 shares that are exercisable within 60 days of February 14, 2020.~~

~~(10)~~

~~In June 2019, Mr. Chilcott resigned from his position as Chief Financial Officer. Amount includes options to purchase 450,000 shares that are exercisable within 60 days of February 14, 2020.~~

~~(11)~~

~~Includes options to purchase 315,750 shares that are exercisable within 60 days of February 14, 2020.~~

~~(12)~~

~~In July 2019, Mr. Stokely was appointed to the position as Chief Financial Officer. Amount includes options to purchase 215,000 shares that are exercisable within 60 days of February 14, 2020.~~

~~Securities Authorized for Issuance Under Equity Compensation Plans~~

~~The following table sets forth information regarding securities authorized for issuance under equity compensation plans as of December 31, 2019:~~

(c) Number of

(a) Number of securities

(b) Weighted

securities remaining

to be issued upon

average exercise

available for future

exercise of outstanding

price of

issuance under equity

options, warrants and

outstanding options,

compensation plans

rights

warrants and rights

(excluding securities reflected
Plan Category

(#)

($)

in column (a)) (#)

Equity compensation plans approved by stockholders

13,116,856

1.33

9,856,000
Equity compensation plans not approved by stockholders

-

-

-
Total

13,116,856

1.33

9,856,000

~~Item 13.Certain Relationships, Related Transactions, and Director Independence~~

~~Related Party Transactions~~

Other than the director and executive compensation arrangements discussed above in Item 11 “Executive Compensation”, we have not been a party to any transactions since January 1, 2019 in which the amount involved exceeded or will exceed $120,000, and in which any director, executive officer, or holder of more than 5% of any class of our voting stock, or any member of the immediate family of or entities affiliated with any of them, had or will have a material interest.

~~Policies and Procedures for Related Party Transactions~~

We have a policy that our executive officers, directors, nominees for election as directors, beneficial owners of more than 5% of any class of our common stock and any member of the immediate family of any of the foregoing persons, are not permitted to enter into a related party transaction with us without the prior consent of our Audit Committee, subject to the pre-approval exceptions described below. If advance approval is not feasible then the related party transaction will be considered at the Audit Committee’s next regularly scheduled meeting. In approving or rejecting any such proposal, our Audit Committeethis item is to ~~consider the relevant facts and circumstances available and deemed relevant by~~be included in our ~~Audit Committee, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party~~2022 Proxy Statement under the ~~same or similar circumstances and the extent~~section entitled “Proposal 2—Ratification of ~~the related party’s interest in the transaction. Our Board has delegated to the chair of our Audit Committee the authority to pre-approve or~~

~~Table of Contents~~

ratify any request for us to enter into a transaction with a related party, in which the amount involved is less than $120,000 and where the chair is not the related party. Our Audit Committee will also review certain types of related party transactions that it has deemed pre-approved even if the aggregate amount involved will not exceed $120,000 including, employment of executive officers, director compensation, certain transactions with other organizations, transactions where all stockholders receive proportional benefits, transactions involving competitive bids, regulated transactions and certain banking-related services.

~~Director Independence~~

Our Common Stock is listed on the NYSE American. The listing rules of the NYSE American require that a majority of the members of the Board be independent. The rules of the NYSE American require that, subject to specified exceptions, each member of our Audit, Compensation, and Nominating and Governance be independent. Audit Committee members must also satisfy the independence criteria set forth in Rule 10A‑3 under the Exchange Act. Under the rules of the NYSE American, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

In order to be considered independent for purposes of Rule 10A‑3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other board committee: (1) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries.

In October 2019, our Board undertook a review of its composition, the composition of its committees and the independence of each director. Based upon information provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board has determined that none of Messrs. Coelho, Giles or Dr. Stevens, representing three of our five directors, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined by the NYSE American. Our Board also determined that Messrs. Giles, Coelho and Dr. Stevens, who comprise our Audit Committee, our Compensation Committee, and our Nominating and Governance Committee, satisfy the independence standards for those committees established by applicable SEC rules and the NYSE American rules. In making this determination, our Board considered the relationships that each non-employee director has with our company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.

~~Item 14.Principal Accountant Fees and Services~~

~~As disclosed in~~ ~~Part II, Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure,~~ we appointed Moss Adams LLP as the Company’s independent registered public accounting firm for the Company’s fiscal year ended December 31, 2019. In conjunction with the appointment of Moss Adams LLP on July 10, 2019, Plante Moran notified the Company of its resignation as the Company’s independent registered public accounting firm, effective July 10, 2019.

The following tables present aggregate fees accrued for professional services rendered by our independent registered public accounting firms, both Moss Adams LLP and Plante Moran for the respective periods.

Year Ended December 31,

2019

2018
Moss Adams LLP

Annual Audit and Quarterly Review Fees

$
212,000

$
—
Audit-related fees (1)

—

—
Tax fees (2)

—

—
Total fees

$
212,000

$
—

~~Table of Contents~~

Year Ended December 31,

2019

2018
Plante Moran, PLLC

Annual Audit and Quarterly Review Fees

$
30,000

$
238,000
Audit-related fees (1)

—

—
Tax fees (2)

15,000

16,000
Total fees

$
45,000

$
254,000

~~(1)~~

Audit-related service fees would include employee benefit plan audits, due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, attest services related to financial reporting that are not required by statute or regulation and consultation concerning financial accounting and reporting standards. The Company did not incur expenses related to audit related services fees for the years ended December 31, 2019 or 2018,

~~(2)~~

~~Tax service fees are comprised of federal and state services related to tax compliance, consulting and preparation.~~

~~Policy on Audit Committee Pre-Approval of Services~~Appointment of Independent Registered Public Accounting ~~Firm~~

~~Our Audit Committee has responsibility for appointing, setting compensation,~~Firm” and ~~overseeing~~is incorporated herein by reference, provided that if the ~~work~~2022 Proxy Statement is not filed within 120 days after the end of the ~~independent registered public accounting firm. In recognition~~fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-K filed not later than the end of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. Prior to engagement of the independent registered public accounting firm for the following year’s audit, management will submit to the Audit Committee for approval a description of services expected to be rendered during that year for each of following four categories of services:

~~Audit services~~ ~~include fees for services that generally only the auditor reasonable can provide,~~ such as statutory auditors required domestically and internationally (including statutory audits required for insurance companies for purposes of state law); comfort letters; consents; assistance with and review of documents filed with the SEC; section 404 attestation services; other attest services that generally only the auditor can provide; work done by tax professionals for the audit or quarterly review; and accounting consultations billed as audit services, as well as other accounting and financial reporting consultation and research work necessary to comply with the standards of the PCAOB.120-day period.

~~Audit-related services~~ include, among others: employee benefit plan audits, due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews, attest services related to financial reporting that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.

~~Tax services~~ ~~consist principally of assistance with federal and state tax compliance and reporting, as well as certain tax planning consultations.~~

~~Other services~~ ~~are those associated with services not captured in the other categories. We generally do not request such services from our independent auditor.~~

Prior to the engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted, and the Audit Committee requires the independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging the independent registered public accounting firm.

The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.

~~All of the services of Moss Adams LLP and Plante Moran described above were pre-approved by the Audit Committee.~~

~~Table of Contents~~

PART IV

Item 15.~~Exhibits and Financial Statement Schedules~~

Exhibits and Financial Statement Schedules.

(a)(1) Financial Statements

The following documents are filed as part of this Form ~~10‑K,~~10-K, as set forth on the Index to Financial Statements found on page ~~F‑1.~~F-1.

~~Reports of Independent Registered Public Accounting Firms~~

●Report of Independent Registered Public Accounting Firm

~~Balance Sheets as of December 31, 2019 and 2018~~

●Balance Sheets as of December 31, 2021 and 2020

~~Statements of Operations for the years ended December 31, 2019 and 2018~~

●Statements of Operations for the years ended December 31, 2021 and 2020

~~Statements of Stockholders’ Equity for the years ended December 31, 2019 and 2018~~

●Statements of Stockholders’ Equity for the years ended December 31, 2021 and 2020

~~Statements of Cash Flows for the years ended December 31, 2019 and 2018~~

●Statements of Cash Flows for the years ended December 31, 2021 and 2020

~~Notes to Financial Statements~~

●Notes to Financial Statements

(a)(2) Financial Statement Schedules

Not Applicable.

Table of Contents

(a)(3) Exhibits


Exhibit number

~~Table of Contents~~

		Exhibit title
~~Exhibit~~ ~~number~~		~~Exhibit title~~
~~2.1~~3.1		~~Agreement and Plan~~Certificate of ~~Merger, dated March 2, 2010.~~Incorporation of the Registrant. (Incorporated by reference from Registrant’s Form 8-K filed March 8,30, 2010)
~~2.2~~3.2		~~Securities Put and Guarantee Agreement dated March 2, 2010.~~Certificate of Amendment to Certificate of Incorporation of the Registrant. (Incorporated by reference from Registrant’s Form 8-K filed March 8,30, 2010)
3.1*3.3		~~Certificate of Incorporation of the Registrant, as currently in effect.~~
~~3.2~~		Plan of Conversion of Chay Enterprises, Inc. to a Delaware corporation. (Incorporated by reference from Registrant’s Form 8-K filed March 30, 2010)
~~3.3~~3.4		Certificate of Amendment to Certificate of Incorporation of the Registrant. (Incorporated by reference from Registrant’s Form 8-K filed December 18, 2019)
3.5		Amended and Restated Bylaws of the Registrant, as currently in effect. (Incorporated by reference from Registrant’s Form 10-Q filed November 14, 2018)
~~4.1~~4.1*		Specimen Common Stock Certificate of the Registrant. ~~(Incorporated by reference from Registrant’s Registration Statement on Form S-4 filed January 7, 2011)~~
4.2		Form of Warrant to Purchase Common Stock. (Incorporated by reference from Exhibit 4.1 to the Registrant’s Form 8-K filed on ~~August 29, 2016)~~June 6, 2017)
4.3		~~Form of Warrant to Purchase Common Stock. (Incorporated by reference from Registrant’s Form 8-K filed on August 29, 2016)~~
~~4.4~~		Form of Warrant. (Incorporated by reference from the Registrant’s Form 8-K filed on August 13, 2018)
4.4		Form of Warrant. (Incorporated by reference from the Registrant’s Form 8-K filed on December 15, 2021)
4.5		Description of Capital Stock of Ampio Pharmaceuticals, Inc.
~~10.1~~		~~Form of Director and Executive Officer Indemnification Agreement.~~ (Incorporated by reference from Registrant’s Form ~~8-K/A~~10-K filed ~~March 17, 2010)~~on February 21, 2020)
10.210.1*		2010 Stock Incentive Plan and forms of option agreements. (Incorporated by reference from Registrant’s Form 8-K/A filed March 17, 2010)
10.310.2*		Amendment of 2010 Stock and Incentive Plan. (Incorporated by reference from Registrant’s Proxy Statement on Form 14A filed November 1, 2013)
10.3**		2019 Stock Incentive Plan and forms of option agreements. (Incorporated by reference from the Registrant’s Form 10-K filed on February 21, 2021)
10.4,*		Form of restricted stock award agreement under the 2019 Stock Incentive Plan.
10.5,*		~~Sponsored Research Agreement dated September 1, 2009. (Incorporated by reference from Registrant’s Form 8-K/A filed March 17, 2010)~~
10.5**		Employment Agreement ~~effective January 10, 2020~~ by and between Ampio Pharmaceuticals, Inc. and Michael ~~Macaluso. (Incorporated by reference from Registrant’s Form 8-K filed December 18, 2019)~~Macaluso, dated October 11, 2021.
10.6		Securities Purchase Agreement by and among Ampio Pharmaceuticals, Inc. and the Buyer (as defined therein), dated June 17, 2019. (Incorporated by reference from Registrant’s Form 8-K filed June 17, 2019)
~~10.7~~		Lease Agreement by and between Ampio Pharmaceuticals, Inc. and NCWP – Inverness Business Park, LLC, dated December 13, 2013. (Incorporated by reference from Registrant’s Form 8-K filed December 19, 2013)
10.810.7,**		~~Human Serum Albumin Ingredient Purchase and Sale~~Employment Agreement by and between Ampio Pharmaceuticals, Inc. and ~~Supplier,~~Holli Cherevka, dated October ~~10, 2013. (Incorporated by reference from Registrant’s Form 10-K/A filed May 23, 2014)~~11, 2021.

~~Table of Contents~~

10.910.8, ****		Amendment to Human Serum Albumin Ingredient Purchase and Sale Agreement among Ampio Pharmaceuticals, Inc., Octapharma USA, Inc. and Nova Biologics, Inc., effective as of October 8, 2015. (Incorporated by reference from Registrant’s Form 8-K filed October 20, 2015)
~~10.10~~		Amendment No. 2 to Human Serum Albumin Ingredient Purchase and Sale Agreement among Ampio Pharmaceuticals, Inc., Octapharma USA, Inc. and Nova Biologics, Inc., effective as of October 8, 2015. (Incorporated by reference from Registrant’s Form 8-K filed October 20, 2015)
10.11 *		~~Amendment No. 3 to Human Serum Albumin Ingredient Purchase and Sale Agreement among Ampio Pharmaceuticals, Inc., Octapharma USA, Inc. and Nova Biologics, Inc., effective as of November 14, 2017.~~
10.12**		~~Employment Agreement between Ampio Pharmaceuticals, Inc. and Holli Cherevka, dated September 16, 2019. (Incorporated by reference from Registrant's Form 8-K filed September 20, 2019)~~
10.13**		Employment Agreement between Ampio Pharmaceuticals, Inc. and Daniel Stokely, dated ~~July 9, 2019. (Incorporated by reference from Registrant's Form 8-K filed July 10, 2019)~~October 11, 2021.
10.1410.9*		~~Amendment to~~ Employment Agreement between Ampio Pharmaceuticals, Inc. and ~~Daniel Stokely,~~Michael Martino, dated ~~August 20, 2019.~~November 22, 2021 (Incorporated by reference from ~~Registrant's~~the Registrant’s Form 8-K ~~filed August 23, 2019)~~Filed November 29, 2021)

Table of Contents

10.1510.10*		Stock Option Cancellation and Grant Agreement for Executive between Ampio Pharmaceuticals, Inc. and Daniel Stokely, dated August 20, 2019. (Incorporated by reference from Registrant's Form 8-K filed August 23, 2019)
10.1610.11		Form of Indemnification Agreement between Ampio Pharmaceuticals, Inc. and certain directors, executive officers and key employees.
10.12**		Letter dated November 7, 2019 re: Administrative Error in the Stock Option Cancellation and Grant Agreement for Executive between Ampio Pharmaceuticals, Inc. and Daniel Stokely, dated August 20, 2019. (Incorporated by reference from Registrant's Form 10-Q filed November 7, 2019)
10.17**10.13		~~Separation Agreement between Ampio Pharmaceuticals, Inc. and Thomas Chilcott, III. (Incorporated by reference from Registrant's Form 8-K filed June 13, 2019)~~
~~10.18~~		~~Equity Distribution Agreement, dated April 12, 2019 between Ampio Pharmaceuticals, Inc. and Canaccord Genuity LLC. (Incorporated by reference from Registrant’s Form 8-K filed on April 15, 2019)~~
~~10.19~~		~~Form of Lock-Up Agreement (Incorporated by reference from Registrant’s Form 8-K filed June 17, 2019)~~
~~10.20~~		Placement Agency Agreement, dated June 17, 2019, by and among Ampio Pharmaceuticals, Inc. and ThinkEquity, a division of Fordham Financial Management, Inc. (Incorporated by reference from Registrant’s Form 8-K filed June 17, 2019)
~~10.21~~10.14		~~Warrant Exercise~~Placement Agent Agreement, dated ~~as of October 28, 2019,~~December 13, 2021, by and between Ampio Pharmaceuticals, Inc. and ~~the Holder (as defined therein). (Incorporated by reference from Registrant's Form 8-K filed October 29, 2019)~~
14.1*		~~Code of Business Conduct and Ethics.~~
~~16.1~~		~~Letter from Plante & Moran PLLC Regarding Change in Certifying Accountant, dated July 11, 2019.~~A.G.P/Alliance Global Partners. (Incorporated by reference from Registrant’s Form 8-K filed ~~July 11, 2019)~~December 15, 2021)
10.15		Form of Securities Purchase Agreement. (Incorporated by reference from Registrant’s Form 8-K filed on December 15, 2021)
10.16		Sales Agreement, dated February 20, 2020, by and among ThinkEquity, a division of Fordham Financial Management, Inc., Roth Capital Partners LLC and Ampio Pharmaceuticals, Inc. (Incorporated by reference from the Registrant’s Form 8-K filed on February 20, 2020)
10.17		Loan Agreement, dated April 16, 2020, by and between Key Bank National Association and Ampio Pharmaceuticals, Inc. (Incorporated by reference from the Registrant’s Form 8-K filed on April 22, 2020)
23.1*		Consent of Moss Adams LLP.
23.2*		~~Consent of Plante & Moran PLLC.~~
31.1*		Certificate of the Chief Executive Officer of Ampio Pharmaceuticals, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~Table of Contents~~

31.2*		Certificate of the Chief Financial Officer of Ampio Pharmaceuticals, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certificate of the Chief Executive Officer and the Chief Financial Officer of Ampio Pharmaceuticals, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		Inline XBRL (extensible Business Reporting Language). The following materials from Ampio Pharmaceuticals, Inc.’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2021 formatted in XBRL: (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Stockholders’ Equity (Deficit), (iv) the Statements of Cash Flows, and (v) the Notes to the Financial Statements.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*	Filed herewith.
**	This exhibit is a management contract or compensatory plan or arrangement.

~~***~~Item 16.

~~Confidential treatment has been applied for with respect to certain portions of these exhibits.~~Form 10-K Summary.

None.

~~Item 16.None~~

6773

Table of Contents

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	AMPIO PHARMACEUTICALS, INC.

Date: ~~February 21, 2020~~March 29, 2022	By:	/s/ Michael ~~Macaluso~~Martino
		Michael ~~Macaluso~~Martino
		Chief Executive Officer
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities indicated, on ~~February 21, 2020.~~March 29, 2022.

Signature		Title

/s/ Michael ~~Macaluso~~Martino		Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
Michael ~~Macaluso~~Martino

/s/ Daniel G. Stokely		Chief Financial Officer (Principal Financial andAccounting Officer) and Secretary
Daniel G. Stokely		~~Accounting Officer), Secretary and Treasurer~~

/s/ Michael Macaluso		Director
Michael Macaluso

/s/ David Bar-Or		Director
David Bar-Or

/s/ Philip H. Coelho		Director
Philip H. Coelho

/s/ Richard B. Giles		Director
Richard B. Giles

Table of Contents



/s/ David R. Stevens		Director
David R. Stevens

/s/ Kevin Buchi		Director
Kevin Buchi

/s/ Elizabeth Jobes		Director
Elizabeth Jobes

6875

Table of Contents

INDEX TO FINANCIAL STATEMENTS

AMPIO PHARMACEUTICALS, INC.


	Page
	~~Page~~
Report of Independent Registered Public Accounting Firm (Moss Adams LLP, Denver, Colorado PCAOB ID 659)	F-2

~~Reports of Independent Registered Public Accounting Firms~~Balance Sheets ~~Moss Adams LLP~~ ~~Plante & Moran, PLLC~~	F-4

~~Balance Sheets~~Statements of Operations	F-5

Statements of Stockholders’ Equity	F-6

Statements of ~~Operations~~Cash Flows	F-7

Notes to Financial Statements ~~of Stockholders’ Equity~~	F-8

~~Statements of Cash Flows~~	~~F-9~~

~~Notes to Financial Statements~~	~~F-10~~

F-1

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

Ampio Pharmaceuticals, Inc.

~~Opinions~~Opinion on the Financial Statements ~~and Internal Control over Financial Reporting~~

We have audited the accompanying balance ~~sheet~~sheets of Ampio Pharmaceuticals, Inc. (the “Company”) as of December 31, ~~2019~~,2021 and 2020, the related statements of operations, stockholders’ equity, and cash flows for the ~~year~~years then ended, and the related notes (collectively referred to as the ~~“financial statements”)~~financial statements). ~~We also have audited the Company’s internal control over financial reporting as of~~ ~~December 31, 2019, based on criteria established in~~ ~~Internal Control - Integrated Framework (2013~~) ~~issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).~~

In our opinion, the financial statements ~~referred to above present fairly, in all material respects, the financial position of the Company as of~~ ~~December 31, 2019~~, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of ~~December 31, 2019, based on criteria established in~~ ~~Internal Control - Integrated Framework (2013~~) ~~issued by COSO.~~

~~Going Concern Uncertainty~~

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and negative cash flows from operations, and has an accumulated deficit, that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Change in Accounting Principle~~

As discussed in Note 2 to the financial statements, the Company changed its method of accounting for leases effective January 1, 2019 due to the adoption of Accounting Standards Codification (ASC) 842.

~~Basis for Opinions~~

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying ~~Management’s Annual Report on Internal Control over Financial Reporting included in Item 9A~~. ~~Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.~~ We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

~~F-2~~

~~Table of Contents~~

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

~~Definition and Limitations of Internal Control Over Financial Reporting~~

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~/s/ Moss Adams LLP~~

~~Denver, Colorado~~

~~February 20, 2020~~

~~We have served as the Company’s auditor since 2019.~~

~~F-3~~

~~Table of Contents~~

~~Report of Independent Registered Public Accounting Firm~~

~~To the Stockholders and Board of Directors of Ampio Pharmaceuticals~~

~~Opinions on the Financial Statements and Internal Control over Financial Reporting~~

We have audited the accompanying balance sheet of Ampio Pharmaceuticals (the “Company”) as of December 31, 2018, the related statement of operations, stockholders' equity, and cash flows for year ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in ~~Internal Control-Integrated Framework (2013)~~ ~~issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”).~~

~~In our opinion, the financial statements referred to above~~ present fairly, in all material respects, the financial position of the Company as of December 31, ~~2018,~~2021 and 2020, and the results of its operations and its cash flows for the ~~year~~years then ended, ~~December 31, 2018,~~ in conformity with accounting principles generally accepted in the United States of America. ~~Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in the COSO framework.~~

Basis for Opinion

~~Going Concern~~

~~The accompanying~~These financial statements ~~have been prepared assuming that~~are the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Basis for Opinion~~

~~The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment~~responsibility of the ~~effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.~~Company’s management. Our responsibility is to express an opinion on the Company’s financial statements ~~and an opinion on the Company's internal control over financial reporting~~ based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audit~~audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or ~~fraud, and whether effective~~fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting ~~was maintained in all material respects.~~

but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our ~~audit of the financial statements~~audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures ~~that~~to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our ~~audit~~audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our ~~audit~~audits provide a reasonable basis for our ~~opinions.~~opinion.

~~F-4~~F-2

Table of Contents

Critical Audit Matters

~~Definition and Limitations~~Critical audit matters are matters arising from the current period audit of ~~Internal Control over Financial Reporting~~

~~A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies~~that were communicated or required to be communicated to the audit committee and ~~procedures~~ that (1) ~~pertain~~relate to accounts or disclosures that are material to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements ~~in accordance with generally accepted accounting principles,~~ and (2) involved especially challenging, subjective, or complex judgments. We determined that ~~receipts and expenditures of the company~~there are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.no critical audit matters.

/s/ ~~Plante & Moran, PLLC~~Moss Adams LLP

Denver, Colorado

March 29, 2022

We have served as the Company’s auditor ~~from 2010 to~~since 2019.

~~Denver, Colorado~~

~~March 18, 2019~~

~~F-5~~F-3

Table of Contents

AMPIO PHARMACEUTICALS, INC.

Balance Sheets

December 31,

December 31,


2019

2018

Assets




Current assets




Cash and cash equivalents

$
6,532,000

$
7,585,000
Prepaid expenses and other

1,718,000

447,000
Total current assets

8,250,000

8,032,000

Fixed assets, net

4,748,000

5,998,000
Right-of-use asset

1,003,000

—
Total assets

$
14,001,000

$
14,030,000

Liabilities and Stockholders’ Equity




Current liabilities




Accounts payable and accrued expenses

$
4,025,000

$
1,324,000
Lease liability-current portion

259,000

60,000
Total current liabilities

4,284,000

1,384,000

Lease liability-long-term

1,210,000

477,000
Warrant derivative liability

2,064,000

6,933,000
Total liabilities

7,558,000

8,794,000

Commitments and contingencies (Note 7)





Stockholders’ equity




Preferred Stock, par value $0.0001; 10,000,000 shares authorized; none issued

—

—
Common Stock, par value $0.0001; 300,000,000 shares authorized as of 2019 and 200,000,000 shares authorized as of 2018; shares issued and outstanding - 158,644,757 as of December 31, 2019 and 110,941,516 as of  December 31, 2018

16,000

11,000
Additional paid-in capital

191,060,000

176,228,000
Accumulated deficit

(184,633,000)

(171,003,000)
Total stockholders’ equity

6,443,000

5,236,000

Total liabilities and stockholders’ equity

$
14,001,000

$
14,030,000


	December 31,		December 31,
	2021		2020

Assets
Current assets
Cash and cash equivalents	$	33,892,000	$	17,346,000
Prepaid expenses and other		1,740,000		1,147,000
Total current assets		35,632,000		18,493,000

Fixed assets, net		2,564,000		3,561,000
Right-of-use asset, net		629,000		824,000
Total assets	$	38,825,000	$	22,878,000

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued expenses	$	4,811,000	$	1,550,000
Lease liability-current portion		311,000		284,000
Total current liabilities		5,122,000		1,834,000

Lease liability-long-term		614,000		925,000
Warrant derivative liability		5,805,000		2,607,000
Total liabilities		11,541,000		5,366,000

Commitments and contingencies (Note 7)

Stockholders’ equity
Preferred Stock, par value $0.0001; 10,000,000 shares authorized; none issued		—		—
Common Stock, par value $0.0001; 300,000,000 shares authorized; shares issued and outstanding - 227,325,381 as of December 31, 2021 and 193,378,996 as of December 31, 2020		23,000		19,000
Additional paid-in capital		244,863,000		218,020,000
Accumulated deficit		(217,602,000)		(200,527,000)
Total stockholders’ equity		27,284,000		17,512,000

Total liabilities and stockholders’ equity	$	38,825,000	$	22,878,000

The accompanying notes are an integral part of these financial statements.

~~F-6~~F-4

Table of Contents

AMPIO PHARMACEUTICALS, INC.

Statements of Operations

Year Ended December 31,


2019

2018


Operating expenses





Research and development

$
12,622,000

$
6,829,000

General and administrative

5,954,000

4,355,000

Total operating expenses

18,576,000

11,184,000

Other income (expense)





Interest income (expense)

77,000

(5,000)

Derivative gain

4,869,000

45,298,000

Loss from disposal of fixed assets

—

(123,000)

Total other income (expense)

4,946,000

45,170,000

Net (loss) income

$
(13,630,000)

$
33,986,000

Net (loss) income per common share:





Basic

$
(0.10)

$
0.46

Diluted

$
(0.14)

$
(0.12)

Weighted average number of common shares outstanding:

Basic

130,601,500

73,358,034

Diluted

131,135,178

91,091,879


	Year Ended December 31,
	2021		2020

Operating expenses
Research and development	$	11,900,000	$	9,172,000
General and administrative		8,671,000		6,662,000
Total operating expenses		20,571,000		15,834,000

Other income (expense)
Interest income		4,000		12,000
Paycheck Protection Program loan forgiveness		—		544,000
Derivative gain (loss)		3,492,000		(543,000)
Loss on disposal of fixed asset		—		(73,000)
Total other income (expense)		3,496,000		(60,000)

Net loss	$	(17,075,000)	$	(15,894,000)

Net loss per common share:
Basic	$	(0.09)	$	(0.09)
Diluted	$	(0.10)	$	(0.09)

Weighted average number of common shares outstanding:
Basic		199,299,072		172,846,773
Diluted		204,963,019		172,846,773

The accompanying notes are an integral part of these financial statements.

~~F-7~~F-5

Table of Contents

AMPIO PHARMACEUTICALS, INC.

Statements of Stockholders’ Equity

Additional

Total

Common Stock

Paid-in

Accumulated

Stockholders'


Shares

Amount

Capital

Deficit

Equity (Deficit)
Balance at December 31, 2017

80,060,345

$
8,000

$
170,804,000

$
(204,989,000)

$
(34,177,000)

Issuance of common stock for services

17,241

—

60,000

—

60,000
Stock-based compensation, net

—

—

444,000

—

444,000
Issuance of common stock in connection with the public offering, net of offering costs of $844,000

20,000,000

2,000

(2,000)

—

—
Options exercised, net

348,783

—

636,000

—

636,000
Warrants exercised

10,515,147

1,000

4,286,000

—

4,287,000

Net income

—

—

—

33,986,000

33,986,000

Balance at December 31, 2018

110,941,516

$
11,000

$
176,228,000

$
(171,003,000)

$
5,236,000

Issuance of common stock for services

181,590

—

80,000

—

80,000
Stock-based compensation, net

—

—

405,000

—

405,000
Issuance of common stock in connection with the equity distribution agreement

254,984

—

142,000

—

142,000
Offering costs related to the issuance of common stock in connection with the equity distribution agreement

—

—

(144,000)

—

(144,000)
Issuance of common stock in connection with the public offering, net of offering costs of $1,243,000

30,000,000

3,000

10,754,000

—

10,757,000
Warrants exercised, net of offering costs of $277,000

17,266,667

2,000

3,595,000

—

3,597,000

Net loss

—

—

—

(13,630,000)

(13,630,000)

Balance at December 31, 2019

158,644,757

$
16,000

$
191,060,000

$
(184,633,000)

$
6,443,000


				Additional				Total
	Common Stock			Paid-in		Accumulated		Stockholders'
	Shares	Amount		Capital		Deficit		Equity
Balance at December 31, 2019	158,644,757	$	16,000	$	191,060,000	$	(184,633,000)	$	6,443,000

Issuance of common stock for services	136,236		0		80,000		0		80,000
Share-based compensation, net of forfeitures	—		0		1,277,000		0		1,277,000
Stock options exercised, net	11,903		0		(2,000)		0		(2,000)
Warrants exercised, net	2,486,423		0		785,000		0		785,000
Issuance of common stock in connection with the "at-the-market" equity offering program	32,099,677		3,000		26,188,000		0		26,191,000
Offering costs related to the issuance of common stock in connection with the "at-the-market" equity offering program	—		0		(1,368,000)		0		(1,368,000)
Net loss	—		0		0		(15,894,000)		(15,894,000)

Balance at December 31, 2020	193,378,996	$	19,000	$	218,020,000	$	(200,527,000)	$	17,512,000

Issuance of common stock for services	54,052		0		80,000		0		80,000
Share-based compensation, net of forfeitures	—		0		2,724,000		0		2,724,000
Stock options exercised, net	386,604		0		120,000		0		120,000
Warrants exercised, net	588,221		0		114,000		0		114,000
Shares issued in connection with restricted stock awards	1,785,000		0		0		0		0
Shares held back in settlement of tax obligation for shares issued in connection with restricted stock awards	(113,577)		0		(186,000)		0		(186,000)
Issuance of common stock in connection with the "at-the-market" equity offering program	6,246,085		1,000		10,511,000		0		10,512,000
Offering costs related to the issuance of common stock in connection with the "at-the-market" equity offering program	—		0		(512,000)		0		(512,000)
Issuance of common stock and warrants in connection with the registered direct offering	25,000,000		3,000		22,497,000		0		22,500,000
Offering costs related to the issuance of common stock and warrants in connection with the registered direct offering	—		0		(1,816,000)		0		(1,816,000)
Fair value related to the issuance of warrants in connection with the registered direct offering	—		0		(6,689,000)		0		(6,689,000)
Net loss	—		0		0		(17,075,000)		(17,075,000)

Balance at December 31, 2021	227,325,381	$	23,000	$	244,863,000	$	(217,602,000)	$	27,284,000

The accompanying notes are an integral part of these financial statements.

~~F-8~~F-6

Table of Contents

AMPIO PHARMACEUTICALS, INC.

Statements of Cash Flows

Year Ended December 31,



2019

2018


Cash flows from operating activities

Net (loss) income

$
(13,630,000)

$
33,986,000

Adjustments to reconcile net (loss) income to net cash used in operating activities

Stock-based compensation, net

405,000

444,000

Depreciation and amortization

1,272,000

1,281,000

Loss from disposal of fixed assets

—

123,000

Issuance of common stock for services

80,000

60,000

Derivative gain

(4,869,000)

(45,298,000)

Changes in operating assets and liabilities

Increase in prepaid expenses and other

(1,271,000)

(179,000)

Increase (decrease) in accounts payable and accrued expenses

2,700,000

(2,495,000)

Decrease in lease liability

(70,000)

(61,000)

Net cash used in operating activities

(15,383,000)

(12,139,000)

Cash flows used in investing activities

Purchase of fixed assets

(22,000)

(564,000)

Net cash used in investing activities

(22,000)

(564,000)

Cash flows from financing activities

Proceeds from sale of common stock in connection with the equity distribution agreement

142,000

—

Costs related to sale of common stock in connection with the equity distribution agreement

(144,000)

—

Proceeds from sale of common stock in connection with the public offering

12,000,000

8,000,000

Costs related to sale of common stock in connection with the public offering

(1,243,000)

(844,000)

Proceeds from warrant exercises

3,874,000

4,287,000

Costs related to warrant exercises

(277,000)

Proceeds from option exercises

—

636,000

Net cash provided by financing activities

14,352,000

12,079,000

Net change in cash and cash equivalents

(1,053,000)

(624,000)

Cash and cash equivalents at beginning of period

7,585,000

8,209,000

Cash and cash equivalents at end of period

$
6,532,000

$
7,585,000

Non-cash transactions:

Initial lease liability arising from the adoption of ASU 2016-02

$
1,704,000

$
—

Initial recognition of right-of-use asset arising from the adoption of ASU 2016-02

1,168,000

—

Warrant derivative liability in connection with the public offering

—

8,009,000


	Year Ended December 31,
	2021		2020

Cash flows used in operating activities
Net loss	$	(17,075,000)	$	(15,894,000)
Adjustments to reconcile net loss to net cash used in operating activities
Share-based compensation, net of forfeitures		2,724,000		1,277,000
Depreciation and amortization		1,094,000		1,177,000
Loss on disposal of fixed asset		0		73,000
Paycheck Protection Program loan forgiveness		0		(544,000)
Issuance of common stock for services		80,000		80,000
Derivative (gain) loss		(3,492,000)		543,000
Changes in operating assets and liabilities
(Increase) decrease in prepaid expenses and other		(593,000)		571,000
Increase (decrease) in accounts payable and accrued expenses		3,262,000		(2,475,000)
Decrease in lease liability		(89,000)		(81,000)
Proceeds received under the Paycheck Protection Program		0		544,000
Net cash used in operating activities		(14,089,000)		(14,729,000)

Cash flows used in investing activities
Purchase of fixed assets		(97,000)		(63,000)
Net cash used in investing activities		(97,000)		(63,000)

Cash flows from financing activities
Proceeds from sale of common stock in connection with the "at-the-market" equity offering program		10,512,000		26,191,000
Costs related to sale of common stock in connection with the "at-the-market" equity offering program		(512,000)		(1,368,000)
Proceeds from sale of common stock and warrants in connection with the registered direct offering		22,500,000		0
Costs related to the sale of common stock and warrants in connection with the registered direct offering		(1,816,000)		0
Proceeds from warrant and stock option exercises, net		234,000		783,000
Shares held back in settlement of tax obligation for shares issued in connection with restricted stock awards		(186,000)		0
Net cash provided by financing activities		30,732,000		25,606,000

Net change in cash and cash equivalents		16,546,000		10,814,000

Cash and cash equivalents at beginning of period		17,346,000		6,532,000
Cash and cash equivalents at end of period	$	33,892,000	$	17,346,000

Non-cash transactions:
Commercial insurance premium financing agreement	$	1,016,000	$	1,347,000

The accompanying notes are an integral part of these financial statements.

~~F-9~~F-7

Table of Contents

AMPIO PHARMACEUTICALS, INC.

Notes to Financial Statements

Note 1 – Basis of Presentation

The accompanying financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”). Ampio Pharmaceuticals, Inc. (“Ampio” or “the Company”) is a pre-revenue ~~clinical~~ stage biopharmaceutical company, located in Englewood, CO, that is focused ~~primarily~~ on ~~developing Ampion. Ampion is a compound that has been shown in pre-clinical~~the development and ~~clinical studies to decrease inflammation by inhibiting specific pro-inflammatory compounds.~~advancement of immunomodulatory therapies for the treatment of pain from osteoarthritis.

The Company’s core activities ~~have been related~~relate to research and development and raising capital. The Company has not generated operating revenue to date.

Note 2 – Summary of Significant Accounting Policies

Impact of Global Pandemic

The AP-013 study was initiated in June 2019 and was ongoing when the COVID-19 pandemic began. The Secretary of Health and Human Services declared a public health emergency (“PHE”) on January 31, 2020 and the President declared a national emergency in response to COVID-19 on March 13, 2020. The AP-013 study was impacted by the COVID-19 pandemic, as was the case with many clinical studies being conducted at that time. The study was paused in April 2020 due to patient and site safety concerns about COVID-19, the inability of sites to complete the remaining 12-week efficacy and 24-week follow-up visits, or to support doing these by remote visits, and the resulting unanimous recommendation from the study’s safety monitoring committee given the influence of the COVID-19 pandemic on the conduct of the study.

The U.S. Food and Drug Administration (“FDA”) acknowledged the impact of COVID-19 on clinical trials in the “FDA Guidance on Conduct of Clinical Trials of Medical Products during the COVID-19 Pandemic,” which outlined the FDA’s guidance to assist sponsors in assuring the safety of clinical trial participants, complying with good clinical practice (GCP), and minimizing risks to clinical trial integrity during the outbreak. The FDA also issued an update to its Guidance for Industry regarding the statistical principles for sensitivity analysis in clinical trials. In discussions with the FDA, the agency recommended that the Company identify subject information that was impacted by the pandemic during the AP-013 study and conduct a sensitivity analysis to detect potential bias related to the pandemic. Following this guidance, the Company initiated close-out of the study, locked the database, and conducted a preliminary analysis. As planned, a thorough analysis of the data was to be performed according to the statistical analysis plans and to consolidate the study data with data from severe osteoarthritis of the knee (“OAK”) patients from previous single-injection clinical studies before presenting it to the FDA. Early in the first quarter of 2022, the Company completed these additional analyses, according to the statistical analysis plan and incorporated elements of the FDA guidance document, and submitted the preliminary results in a Type C request to meet with the FDA.

In addition, since June 2020, the Company has commenced several clinical trials to determine the safety and efficacy for new applications of Ampion (i.e., inhaled and intravenous) related to inflammation resulting from COVID-19. Given the continued evolution of the COVID-19 pandemic and the related complexities and uncertainties associated with the additional variants, the Company’s business operations could be significantly impacted and, in addition, the supply chain provided by third parties on which the Company relies, including organizations that conduct clinical trials and key suppliers which provide the raw materials for manufacturing Ampion for the ongoing clinical trials, could also be impacted. The full extent of the potential adverse impact on the Company’s business operations and related current and future product development, including, but not limited to, pre-clinical research programs, clinical trials, financing activities and the overall impact on the United States and the global economy will depend on future developments related to the pandemic, which cannot be predicted at this time.

F-8

Table of Contents

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses, and related disclosures in the financial statements and accompanying notes. The Company bases its estimates on historical experience and on ~~other~~ assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.

Significant items subject to such estimates and assumptions primarily include the Company’s projected current and long-term liquidity, the clinical trial accrual, ~~going concern position, warrant derivative liability and related gains and losses, stock-based compensation, the~~ projected useful lives and potential impairment of fixed ~~assets,~~assets. The Company develops these estimates using its judgment based upon the facts and circumstances known at the ~~valuation allowance related to deferred tax assets.~~time.

Cash and Cash Equivalents

The Company considers instruments purchased with an original maturity of three months or less to be cash equivalents. The Company’s investment policy is to preserve principal and maintain liquidity.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company has no off-balance-sheet concentrations of credit risk, such as foreign exchange contracts, option contracts or foreign currency hedging arrangements. The Company consistently maintains its cash and cash equivalent balances in the form of bank demand deposits, United States federal government backed treasury securities and liquid money market fund accounts with financial institutions that management believes are creditworthy. The Company periodically monitors its cash positions with, and the credit quality of, the financial institutions with which it invests. During the years ended ~~as of~~ December 31, ~~2019~~2021 and ~~2018,~~2020, the Company has maintained balances in excess of federally insured limits.

Concentration of Supplier

The Company currently ~~only~~ contracts with ~~one supplier~~a limited number of suppliers to obtain each of the ~~HSA~~key components/raw materials needed to produce Ampion for clinical ~~trials.~~ trials, including Human Serum Albumin, the line sets and the vials/caps and stoppers. The Company believes there are ~~numerous~~ other viable suppliers that could be substituted should the ~~supplier~~suppliers for the key components/raw materials become non-competitive.

Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and amortization. Cost includes expenditures for equipment, leasehold improvements, replacements, and ~~renewals. Maintenance~~renewals and the related cost required to get certain equipment in operating condition. The Company charges routine and ongoing maintenance and repairs ~~are charged~~ to expense as incurred. When assets are sold, retired, or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in operations. The cost of property and equipment is depreciated

~~F-10~~

~~Table of Contents~~

using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the remaining life of the lease.

Impairment of Long-Lived Assets

The Company performs an annual evaluation of the recoverability of the carrying value of its long-lived assets to determine if facts and circumstances indicate that the carrying value of assets may be impaired and if any adjustment is warranted. Based on the Company’s evaluation as of December 31, ~~2019~~2021 and ~~2018, no~~2020, 0 impairment existed for long-lived assets.

F-9

Table of Contents

Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, accounts payable and accrued expenses, and warrant derivative liability. The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses are carried at cost, which approximates fair value due to the short maturity of these instruments. The warrant derivative liability is recorded at estimated fair value based on utilization of the Black-Scholes ~~and Monte Carlo~~ warrant pricing ~~models~~model depending on facts and circumstances. See ~~Notes~~Note 8 and Note 9 for additional information on the warrant derivative liability.

~~Stock-Based~~Share-Based Compensation

The Company accounts for ~~share based~~share-based payments by recognizing compensation expense based upon the estimated fair value of the ~~stock options~~share-based payments on the date of grant. The Company determines the estimated fair value of the ~~stock options~~share-based payments granted using the fair market value or Black-Scholes option pricing model and recognizes compensation costs ratably over the requisite service period which approximates the vesting period using the graded method. See Note 11 for additional information on stock-based compensation.

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. The overall change in deferred tax assets and liabilities for the period measures the deferred tax expense or benefit for the period. The measurement of deferred tax assets may be reduced by a valuation allowance based on judgmental assessment of available evidence if deemed more likely than not that some or all of the deferred tax assets will not be realized. The Company has recorded a valuation allowance against all of its deferred tax assets, as management has concluded that it is more likely than not that the net deferred tax asset will not be realized through projected future taxable income, based primarily on the Company’s ongoing history of operating ~~losses.~~losses and the lack of taxable income in the foreseeable future. See Note 12 for additional information on income taxes.

Clinical Trial ~~Accrual~~Accruals

The Company is currently conducting four discrete clinical trials which are at various stages of completion. The clinical trial accrual ~~involves~~covering each of the studies involve identifying services that third parties, contracted by the Company, have performed, ~~on the Company’s behalf~~ and estimating ~~the level of service performed and~~ the associated cost incurred for these services which remain ~~uninvoiced~~un-invoiced as of the balance sheet date. In addition, the clinical trial accrual involves the measurement of milestone achievements achieved by the patients participating in the clinical trial and the associated costs which have not been invoiced as of the balance sheet date. The Company develops ~~estimates~~an estimate of ~~liabilities~~liability using its judgment based upon the facts and circumstances known at the time.

Research and Development

Research and development costs are expensed as incurred in the respective periods.

Liquidity

In December 2021, the Company finalized a registered direct offering that generated gross proceeds of $22.5 million, offset by offering-related costs of $1.8 million (see Note 10), which contributed to a cash and cash equivalent balance of $33.9 million as of December 31, 2021.

Furthermore, in February 2020, the Company entered into a Sales Agreement (“Sales Agreement”) with 2 agents to implement an “at-the-market” (“ATM”) equity offering program under which the Company, at its sole discretion and subject to certain exceptions, may issue and sell from time-to-time shares of its authorized common stock. During the

~~F-11~~F-10

Table of Contents

year ended December 31, 2021, the Company sold shares pursuant to the ATM equity offering program, which yielded gross proceeds of $10.5 million, offset by offering-related costs of $0.5 million (see Note 10).

The company recognized a net loss of $17.1 million, which is primarily attributable to operating expenses of $20.6 million, partially offset by the non-cash derivative gain of $3.5 million (see Note 9). The Company used $14.1 million of cash to fund business operations for the year ended December 31, 2021 and ended the year with an accumulated deficit and stockholders’ equity of $217.6 million and $27.3 million, respectively. As a pre-revenue stage biopharmaceutical company, the Company has not generated any operating revenues or profits to date. Based on current cash flow projections, management believes that additional capital will be required to fund the business into the second half of 2023.

Adoption of Recent Accounting Pronouncements

The Company has not adopted any recent accounting pronouncements during the year ended December 31, 2021, as none were deemed to be applicable.

Recent Accounting Pronouncements

In ~~February 2016,~~August 2020, the Financial Accounting ~~Standards~~Standard Board ~~(“FASB”~~(the “FASB”) issued ASU ~~2016-02,~~ 2020-06, “~~Leases (Topic 842)”. The new standard established a right-of-use (“ROU”) model that requires a lessee to record a ROU asset~~Debt (Subtopic 470-20); Debt with Conversion and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognitionOther Options and Derivatives and Hedging (Subtopic 815-40) Contracts in the income statement. Lessees are required to use a modified retrospective transition approach for finance and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In July 2018, the FASB issued ASU 2018-10, ~~“Codification Improvements to Topic 842, Leases”,~~ ~~to clarify how to apply certain aspects of the new lease standard. In July 2018, the FASB also issued ASU 2018-11,~~ ~~“Leases (Topic 842): Targeted Improvements”,~~ to give entities other options for transition. The additional options for transition allowed an entity to apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption or apply a practical expedient. The new standards were effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The Company adopted ASC 842 effective January 1, 2019 and elected to adopt the practical expedient permitted by ASU 2018-11 during the first quarter of 2019. As a result of the adoption, on January 1, 2019, the Company recognized a lease liability of approximately $1.7 million, which represented the present value of the remaining minimum lease payments using an estimated incremental borrowing rate of 5.75%. The Company also derecognized the lease liability as of December 31, 2018 of approximately $540,000 and recognized a ROU asset of approximately $1.2 million. Lease expense did not change materially as a result of the adoption of ASU 2016-02.

~~In June 2018, the FASB issued ASU 2018‑07,~~ ~~“Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”~~. ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions used to acquire goods and services from non-employees. Companies should apply the requirements of Topic 718 to non-employee awards except for certain exemptions specified in the amendment. The guidance was effective for fiscal years beginning after December 15, 2018, including interim reporting periods within those fiscal years. Early adoption is permitted, but no earlier than the Company’s adoption date of ASU 2014‑09 “~~Revenue from Contracts with Customers (Topic 606)”. The Company adopted ASU 2018‑07 during the first quarter of 2019 and the adoption of this guidance did not have a material impact on the Company’s financial statements.~~

~~In July 2018, the FASB issued ASU 2018-09,~~ ~~“Codification Improvements”~~, which facilitates amendments to a variety of topics to clarify, correct errors in, or make minor improvements to the accounting standards codification. The effective date of the standard is dependent on the facts and circumstances of each amendment. Some amendments do not require transition guidance and were effective upon the issuance of this standard. A majority of the amendments in ASU 2018-09 were effective for fiscal years beginning after December 15, 2018. The Company adopted ASU 2018-09 during the first quarter of 2019 and the adoption of this guidance did not have a material impact on the Company’s financial statements.

~~In July 2019, the FASB issued ASU 2019-07, “~~Codification Updates to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization and Miscellaneous Updates (SEC Update).” The updated guidance clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations, thereby eliminating redundancies and making the codification easier to apply. This ASU is effective upon issuance and did not have a significant impact on the Company’s financial statements and related disclosures.

~~Recent Accounting Pronouncements~~

In ~~August 2018, the FASB issued ASU 2018‑13, “Fair Value Measurement - Disclosure Framework (Topic 820)~~Entity’s Own Equity”. The updated guidance ~~modified~~is part of the ~~disclosure requirements on fair value measurements.~~FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. Consequently, more convertible debt instruments will be reported as single liability instruments with no separate accounting for embedded conversion features. The ASU 2020-06 also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception. In addition, ASU 2020-06 also simplifies the diluted net income per share calculation in certain areas. The updated guidance is effective for fiscal years beginning after December 15, ~~2019, including~~2023, and interim ~~reporting~~ periods within those fiscal ~~years. Early~~years, with early adoption is permitted for ~~any removed or modified disclosures, however~~periods beginning after December 15, 2020. The Company is currently evaluating the ~~Company has not yet adopted this ASU.~~

~~F-12~~

~~Table~~impact of ~~Contents~~

~~When adopted,~~ASU 2020-06 on the ~~Company~~Company’s financial statements issued in the future.

This Annual Report on Form 10-K does not ~~expect the adoption of this ASU~~discuss recent pronouncements that are not anticipated to have a ~~significant~~current and/or future impact on ~~its~~or are unrelated to the Company’s financial ~~statements.~~condition, results of operations, cash flows or disclosures.

Note 3 ~~– Going Concern~~

As of the year ended December 31, 2019, the Company had cash and cash equivalents of $6.5 million and a net loss of $13.6 million. The Company’s working capital was $4.0 million, of which $1.7 million relates to prepaid expenses, as of December 31, 2019. The net loss is primarily attributable to operating expenses of $18.6 million, offset by the non-cash derivative gain of $4.9 million and $77,000 of interest income that was recognized during the year ended December 31, 2019. The Company used net cash in operations of $15.4 million for the year ended December 31, 2019. As of December 31, 2019, the Company had an accumulated deficit of $184.6 million and stockholders’ equity of $6.4 million. In addition, as a pre-revenue clinical stage biopharmaceutical company, the Company has not generated any revenues or profits to date. These existing and on-going factors continue to raise substantial doubt about the Company’s ability to continue as a going concern.

~~During the year ended December 31, 2019, the Company conducted a public offering of its securities through which it raised net proceeds of $10.8 million (see~~ ~~Note 10). In addition, the Company received net proceeds of $3.6 million from the exercise of investor warrants (see~~ ~~Note 9). The Company has prepared an updated projection covering the period from January 1, 2020 through March 31, 2021 based on the requirements of ASC 205-40, “Going Concern~~”, which reflects cash requirements for the on-going expenses for the base level of the business, which includes the current level of employees and corporate support level costs such as payroll, legal and accounting, patents and overhead at an average cash burn rate of approximately $900,000 per month. The Company’s projection also reflects an appropriation of additional funds for regulatory approvals related to the completion and filing of the BLA with the FDA and, completion of the current AP-013 study (assuming injection of 1,034 patients) which is projected to be approximately $900,000 per month through the second quarter of 2020, which then decreases to $300,000 per month from the third quarter of 2020 through the fourth quarter of 2020. Based on the current projections, the Company expects that current cash resources and operating cash flows will be sufficient to sustain operations into the second quarter of 2020. The ability of the Company to continue its operations beyond this point is dependent on its ability to satisfy the Company’s future cash needs, including but not limited to, private or public sales of securities, option/warrant exercises, structured debt financings and/or partnering/licensing transactions. In February 2020, the Company entered into a ~~Sales Agreement with two agents to implement an “at-the-market” equity offering program~~ ~~under which the Company may issue and sell from time to time shares of its common stock (see~~ ~~Note 16). However, there is no assurance that the Company will be successful in satisfying its future cash needs such that the Company will be able to continue operations.~~

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

~~Note 4~~ – Prepaid Expenses and Other

Prepaid expenses and other balances ~~in the respective periods is~~as of December 31, 2021 and 2020 are as follows:

December 31, 2019

December 31, 2018

Clinical trial deposit

$
946,000

$
—
Insurance premiums

502,000

164,000
Biologics License Application ("BLA") consulting services deposit

182,000

182,000
Lease deposit

34,000

34,000
Other

29,000

48,000
Annual service agreements

25,000

19,000
Total prepaid expenses and other

$
1,718,000

$
447,000


	December 31,
	2021		2020

Deposits	$	884,000	$	266,000
Unamortized commercial insurance premiums		465,000		627,000
Professional fees		235,000		—
Raw materials		72,000		—
Receivable		16,000		185,000
Other		68,000		69,000
Total prepaid expenses and other	$	1,740,000	$	1,147,000

~~F-13~~F-11

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Note 54 – Fixed Assets

Fixed assets ~~consist~~balances, net of ~~the following:~~accumulated depreciation, as of December 31, 2021 and 2020 are as follows:

Estimated

As of December 31,

As of December 31,



Useful Lives in Years

2018

Additions

Disposals

2019

Manufacturing facility/clean room

3 - 8

$
3,077,000

$
4,000

$
—

$
3,081,000

Leasehold improvements

10

6,075,000

—

—

6,075,000

Office furniture and equipment

5 - 10

511,000

9,000

—

520,000

Lab equipment

5 - 8

1,128,000

9,000

—

1,137,000

Less accumulated depreciation and amortization

(4,793,000)

(1,272,000)

—

(6,065,000)

Fixed assets, net

$
5,998,000

$
(1,250,000)

$
—

$
4,748,000


	Estimated
	Useful Lives	December 31,
	(in Years)	2021		2020

Leasehold improvements	10	$	1,649,000	$	2,250,000
Manufacturing facility/clean room	3 - 8		677,000		998,000
Lab equipment and office furniture	5 - 8		238,000		313,000
Fixed assets, net		$	2,564,000	$	3,561,000

Depreciation expense ~~for the respective periods~~as of December 31, 2021 and 2020 is as follows:

Year Ended December 31,


2019

2018


Depreciation Expense

$
1,272,000

$
1,281,000


	Year Ended December 31,
	2021		2020

Depreciation and amortization expense	$	1,094,000	$	1,177,000

Note 65 – Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses ~~in the respective periods~~as of December 31, 2021 and 2020 is as follows:

December 31, 2019

December 31, 2018

Accounts payable

$
151,000

$
706,000

Clinical trial

3,288,000

407,000
Professional fees

317,000

99,000
Property taxes

96,000

97,000
Accrued compensation

72,000

—
Other

30,000

—
BLA consulting services

28,000

15,000
Director fees

22,000

—
Insurance premiums

21,000

—
Accounts payable and accrued expenses

$
4,025,000

$
1,324,000


	December 31,
	2021		2020

Accounts payable	$	427,000	$	186,000
Clinical trials		2,995,000		558,000
Professional fees		510,000		267,000
Accrued compensation		389,000		0
Commercial insurance premium financing		269,000		386,000
Other		221,000		153,000
Accounts payable and accrued expenses	$	4,811,000	$	1,550,000

Commercial Insurance Premium Financing Agreement

In June 2021, the Company entered into an insurance premium financing agreement for $0.9 million, with a term of nine months and an annual interest rate of 3.57%. Under the terms and provisions of the agreement, the Company will be required to make principal and interest payments totaling $82,000 per month over the remaining term of the agreement. The outstanding obligation as of December 31, 2021 was $245,000, which will be paid in full by March 2022. In addition, as of December 31, 2021, the Company had a remaining balance of $24,000 related to annual insurance premiums payable to the Company’s insurance broker, which will be paid in full by March 2022.

Note 6 – Paycheck Protection Program

In April 2020, the Company received proceeds of $544,000 via a loan from KeyBank National Association (the “Lender”) that was issued under the Paycheck Protection Program (the “PPP”) established under the Coronavirus Aid, Relief and Economic Security Act. The term of the PPP loan was two years with an annual interest rate of 1.0% and

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principal and interest payments would be deferred for the first six months of the loan term, which was subsequently updated in accordance with the Paycheck Protection Program Flexibility Act of 2020.

In October 2020, the Company submitted its PPP loan forgiveness application, requesting forgiveness of the full principal amount of its PPP loan. In May 2021, the Company received notification from the Lender that the Small Business Administration (the “SBA”) had authorized full forgiveness of the PPP loan. In July 2021, the Company received notification from the Lender that the SBA submitted, and the Lender has received, proceeds representing the full pay-off of the loan balance. As such, the Company’s loan balance of $544,000 is considered to be paid off in full.

Note 7 – Commitments and Contingencies

~~The following table summarizes the commitments~~Commitments and contingencies as of December 31, ~~2019 which~~2021 are described ~~below:~~below and summarized in the following table:

Total

2020

2021

2022

2023

2024

Thereafter
Key clinical research trial obligations

$
4,990,000

$
4,990,000

$
—

$
—

$
—

$
—

$
—
BLA consulting services

1,143,000

1,143,000

—

—

—

—

—
Statistical analysis and programming consulting services

368,000

368,000

—

—

—

—

—
Employment agreements

2,145,000

883,000

783,000

466,000

13,000

—

—
Insurance premiums

21,000

21,000

—

—

—

—

—

$
8,667,000

$
7,405,000

$
783,000

$
466,000

$
13,000

$
—

$
—

											��
	Total		2022		2023		2024		2025			2026		Thereafter
Key clinical research trial obligations	$	4,444,000	$	4,444,000	$	0	$	0	$	0		$	0	$	0
Employment agreements		4,021,000		1,764,000		1,260,000		997,000		0			0		0
	$	8,465,000	$	6,208,000	$	1,260,000	$	997,000	$	0		$	0	$	0

Key Clinical Research Trial Obligations

Osteoarthritis of the Knee

AP-013 study

In ~~March 2019,~~December 2020, the Company entered into aan initial contract with a clinical research organization (“CRO”) in ~~connection with~~reference to the AP-013 study ~~for Ampion~~ totaling ~~$6.2 million and covering an~~$1.4 million. The contractual provisions required a retainer of $315,000, which will be applied to study expenses as further defined by the contract. The CRO will refund any unused portion of the retainer. The initial ~~trial size of 724 patients, which~~contract was ~~subsequently~~ increased by ~~$4.1 million in January 2020 as a result~~$300,000 due to additional procedures performed at the request of ~~an increase in number~~the Company during the close-out phase of ~~patients to 1,034. Therefore,~~ the ~~CRO contract totals $10.3 million.~~study. The Company had ~~incurred and accrued cumulative costs totaling $5.9 million against~~an outstanding future contractual commitment of $120,000 (net of the ~~contract~~$315,000 deposit) as of December 31, ~~2019. The amended contract has an outstanding obligation of $4.4 million as of December 31, 2019. The following table provides further detail of the CRO contract:~~2021.

December 31, 2019

Original contract

$
6,180,000
Amendment to contract

4,075,000
Total Contract

$
10,255,000

Initial deposit (included in original contract amount)

$
861,000
Amendment to deposit

325,000
Expenses incurred applied to deposit

(240,000)
Remaining Deposit

$
946,000

Expenses incurred/accrued (includes expenses applied to deposit)

$
5,890,000

Total future commitment

$
4,365,000

Inhaled treatment for COVID-19 patients

AP-018 study and AP-019 study

In ~~June 2019,~~March 2021, the Company entered into a contract with a ~~patient recruitment services company~~CRO totaling $318,000 in ~~connection~~reference to a Phase 1 study for at-home treatment utilizing inhaled Ampion to treat patients with Long-COVID, or prolonged respiratory symptoms due to COVID-19 (the “AP-018 study”). The contractual provisions required an initial retainer of $105,000, which will be applied to future study expenses as further defined by the contract. Due to the unpredictable nature of the ongoing COVID-19 pandemic, and the Company’s difficulty to recruit and enroll patients impacted by Long-COVID in accordance with the ~~AP-013~~terms and provisions of the study ~~for Ampion totaling $264,000. In September 2019,~~protocol, the Company ~~finalized contract negotiations~~needed to ~~increase~~secure additional CRO resources and sites to complete the ~~contract from $264,000 to $377,000 as~~trial, which resulted in a ~~result~~contractual amendment of ~~an increased number of patients, from 724 to 1,034, required~~$1.0 million. As such, the revised contractual amount for the ~~trial.~~AP-018 study is $1.3 million. The ~~Company estimates that there~~CRO will ~~be an additional $20,000 to be incurred relating to printing supply for this contract. Therefore,~~refund any unused portion of the ~~Company expects the contract to total $397,000.~~retainer. The Company ~~has incurred cumulative costs under the current contract totaling $309,000 and~~ had an outstanding ~~obligation~~future contractual commitment of ~~$88,000~~$100,000 (net of the $105,000 deposit) as of December 31, ~~2019.~~2021.

In ~~November 2019,~~June 2021, the Company entered into a contract with a CRO totaling $2.5 million in reference to a multicenter Phase 2 clinical ~~staff outsourcing firm~~trial, using inhaled Ampion in the treatment of respiratory distress due to ~~assist~~COVID-19 (the “AP-019 study”). The contractual provisions required an initial retainer of $300,000, which has been, and will continue to be, applied to study expenses as further defined by the contract. Due to the unpredictable nature of the ongoing COVID-19 pandemic, and the Company’s difficulty with the ~~clinical trial, with an estimated cost totaling approximately $650,000.~~enrollment of patients for the treatment of COVID-19 given the unplanned variability of the virus, vaccine rates and mutations in the virus in certain geographies, the contractual amount was amended by $1.9 million to account for additional study sites, investigator payments and enrollment delays. As such, the revised

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contractual commitment for the AP-019 study is $4.4 million. In the event of premature termination, the Company will pay for services rendered and expenses incurred through the date of termination. The CRO will refund any unused portion of the retainer. The Company had ~~incurred and accrued cumulative costs~~

~~F-15~~

~~Table of Contents~~

~~under the current contract totaling $113,000 and had~~an outstanding future ~~obligations totaling $537,000~~contractual commitment of $2.8 million (net of the $200,000 deposit) as of December 31, ~~2019.~~2021.

~~BLA Consulting Services~~Intravenous (“IV”) treatment for COVID-19 patients

AP-017 study

In ~~March 2018,~~December 2020, the Company entered into a ~~BLA consulting services agreement for $1.2 million. This~~ contract with a CRO totaling $1.8 million in reference to a multicenter Phase 2 clinical trial utilizing IV Ampion in the treatment of patients with complications arising from COVID-19 (the “AP-017 study”). The contractual provisions required a ~~deposit~~retainer of ~~$364,000,~~$345,000, which has been, and will continue to be, applied to study expenses as further defined by the contract. Due to the unpredictable nature of ~~which $182,000~~the ongoing COVID-19 pandemic, and the Company’s difficulty with the enrollment of patients for the treatment of COVID-19 given the unplanned variability of the virus, vaccine rates and mutations in the virus in certain geographies, the contractual amount was ~~funded~~amended by $0.7 million to account for additional study sites, investigator payments and enrollment delays. As such, the revised contractual commitment for the AP-017 study is ~~recorded within~~$2.5 million. In the ~~prepaids~~event of premature termination, the Company will pay for services rendered and ~~other expense line item on~~expenses incurred through the ~~balance sheet.~~ date of termination. The CRO will refund any unused portion of the retainer.The Company ~~incurred cumulative costs totaling $69,000 against this contract and~~ had an outstanding ~~obligations totaling $1.1~~future contractual commitment of $1.4 million (net of the $200,000 deposit) as of December 31, 2019. This contract does not have an expiration date. The Company incurs costs under the contract as sections of the BLA are drafted for the submission of the complete BLA to the U.S. Food and Drug Administration (“FDA”).2021.

~~Statistical Analysis and Programming Consulting Services~~

In May 2019, Ampio entered into a statistical analysis and programming consulting services agreement for $578,000, which had an outstanding obligation of $368,000 as of December 31, 2019. The Company had incurred cumulative costs totaling $210,000 against the contract as of December 31, 2019.

Employment Agreements

The Company ~~entered into an~~has 3 employment agreements that expire in October 2024 and 1 employment agreement ~~with Mr. Michael Macaluso, Chief Executive Officer, effective January 9, 2012. This agreement provided~~that expires in November 2022. These employment agreements call for ~~an annual salary of $195,000, with an initial term ending January 9, 2015. On October 1, 2013,~~base salaries ranging from $335,000 to $550,000 and discretionary bonus and severance payments ranging from $167,000 to $275,000.

These employment agreements supersede and replace the ~~Company increased Mr. Macaluso’s annual salary from $195,000 to $300,000. On December 20, 2014, the Company extended the~~Company’s prior employment agreement of Mr. Macaluso for three additional years, expiring January 9, 2017. On March 9, 2017, the Company extended his employment agreement with an expiration date of January 9, 2020. The Company entered into a new employment agreement with Mr. Macaluso during December 2019, effective January 10, 2020. The new employment agreement provides for an annual salary of $300,000 and term ending January 10, 2023, subject to certain automatic renewal provisions.

The Company entered into an employment agreement with Ms. Holli Cherevka, Chief Operating Officer, on September 19, 2017, which provided for an annual salary of $200,000, with an initial term ending September 19, 2019. On September 16, 2019, the Company entered into a new employment agreement with Ms. Cherevka, which by its terms cancelled the previous employment agreement on this date. The new employment agreement provides for an annual salary of $280,000 and a term ending September 16, 2021, subject to certain automatic renewal provisions.

The Company entered into an employment agreement with Mr. Daniel Stokely, Chief Financial Officer, on July 9, 2019, which provided for an annual salary of $285,000 and a term beginning July 31, 2019 and lasting for three years, subject to certain automatic renewal provisions. The employment agreement allows reimbursement of reasonable commuting and relocation expenses for up to six months. In December 2019, the Company entered into an amended employment agreement with Mr. Stokely to amend the timeframe to reimburse reasonable commuting and relocation expenses from six months to eight months.

agreements. Amounts noted above do not assume the ~~continuity~~continuation of employment beyond the initial contractual terms of each employee’s existing employment agreements.

~~Insurance Premiums~~

In June 2019, Ampio entered into an insurance premium financing agreement for directors and officers insurance coverage with a third-party financing organization for a term of six months with an interest rate of 7.75% for $470,000, which represents 50% of the total annual premium costs. This obligation was paid in full as of December 31, 2019. As of December 31, 2019, the Company had a remaining balance of $21,000 related to annual insurance premiums payable to the Company’s insurance broker.

~~F-16~~

~~Table of Contents~~

Facility Lease

In December 2013, the Company entered into a 125-month non-cancellable operating lease for office space and a manufacturing facility. The effective date of the lease was May 1, 2014. The initial base rent of the lease was $23,000 per month. The total base rent over the term of the lease is approximately $3.3 million, which includes rent abatements and leasehold incentives. ~~As discussed further within~~ ~~Note 1, the~~The Company adopted the FASB issued ASC 842, “Leases (Topic 842)” effective January 1, 2019. With the adoption of ASC 842, the Company recorded an operating ~~ROU~~right-of-use (“ROU”) asset and an operating lease liability on its balance sheet. The ROU asset represents the Company’s right to use the underlying asset for the lease term and the lease obligation represents the Company’s commitment to make the lease payments arising from the lease. ROU lease assets and obligations are recognized at the commencement date based on the present value of remaining lease payments over the lease term. As the Company’s lease does not provide an implicit rate, the Company used an estimated incremental borrowing rate of 5.75%, based on the information available at the commencement date in determining the present value of the lease payments. Lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. The lease liability is classified as current or long-term on the balance sheet.

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Table of Contents

The following table provides a reconciliation of the Company’s remaining undiscounted payments for its facility lease and the carrying amount of the lease liability presented in the balance sheet as of December 31, ~~2019:~~2021:


	Facility Lease Payments		2020		2021		2022		2023		2024		Thereafter


															Facility Lease Payments		2022		2023		2024		2025		2026		Thereafter

Remaining Facility Lease Payments	$	1,679,000	$	335,000	$	345,000	$	355,000	$	364,000	$	280,000	$	—	$	999,000	$	355,000	$	364,000	$	280,000	$	0	$	0	$	0
Less: Discount Adjustment		(210,000)														(74,000)
Total lease liability	$	1,469,000													$	925,000


Lease liability-current portion	$	259,000													$	311,000


Long-term lease liability	$	1,210,000													$	614,000

The following table provides a reconciliation of the Company’s remaining ROU asset for its facility lease presented in the balance sheet as of December 31, ~~2019:~~2021:

Right-of-Use Asset

Initial recognition as of January 1, 2019

$
1,168,000
Amortization

(165,000)
Balance as of December 31, 2019

$
1,003,000


	ROU Asset

Balance as of December 31, 2020	$	824,000
Amortization		(195,000)
Balance as of December 31, 2021	$	629,000

The Company recorded lease expense in the respective periods is as follows:

Year Ended December 31,


2019

2018


Lease expense

$
261,000

$
260,000


	Year Ended December 31,
	2021		2020

Lease expense	$	275,000	$	264,000

~~F-17~~

~~Table of Contents~~

Note 8 – Warrants

The Company has issued ~~equity-classified warrants~~both equity (“placement agent”) and liability classified (“investor”) warrants in conjunction with ~~previous~~ equity raises. The Company had a total of ~~2.7~~1.1 million ~~equity based-warrants~~equity-classified warrants and ~~4.4~~17.2 million ~~liability~~liability-classified warrants outstanding as of December 31, ~~2019.~~2021.

The following table summarizes the Company’s warrant activity:


		Weighted		Weighted Average
	Number of	Average		Remaining
	Warrants	Exercise Price		Contractual Life

Outstanding as of December 31, 2019	7,116,524	$	0.57	3.41
Warrant exercised	(2,985,800)	$	0.42	—
Outstanding as of December 31, 2020	4,130,724	$	0.66	2.05
Warrants issued in connection with the registered direct offering	15,000,000	$	1.10	4.96
Warrants exercised	(812,827)	$	0.58	—
Warrants expired	(15,000)	$	0.94	—
Outstanding as of December 31, 2021	18,302,897	$	1.02	4.24

Weighted

Weighted Average

Number of

Average

Remaining

Warrants

Exercise Price

Contractual Life

Outstanding at December 31, 2017

13,332,000

$
0.73

4.01
Warrants issued in connection with the public offering

20,000,000

$
0.40

4.62
Warrants exercised

(10,550,000)

$
0.42

Warrants expired

(499,000)

$
3.24

Outstanding at December 31, 2018

22,283,000

$
0.51

4.25
Warrants issued in connection with the public offering

2,100,000

$
0.50

4.47
Warrants exercised

(17,267,000)

$
0.22


Outstanding at December 31, 2019

7,116,000

$
0.57

3.41

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Table of Contents

The following table summarizes the Company’s outstanding warrants between placement agent and investor warrant classifications:


					Weighted		Weighted Average
				Number of	Average		Remaining
Date		Exercise Price	Type	Warrants	Exercise Price		Contractual Life

December 2021 registered direct offering	$	1.10	Investor	15,000,000			4.96
August 2018 public offering	$	0.40	Investor	153,400			1.61
June 2017 registered direct offering	$	0.76	Investor	2,026,915			0.42
June 2019 public offering	$	0.50	Placement agent	823,650			2.46
June 2017 registered direct offering	$	0.76	Placement agent	298,932			0.42
Outstanding as of December 31, 2021				18,302,897	$	1.02	4.24

In connection with the ~~June 2019 public~~December 2021 registered direct offering, the Company issued ~~Placement Agent Warrants~~investor warrants to purchase an aggregate of ~~2.1~~15.0 million shares of common stock at an exercise price of ~~$0.50~~$1.10 with a term of five ~~years. These~~years and are immediately exercisable (see Note 10). Due to certain derivative features, these warrants were accounted for under liability accounting and are recorded at fair value each reporting period. As of December 31, 2021, these warrants had a fair value of $5.6 million. Significant assumptions, using the Black-Scholes valuation model as ~~equity-based warrants (see~~ ~~Note 10~~).of December 31, 2021, and at issuance were as follows:


Assumptions for warrants issued December 15, 2021:	December 31, 2021			At Issuance

Exercise Price	$	1.10		$	1.10
Volatility		101	%		100	%
Equivalent term (years)		4.96			5.00
Risk-free interest rate		1.25	%		1.26	%
Number of warrants		15,000,000			15,000,000
Derivative liability	$	5,597,000		$	6,689,000

In connection with the August 2018 confidentially marketed public offering, the Company issued investor warrants to purchase an aggregate of 20.0 million shares of common stock at an exercise price of $0.40 with a term of

five years. Due to certain derivative features, these warrants were accounted for under liability accounting and are recorded at fair value each reporting period. As of December 31, ~~2019~~2021 and ~~2018,~~2020, these warrants had a fair value of ~~$1.2 million~~$52,000 and ~~$5.2 million,~~$606,000, respectively. Significant assumptions, using the Black-Scholes valuation model, as of

December 31, ~~2019,~~2021, December 31, ~~2018,~~2020, and at issuance were as follows:

Assumptions for warrants issued August 13, 2018:

December 31, 2019

December 31, 2018

At Issuance



Exercise Price

$
0.40

$
0.40

$
0.40

Volatility

132
%

130
%

122
%
Equivalent term (years)

3.62

4.62

5.00

Risk-free interest rate

1.64
%

2.50
%

2.75
%
Number of shares

2,400,000

15,600,000

20,000,000


	December 31,
Assumptions for warrants issued August 13, 2018:	2021			2020

Exercise Price	$	0.40		$	0.40
Volatility		107	%		131	%
Equivalent term (years)		1.61			2.61
Risk-free interest rate		0.60	%		0.15	%
Number of warrants		153,400			437,500
Derivative liability	$	52,000		$	606,000

In connection with the June 2017 registered direct offering, the Company issued investor warrants to purchase an aggregate of 11.0 million shares of common stock at an exercise price of $0.76 with a term of five ~~years.~~years. Due to certain derivative features, these warrants are accounted for under liability accounting and are recorded at fair value each

~~F-18~~F-16

Table of Contents

reporting period. As of December 31, ~~2019~~2021 and ~~2018,~~2020, these warrants had a fair value of ~~$800,000~~$156,000 and ~~$1.7~~$2.0 million, respectively. Significant assumptions as of December 31, ~~2019~~2021 and ~~2018~~2020 were as follows:



							December 31,
Assumptions for warrants issued June 2, 2017:	December 31, 2019			December 31, 2018			2021			2020


Exercise Price	$	0.76		$	0.76		$	0.76		$	0.76
Volatility		139	%		134	%		92	%		90	%
Equivalent term (years)		2.42			3.42			0.42			1.42
Risk-free interest rate		1.60	%		2.47	%		0.15	%		0.11	%
Number of shares		2,027,000			6,094,000
Number of warrants								2,026,915			2,026,915
Derivative liability							$	156,000		$	2,001,000

During the year ended December 31, 2021, the Company issued 284,100 shares of its common stock as a result of the exercise of investor warrants with an exercise price of $0.40. The Company received proceeds of $114,000 during the period related to these investor warrant exercises. In addition, former placement agents elected to exercise 528,727 of their warrants utilizing the net exercise option, where the total number of shares of common stock issued was reduced to cover the exercise price and, as such, the Company issued 304,121 shares of common stock. The Company did not receive any cash related to the exercise of placement agent warrants. A total of 15,000 placement agent warrants also expired during the year ended December 31, 2021.

The total value for the warrant derivative liability as of December 31, ~~2019~~2021 is approximately ~~$2.0 million. See~~$5.8 million (see Note 9~~for additional information regarding the warrant derivative liability.~~).

In October 2019, the Company entered into warrant exercise agreements with certain warrant holders from the 2017 and 2018 public offerings, which reduced the exercise price of the investor warrants from $0.76 (2017 public offering) and $0.40 (2018 public offering) to $0.215 per warrant. A total of 16.4 million warrants were exercised, which generated gross proceeds of $3.5 million. In connection with the warrant repricing, the Company paid its investment banker a fee of 7% of the gross proceeds plus reasonable out-of-pocket expenses, which totaled $277,000, and resulted in net proceeds of $3.2 million.

~~In addition to the warrant exercises referenced above, the Company had other warrant exercises during~~During the year ended December 31, ~~2019. The~~2020, the Company issued ~~875,000~~2.0 million shares of its common stock as a result of the exercise of investor warrants with an exercise price of $0.40 and received ~~$350,000~~proceeds of $785,000 related to these investor warrant exercises.

~~The combined net proceeds for the investor warrant exercises at December 31, 2019 was approximately $3.6 million.~~

In December 2018, the Company entered into a warrant exercise agreement with certain holders of the warrants from the August 2018 confidentially marketed public offering, which reduced the exercise price of the investor warrants from $0.40 to $0.30 per warrants. A total of 4.2 million warrants were exercised, which generated gross proceeds of approximately $1.3 million as of December 31, 2018. No additional costs were incurred related to these warrant exercises.

In addition, former placement agents elected to exercise 1.0 million of their warrants utilizing the ~~warrants exercises reference above,~~net exercise option, where the ~~Company had several other warrant exercises. The Company issued 175,000~~total number of shares of common stock ~~from~~issued was reduced to cover the exercise price and, as such, the Company issued 524,000 shares of common stock. The Company did not receive any cash related to the exercise of investor warrants with an exercise price of $0.40 from the 2018 confidentially marketed public offering. The Company also issued 1.5 million shares of common stock from the exercise of investor warrants with an exercise price of $0.76 from the 2017 registered direct offering. In addition, the Company issued 4.5 million shares of common stock from the exercise of investor warrants at an exercise price of $0.40 from the 2016 registered direct offering. After this warrant exercise, the Company no longer has outstanding $0.40 warrants from the 2016 registered direct offering. The Company received proceeds totaling approximately $3.0 million as of December 31, 2018 related to these investor warrant exercises.placement agent warrants.

~~The combined proceeds for the investor warrant exercises at December 31, 2018 was approximately $4.3 million.~~

Note 9 – Fair Value Considerations

Authoritative guidance defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources not affiliated with the Company. Unobservable inputs are inputs that reflect the Company’s

~~F-19~~

~~Table of Contents~~

assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on reliability of the inputs as follows:


	Level 1:	Inputs that reflect unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities;

	Level 2:	Inputs that include quoted prices for similar assets and liabilities in active or inactive markets or that are observable for the asset or liability either directly or indirectly; and

	Level 3:	Unobservable inputs that are supported by little or no market activity.

F-17

Table of Contents

The Company’s financial instruments include cash and cash equivalents, accounts payable and accrued expenses, and warrant derivative liability. Warrants are recorded at estimated fair ~~value-based utilization of~~value utilizing the Black-Scholes ~~or Monte Carlo~~ warrant pricing ~~model depending on the facts and circumstances surrounding the derivative.~~model.

The Company’s assets and liabilities which are measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. The Company’s policy is to recognize transfers in and/or out of the fair value hierarchy as of the date in which the ~~even~~event or change in circumstances caused the transfer. The Company has consistently applied the valuation techniques in all periods presented.

The following table presents the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, ~~2019~~2021 and ~~2018,~~2020, by level within the fair value hierarchy:


	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
December 31, 2019

									Fair Value Measurements Using
									Level 1		Level 2		Level 3		Total
December 31, 2021
Liabilities:
Warrant derivative liability	$	—	$	—	$	2,064,000	$	2,064,000	$	0	$	0	$	5,805,000	$	5,805,000

December 31, 2018

December 31, 2020
Liabilities:
Warrant derivative liability	$	—	$	—	$	6,933,000	$	6,933,000	$	0	$	0	$	2,607,000	$	2,607,000

The recurring warrant derivative liability was valued using the Black-Scholes valuation methodology because that model embodies all the relevant assumptions that address the features underlying these instruments. The significant assumptions in valuing the warrant derivative liability as of December 31, ~~2019,~~2021, December 31, ~~2018,~~2020, and at issuance are disclosed in Note 8.

~~F-20~~

~~Table of Contents~~

The following table sets forth a reconciliation of changes in the fair value of financial liabilities classified as Level 3 in the fair valued hierarchy:

Derivative Instruments

Balance as of December 31, 2018

$
6,933,000
Warrant exercises

(353,000)
Modified warrant exercises

(5,967,000)
Change in fair value

1,451,000
Balance as of December 31, 2019

$
2,064,000


	Derivative Instruments

Balance as of December 31, 2020	$	2,607,000
Warrant issuances		6,689,000
Warrant exercises		(347,000)
Change in fair value		(3,144,000)
Balance as of December 31, 2021	$	5,805,000

Note 10 – Common Stock

Authorized Shares

The Company had 300.0 million authorized ~~shares increased from 200,000,000~~ shares of common stock as of December 31, ~~2018 to 300,000,000 shares of common stock as of December 31, 2019.~~2021 and 2020.

The following table summarizes the Company’s remaining authorized shares ~~available:~~

December 31, 2019

Authorized shares

300,000,000

Common stock outstanding

158,644,757
Options Outstanding

6,000,332
Warrants Outstanding

7,116,524
Reserved for issuance under 2019 Stock and Incentive Plan

9,856,000

Available shares

118,382,387

Average Stock Price:

  30 day
$
0.45
  60 day
$
0.41
  90 day
$
0.43

available for future issuance:

~~F-21~~F-18

Table of Contents


	December 31, 2021

Authorized shares		300,000,000

Common stock outstanding		227,325,381
Options outstanding		7,506,989
Warrants outstanding		18,302,897
Reserved for issuance under 2019 Stock and Incentive Plan		4,417,332

Available shares		42,447,401

~~Shelf Registration~~

Registered Direct Offering

In March 2017, the Company filed a shelf registration statement on Form S‑3 (the “Shelf Registration Statement”) with the SEC to register the Company’s common stock and warrants in an aggregate amount of up to $100.0 million for offerings from time to time, as well as 5.0 million shares of common stock available for sale by selling shareholders. The Shelf Registration Statement was declared effective in April 2017 by the SEC and expires in April 2020. The Company plans to renew the shelf registration prior to the expiration date. Approximately $66.7 million remained available under the Shelf Registration Statement as of December ~~31, 2019. However, such availability may be limited due to the number of remaining authorized shares available for the Company to issue.~~

~~Public Offerings~~

~~In June 2019,~~2021, the Company completed a ~~public~~registered direct offering whereby it issued ~~30.0~~25.0 million shares of its common stock at a ~~stock~~ price of ~~$0.40,~~$0.90 per share, along with investor warrants to purchase up to 15.0 million shares of common stock, generating gross proceeds of ~~$12.0~~$22.5 million. In connection with this offering, wethe Company entered into a Placement Agent Agreement with the placement agent. Pursuant to the Placement Agent Agreement, the placement agent received a 7% commission of ~~$840,000,~~$1.6 million, and ~~$230,000~~$75,000 as compensation for other costs related to the offering and also received 2.1 million warrants with an exercise price of $0.50 and an expiration date of June 17, 2024 (“Placement Agent Warrants”). Such Placement Agent Warrants provide for cashless exercise, which the placement agent may elect if the Company does not have an effective registration statement registering, or the prospectus contained therein is not available for the issuance of, the shares underlying the warrants.offering. Additionally, the Placement Agent Agreement contained certain restrictions that ~~may prevent~~prevents the Company from conducting an ~~at-the-market offering or continuous~~ equity financing and utilizing the at-the-market equity offering program in the near ~~term and granted the placement agent a right of first refusal, that covers a period through June 2021, to act as the investment banker or placement agent on certain future transactions.~~term. The Company also incurred expenses related to legal, accounting, and other registration costs of ~~$173,000.~~$167,000. The shares ~~were offered~~ and ~~sold pursuant to the Company’s Shelf Registration Statement.~~

In August 2018, the Company completed a confidentially marketed public offering whereby it issued 20.0 million shares of its common stock at a stock price of $0.40, along with investor warrants to purchase up to 20.0 million shares of common stock, generating gross proceeds of $8.0 million. In connection with the offering, the underwriter received a 7% commission of $560,000. The Company also incurred expenses related to legal, accounting, and other registration costs of $284,000. The shares and the warrants were offered and sold pursuant to the Company’s ~~Shelf Registration Statement.~~shelf registration statement.

The investor warrants issued in connection with the registered direct offering have an exercise price of ~~$0.40~~$1.10 per share and are immediately exercisable ~~immediately~~ with a term of five years from issuance. Based on the terms of the warrant and related securities law, the contract does not meet the criteria within Accounting Standards Codification (“ASC”) 815 ~~“Derivatives~~“Derivatives and Hedging” to permit the company to settle in unregistered shares. Therefore, the Company could be forced to cash settle the warrants. Based on this derivative feature, these warrants must be accounted for as a liability at fair value under ASC 815. On the date of issuance, these warrants were valued at ~~$8.0 million.~~$6.7 million, using the Black-Scholes valuation model (see Note 8) and represents a reduction in additional paid-in capital at the time of issuance.

The Company’s net cash proceeds from the confidentially marketed public offering totaled $7.2 million. When the additional non-cash charges of $8.0 million related to the 20.0 million warrants were offset against the net cash transaction proceeds, the non-cash charges exceeded 100% of the proceeds. Therefore, the Company was required to take the additional cost above the transaction proceeds and recognize a loss on the day it entered into the transaction. The loss on the transaction was $853,000 and this amount is included in the derivative gain on the statement of operations.ATM Equity Offering Program

~~Equity Distribution~~Sales Agreement

In ~~April 2019,~~February 2020, the Company entered into ~~an Equity Distribution~~a Sales Agreement with ~~a placement agent~~2 agents to implement an ~~“at-the-market”~~ATM equity offering program under which the Company, from time to time ~~could~~and at its sole discretion, may offer and sell shares of its common stock having an aggregate offering price of up to ~~$24.65~~$50.0 million ~~(the “Shares”)~~to the public through the ~~placement agent.~~agents until (i) each agent declines to accept the terms for any reason, (ii) the entire amount of shares has been sold, or (iii) the Company suspends or terminates the Sales Agreement. Subject to the terms and conditions of the Sales Agreement, the agents shall use their commercially reasonable efforts to sell shares from time to time, based upon the Company’s instructions as documented on a purchase notification form. If an agent declines to accept the purchase notification form, the agent must promptly notify the Company and the other agent then has the ability to accept or decline the purchase notification form. The Company ~~had~~has no obligation to sell any ~~of the Shares~~shares and ~~could~~may, at any time and in its sole discretion, suspend sales under the ~~Equity Distribution~~Sales Agreement or terminate the ~~Equity Distribution~~Sales Agreement in accordance with its terms. The ~~Company provided the placement agent with~~Sales Agreement includes customary indemnification ~~rights. The placement agent was~~rights in favor of the agents and provides that the agents will be entitled to aan aggregate fixed commission of ~~3.0%~~4.0% of the gross proceeds (2.0% to each agent) to the Company from any shares ~~sold. The~~sold pursuant to the Sales Agreement.

In connection with the registered direct offering that the Company ~~terminated~~completed in December 2021, the ~~Equity Distribution Agreement in June 2019.~~

Company is prohibited from utilizing the ATM equity offering program until May 15, 2022.

~~F-22~~F-19

Table of Contents

The following table summarizes the Company’s sales and related issuance costs incurred under the ~~Equity Distribution Agreement:~~Sales Agreement as of December 31, 2021:

Equity Distribution Agreement

Total shares of common stock sold

254,984

Average price per share

$
0.56
Gross Proceeds

$
142,000
Commissions earned by placement agent

$
4,000
Legal fees

$
140,000


		Year Ended December 31,
		2021		2020

Total shares of common stock sold		6,246,085		32,099,677

Gross proceeds	$	10,512,000	$	26,191,000
Commissions earned by placement agents		(422,000)		(1,050,000)
Issuance fees		(90,000)		(318,000)
Net proceeds	$	10,000,000	$	24,823,000

Issuance of Common Stock ~~Issued~~ for Services

The Company issued ~~181,590~~54,052 and ~~17,241~~136,236 shares of common stock under the Ampio Pharmaceuticals, Inc. 2019 Stock and Incentive Plan (the “2019 Plan”), each valued at $80,000, ~~and $60,000, respectively, to certain~~as partial compensation for the services of non-employee directors, ~~as part of their annual director compensation for fiscal~~during the years ~~2019~~ended December 31, 2021 and ~~2018,~~2020, respectively. ~~The related compensation expense was recognized in the period the stock awards were issued.~~

Note 11 – Equity Instruments

~~Options~~

In December 2019, the Company’s Board of Directors and stockholders approved the adoption of the ~~Ampio Pharmaceuticals, Inc.~~ 2019 ~~Stock and Incentive~~ Plan, ~~(the “2019 Plan”),~~ under which shares were reserved for future issuance ~~under~~of equity related awards classified as option awards/grants, restricted stock awards ~~options,~~ and other equity related awards. The 2019 Plan permits grants of equity awards to employees, directors and consultants. The stockholders ~~have~~ approved a total of 10.0 million shares to be reserved for issuance under the 2019 Plan. The Company’s ~~previous~~ 2010 ~~Stock and Incentive~~ Plan ~~(the “2010 Plan”)~~ was cancelled ~~upon~~concurrently with the adoption of the 2019 Plan.

The following table summarizes the activity of the ~~2010 Plan, along with the~~ 2019 Plan and the shares available ~~options to be granted~~for future equity awards as of December 31, ~~2019:~~2021:


			2019 Plan
	~~2010 Plan~~

Total shares reserved for equity awards		10,000,000
Options granted during previous fiscal years		~~11,700,000~~(2,067,471)
Options granted during fiscal 2021		~~(14,505,000)~~(1,866,000)
~~Add back:~~Restricted stock awards granted during fiscal 2021		(1,785,000)
Forfeited, expired ~~forfeited~~ and/or cancelled equity awards		5,500
Shares forfeited to settle exercise price and tax obligation		~~6,367,000~~
~~Add back: options used in net exercise~~		~~192,000~~
~~Cancellation of 2010 Plan~~		~~(3,754,000)~~130,303
Remaining shares available for future equity awards		—4,417,332

F-20

Table of Contents

Options

The Company’s stock option activity is summarized in the table below:


		Weighted		Weighted Average
	Number of	Average		Remaining		Aggregate
	Options	Exercise Price		Contractual Life		Intrinsic Value
Outstanding December 31, 2019	6,000,332	$	1.33	5.40	$	—
Granted	1,923,471	$	0.90
Exercised	(32,500)	$	0.33
Forfeited	(100,000)	$	1.70
Expired and/or cancelled	(1,691,652)	$	1.87
Outstanding as of December 31, 2020	6,099,651	$	1.04	7.36	$	—
Granted	1,866,000	$	1.21
Exercised	(443,662)	$	0.55
Forfeited, expired and/or cancelled	(15,000)	$	5.76
Outstanding as of December 31, 2021	7,506,989	$	1.12	7.21	$	91,000
Exercisable as of December 31, 2021	6,333,656	$	1.02	6.73	$	88,000

Of the 443,662 stock options that were exercised during the year ended December 31, 2021, 8,000 stock options were cash exercised whereby the Company received proceeds to cover the option holder’s exercise price and tax obligations totaling $6,000. In addition, 302,734 stock options were exercised as cashless exercises whereby the Company received proceeds to cover the option holders’ exercise price totaling $154,000. The remaining 132,928 stock options were net exercised whereby the total number of shares of common stock issued was reduced by 57,058 shares to cover the option holders’ exercise price and tax obligations. The Company submitted the tax obligations totaling $40,000 on behalf of the option holders. The shares of common stock that are held back upon a net exercise of a stock option to settle the option holder’s obligation associated with the exercise price and tax obligations are added back to the reserve for shares available for future equity awards under the 2019 Plan.

Outstanding options that were issued in accordance with the 2010 Plan and 2019 Plan are summarized in the table below:


Outstanding Options by Plan		December 31, 2021
2010 Plan	3,630,018
2019 Plan
	3,876,971
~~Total shares reserved for equity awards~~Outstanding as of December 31, 2021	~~10,000,000~~
~~Options granted~~	~~(144,000)~~
~~Add back: expired, forfeited and/or cancelled equity awards~~	—
~~Add back: options used in net exercise~~	—
~~Remaining shares available for future equity awards~~	~~9,856,000~~7,506,989

~~F-23~~

~~Table of Contents~~

~~The following table summarizes the Company’s stock option activity:~~

Weighted

Weighted Average


Number of

Average

Remaining

Aggregate

Options

Exercise Price

Contractual Life

Intrinsic Value
Outstanding December 31, 2017

7,247,000

$
2.87

5.16

$
—
Granted

285,000

$
0.48




Exercised

(410,000)

$
2.06




Forfeited

(3,000)

$
1.02




Expired or Cancelled

(1,693,000)

3.92

Outstanding at December 31, 2018

5,426,000

$
1.99

4.89

$
—
Granted

2,226,000

$
0.57

Exercised

—

$
—

Forfeited

—

$
—

Expired and/or Cancelled

(1,652,000)

$
2.51

Outstanding at December 31, 2019

6,000,000

$
1.33

5.40

$
169,000
Exercisable at December 31, 2019

5,416,000

$
1.41

5.00

$
114,000

Stock options outstanding at December 31, ~~2019~~2021 are summarized in the table below:


	Number of	Weighted		Weighted Average
	Options	Average		Remaining
Range of Exercise Prices	Outstanding	Exercise Price		Contractual Lives
Up to $0.50	494,500	$	0.44	7.66
$0.51 - $1.00	4,452,345	$	0.70	6.80
$1.01 - $1.50	937,000	$	1.19	9.69
$1.51 and above	1,623,144	$	2.45	6.77
Total	7,506,989	$	1.12	7.21

Restricted Stock Awards

In connection with the 3 employment agreements that expire October 2024 (see Note 7), the Company awarded 1.8 million shares of restricted stock in accordance with the 2019 Plan, of which a portion vested immediately, with the

Number of

Weighted

Weighted Average

Options

Average

Remaining
Range of Exercise Prices

Outstanding

Exercise Price

Contractual Lives
$0.40 - $2.00

4,972,000

$
0.75

6.05
$2.01 - $5.00

840,000

$
3.28

1.93
$5.01 - $8.62

188,000

$
7.97

3.85

6,000,000

$
1.33

5.40

F-21

Table of Contents

remaining shares of restricted stock awards vesting annually on January 1st until 2025. The 2019 Plan allows the restricted stock award grantee to authorize the Company to withhold shares of common stock to settle the tax obligation at such time the shares vest. The shares of restricted stock that vested immediately were subject to statutory tax withholdings and all 3 employees authorized the Company to withhold shares of common stock to settle the tax obligation, which resulted in a forfeiture of 113,577 shares of restricted stock and 1.7 million net shares of restricted stock being issued during the year ended December 31, 2021.

The restricted stock awards activity at December 31, 2021 is summarized in the table below:


		Weighted
		Average Grant-Date			Aggregate
	Awards	Fair Value			Intrinsic Value
Granted	1,785,000	$	1.64
Vested	(203,423)	$	1.64	$	—
Shares forfeited to settle tax obligation	(113,577)	$	1.64
Unvested at December 31, 2021	1,468,000	$	1.64

Share-based Compensation

The Company computes the fair value for all options granted or modified using the Black-Scholes option pricing model. To calculate the fair value of the options, certain assumptions are made regarding components of the model, including the fair value of the underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. The Company calculates its volatility assumption using the actual changes in the market value of its stock. Forfeitures are recognized as they occur. The Company’s historical option exercises do not provide a reasonable basis to estimate an expected term due to the lack of sufficient data. Therefore, the Company estimates the expected term by using the simplified method. The simplified method calculates the expected term as the average of the vesting term plus the contractual life of the options. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for treasury securities of similar maturity. The Company computed the fair value of options granted and modified during the period ended December 31, ~~2019~~2021 and December 31, ~~2018,~~2020, using the following assumptions:

Year Ended December 31,


2019

2018

Expected volatility

24 % - 187
%

101% - 215
%
Risk free interest rate

1.42% - 2.38
%

1.86% - 2.96
%
Expected term (years)

0.08 - 5.50

0.32 - 5.50


	Year Ended December 31,
	2021		2020

Expected volatility	113% - 127	%	121% - 134	%
Risk free interest rate	0.78% - 1.38	%	0.19% - 1.67	%
Expected term (years)	5.00 - 6.50		3.00 - 6.00

~~On October 1, 2018,~~Based on these assumptions, the ~~Compensation Committee approved a one-time option repricing where the exercise~~Company recognized $1.4 million of ~~each relevant option (as defined below) was amended~~share-based compensation related to ~~reduce such exercise price to $0.75 per share. “Relevant Options” are certain outstanding stock~~ options as of ~~October 1, 2018 (vested or unvested) to acquire shares of the Company’s~~December 31, 2021.

~~F-24~~

~~Table of Contents~~

Common Stock that have exercise prices above $0.75 per share; provided, however, that the maximum dollar value of the repricing for any individual will not exceed $500,000 (with such value calculated by multiplying (i) the difference between the initial exercise price and $0.75 by (ii) the number of options being repriced). The Company ~~computed~~also computes the fair value for all restricted stock awards based on the ~~one-time option repricing,~~stock price on the grant date and recognizes share-based compensation ratably over the requisite service period which ~~totaled $97,000 for~~approximates the ~~period ended~~vesting period. The Company recognized $1.3 million of share-based compensation relating to restricted stock awards as of December 31, ~~2018, using~~2021.

As such, the ~~following assumptions:~~Company recognized a total of $2.7 million of share-based compensation for options and restricted stock awards as of December 31, 2021, which is further explained in the table below.

F-22


~~Assumptions for one-time option repricing~~	~~At Date of Repricing~~
~~Expected volatility~~	~~215~~	%
~~Expected term (years)~~	~~1.00~~
~~Risk free interest rate~~	~~2.60~~	%

Table of Contents

~~Stock-based~~Share-based compensation expense related to the fair value of stock options ~~was~~and restricted stock awards is included in the statements of operations as research and development expenses and general and administrative expenses as set forth in the table below. The Company determined the fair value as of the date of grant for options using the Black-Scholes option pricing model and expenses the fair value ratably over the vesting period. The following table summarizes stock-based compensation for the years ended December 31, ~~2019~~2021 and December 31, ~~2018:~~2020:

Year Ended December 31,


2019

2018
Research and development expenses




Stock-based compensation

$
89,000

$
191,000

General and administrative expenses




Issuance of common stock for services

80,000

60,000
Stock-based compensation

316,000

253,000

Total stock-based compensation

$
485,000

$
504,000

Unrecognized expense at December 31, 2019

130,000



Weighted average remaining years to vest

0.57


	Year Ended December 31,
	2021		2020
Research and development expenses
Share-based compensation	$	46,000	$	401,000

General and administrative expenses
Issuance of common stock for services (see Note 10)		80,000		80,000
Share-based compensation		2,678,000		876,000

Total share-based compensation	$	2,804,000	$	1,357,000

Unrecognized share-based compensation expense related to stock options as of December 31, 2021		868,000

Weighted average remaining years to vest for stock options		1.24

Unrecognized share-based compensation expense related to restricted stock awards as of December 31, 2021		1,572,000

Weighted average remaining years to vest for restricted stock awards		3.01

Note 12 – Income Taxes

Income tax expense (benefit) resulting from applying statutory rates in jurisdictions in which the Company is taxed (Federal and State of Colorado) differs from the income tax provision (benefit) in the Company’s financial statements. The following table reflects the reconciliation for the respective periods:


	Years Ended December 31,
	2019		2018

					Years Ended December 31,
					2021		2020
(Benefit) expense at federal statutory rate	(21.0)	%	21.0	%	(21.0)	%	(21.0)	%
State, net of federal income tax impact	(4.1)	%	(0.8)	%	(4.4)	%	(2.9)	%
Stock-based compensation	4.8	%	2.3	%	0.1	%	4.7	%
Registered offering gain / warrant expense	(7.5)	%	(28.1)	%
Registered offering gain/warrant expense					(4.6)	%	0.4	%
Paycheck Protection Program funding					0.0	%	(0.7)	%
Change in state deferred tax rate					0.0	%	0.7	%
Expiration of tax attribute carryforwards					1.1	%	1.5	%
Other					2.1	%	0.0	%
Change in valuation allowance	27.8	%	5.6	%	26.7	%	17.3	%
Effective tax rate	0.0	%	0.0	%	0.0	%	0.0	%

~~F-25~~F-23

Table of Contents

Deferred income taxes arise from temporary differences in the recognition of certain items for income tax and financial reporting purposes. The approximate tax effects of significant temporary differences which comprise the deferred tax assets and liabilities are as follows for the respective periods:


	Years Ended December 31,
	2019		2018

					Years Ended December 31,
					2021		2020
Long-term deferred income tax assets (liabilities):
Accrued liabilities	$	18,000	$	—	$	96,000	$	—
Interest expense carryforward		—		1,000		73,000		—
Deferred rent		115,000		132,000
ROU asset						(155,000)		(203,000)
Lease liability						228,000		298,000
Net operating loss carryforward		40,248,000		35,868,000		47,858,000		43,515,000
Share-based compensation		1,592,000		2,255,000		1,050,000		1,030,000
Unrealized loss on trading security		774,000		774,000		772,000		772,000
Property and equipment		(131,000)		(210,000)		113,000		9,000
Warrants		67,000		67,000		96,000		152,000
Other						1,000		1,000
Less: Valuation allowance		(42,683,000)		(38,887,000)		(50,132,000)		(45,574,000)
Total long-term deferred income tax assets (liabilities)	$	—	$	—	$	0	$	0

As of December 31, ~~2019,~~2021, Ampio has approximately ~~$163.2~~$194.6 million in net operating loss (“NOL”) carryforwards that, subject to limitation, may be available in future tax years to offset taxable income. These net operating loss carryforwards expire from ~~2019~~2022 through 2037. Approximately ~~$30.3~~$63.5 million of the NOL carryforward carries forward indefinitely. Under the provisions of the Internal Revenue Code, substantial changes in the Company’s ownership may result in limitations on the amount of NOL carryforwards that can be utilized in future years.

The Company has provided a full valuation allowance against its deferred tax assets as it has determined that it is not more likely than not that recognition of such deferred tax assets will be utilized in the foreseeable future. The amount of income taxes and related income tax positions taken are subject to audits by federal and state tax authorities. The Company has adopted accounting guidance for uncertain tax positions which provides that in order to recognize an uncertain tax benefit, the taxpayer must be more likely than not of sustaining the position, and the measurement of the benefit is calculated as the largest amount that is more than 50% likely to be realized upon recognition of the benefit. ~~Ampio~~The Company believes that it has no material uncertain tax positions and has fully reserved against ~~the Company’s~~its future tax benefit with a valuation allowance and does not expect significant changes in the amount of unrecognized tax benefits to occur within the next twelve months. The Company’s policy is to record a liability for the difference between benefits that are both recognized and measured pursuant to GAAP and tax positions taken or expected to be taken on the tax return. Then, to the extent that the assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. ~~Ampio~~The Company reports tax-related interest and penalties as a component of income tax expense. During the periods reported, management of ~~Ampio~~the Company has concluded that no significant tax position requires recognition. The Company files income tax returns in the United States federal and various state jurisdictions. The Company is no longer subject to income tax examinations for federal income taxes before ~~2016~~2018 or for Colorado before ~~2015.~~2017. Net operating loss carryforwards are subject to examination in the year they are utilized regardless of whether the tax year in which they are generated has been closed by statute. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company may be subject to examination for prior NOL’s generated as such NOL’s are utilized.

Note 13 – Earnings Per Share

In the previously issued Form 10-K for the year ended December 31, 2018, the Company calculated basic and diluted earnings per share in a way, which was incorrect. The impact of this error to the Company’s previously reported diluted earnings per share for the year ended December 31, 2018 was an over-statement of $0.58. Based on the SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality, the Company assessed the materiality of the misstatement on both a quantitative and qualitative basis. Based on this assessment, the Company’s management determined that the diluted earnings per share calculation does not constitute a material misstatement and, as such, an amendment to the previously

~~F-26~~

~~Table of Contents~~

~~filed Annual Report on Form 10-K was not necessary. As such, the Company has revised the previously issued financial statements for the year ended December 31, 2018 to correct for this error.~~

Basic earnings per share is computed by dividing net ~~income (loss)~~loss available to common stockholders by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is based on the treasury stock method and computed by dividing net ~~income (loss)~~loss available to common stockholders by the diluted weighted-average shares of common stock outstanding during each period. The Company’s ~~potential~~potentially dilutive shares include stock options, ~~and~~ warrants for the shares of common ~~stock.~~stock and restricted stock awards. The potentially dilutive shares are

F-24

Table of Contents

considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when the effect is dilutive. The investor warrants are treated as equity in the calculation of diluted earnings per share in both the computation of the numerator and denominator. Since the Company operates at a net loss after adjusting for the derivative gain, all potentially dilutive shares are considered anti-dilutive and are excluded from the calculation of diluted net loss per share.denominator, if dilutive. The following table sets forth the calculations of basic and diluted earnings per share for the year ended December 31, ~~2019~~2021 and ~~2018:~~

Year Ended December 31,

2019

2018

2018
(as previously reported)
Net Income (loss)

$
(13,630,000)

$
33,986,000

$
33,986,000
Less: decrease (increase) in fair value of investor warrants

(4,869,065)

(45,298,000)

—
Income (loss) available to common stockholders

$
(18,499,065)

$
(11,312,000)

$
33,986,000

Basic and diluted weighted-average common shares outstanding

130,601,500

73,358,034

73,358,034
Add: dilutive effect of equity instruments

533,678

17,733,845

—
Diluted weighted-average shares outstanding

131,135,178

91,091,879

73,358,034
Earnings per share - basic

$
(0.10)

$
0.46

$
0.46
Earnings per share - diluted

$
(0.14)

$
(0.12)

$
0.46

2020:


	Year Ended December 31,
	2021		2020
Net loss	$	(17,075,000)	$	(15,894,000)
Less: decrease in fair value of investor warrants		(3,492,000)		—
Loss available to common stockholders	$	(20,567,000)	$	(15,894,000)

Basic weighted-average common shares outstanding		199,299,072		172,846,773
Add: dilutive effect of equity instruments		5,663,947		—
Diluted weighted-average shares outstanding		204,963,019		172,846,773
Earnings per share – basic	$	(0.09)	$	(0.09)
Earnings per share – diluted	$	(0.10)	$	(0.09)

The potentially dilutive shares of common stock that have been excluded from the calculation of net loss per share because of the anti-dilutive effect as of December 31, 2021 and 2020 are as follows:


	Year Ended December 31,
	2021	2020
Warrants to purchase shares of common stock	12,638,950	4,130,724
Outstanding stock options	7,506,989	6,099,651
Restricted stock awards	1,468,000	—
Total potentially dilutive shares of common stock	21,613,939	10,230,375

Note 14 – Litigation

~~On August 25, 2018, a purported stockholder of~~From time to time, the Company ~~commenced~~may be a ~~putative class action lawsuit~~party to litigation arising in the ~~United States District Court for the Central District~~ordinary course of California, captioned Shi v. Ampio Pharmaceuticals, Inc., et al., Case No. 18-cv-07476 (the “Securities Class Action”). Plaintiff in the Securities Class Action alleges that the Company and certainbusiness. As of its current and former officers violated the federal securities laws by misrepresenting and/or omitting material information regarding the AP-003 Phase III clinical trial of Ampion. The plaintiff asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Securities and Exchange Commission Rule 10b-5, on behalf of a putative class of purchasers of the Company’s common stock from December 14, 2017 through August 7, 2018. Plaintiff in the Securities Class Action seeks unspecified damages, pre-judgment and post-judgment interest, and attorneys’ fees and costs. On September 27, 2019, the Court presiding over the Securities Class Action issued an order appointing a Lead Plaintiff and Lead Counsel, pursuant to the Private Securities Litigation Reform Act. Lead Plaintiff filed an amended complaint in late 2019. ~~The Company filed a motion to dismiss the amended complaint on February 10, 2020. Plaintiffs’ opposition is due in March and the Company then has the right to file a reply.~~

On September 10, 2018, a purported stockholder of the Company brought a derivative action in the United States District Court for the Central District of California, captioned Cetrone v. Macaluso, et al., Case No. 18-cv-07855 (the “Cetrone Action”), alleging primarily that the directors and officers of Ampio breached their fiduciary duties in connection with alleged misstatements and omissions regarding the AP-003 Phase III clinical trial of Ampion.

~~F-27~~

~~Table of Contents~~

On October 5, 2018, a purported stockholder of the Company brought a derivative action in the United States District Court for the District of Colorado, Theise v. Macaluso, et al., Case No. 18-cv-02558 (the “Theise Action”), which closely parallels the allegations in the Cetrone Action. A second derivative action was filed in the United States District Court for the District of Colorado and was consolidated with the Theise Action under the caption In re: Ampio Pharmaceuticals Inc. Stockholder Derivative Actions, Case No. 18-cv-02558. This consolidated action, and the Certrone Action in California, are stayed pending further developments in the Securities Class Action.

The Company believes that all claims asserted are without merit and intends to defend these lawsuits vigorously. However, it is possible that additional actions will be filed in the future. The Company currently believes the likelihood of a loss contingency related to these matters is remote and given the fact of where the claims exist in the litigation process,31, 2021, the Company is not ~~in the position~~a party to ~~provide an estimate and/or range of potential loss.~~

any ongoing lawsuits.

Note 15 – Employee Benefit Plan

The Company has a 401(k) plan that allows participants to contribute a portion of their salary, subject to eligibility requirements and annual IRS limits. However, as of December 31, 2021, the Company does not match employee contributions.

Note 16 – Subsequent Events

In January 2020, the Company executed an amendment with the CRO as a result of an increased number of patients required for the current trial, which increased the contractual amount by $4.0 million. Therefore, the contract including the amendment totals $10.3 million (see Note 7 for additional information).

In addition, in January 2020, the Company awarded 34,059 shares of common stock to each independent director at a price of $0.5872 per share equivalent to $20,000, which was the closing price of our common stock on the date of grant.

On February ~~20, 2020,~~2022, the Company entered into a ~~Sales Agreement (“Sales Agreement”)~~sponsored research agreement with ~~two agents~~Trauma Research, LLC, an entity owned by one of the Company’s Directors. The agreement totals $400,000 for research activities to ~~implement an “at-the-market” equity offering program under which~~be performed over the next year. In addition, the Company ~~from time~~also entered into an agreement with that Director to ~~time, may offer and sell shares of its common stock having an aggregate offering price up~~provide research services. The agreement totals $250,000, which is to ~~$50.0 million (the “Shares”) through~~be paid in 4 equal installments payable quarterly over the ~~agents.~~Subject to the terms and conditions of the Sales Agreement, the agents will use their commercially reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions. The Company has no obligation to sell any of the Shares, and may at any time suspend sales under the Sales Agreement or terminate the Sales Agreement in accordance with its terms. The Company has provided the Agents with customary indemnification rights, and the agents will be entitled to an aggregate fixed commission of 4.0% of the gross proceeds (2.0% to each agent) from Shares sold. 1-year term.

~~F-28~~F-25


Delaware	26-0179592
~~Delaware~~	~~26‑0179592~~
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification ~~Number)~~No.)


373 Inverness Parkway Suite 200 Englewood, Colorado	80112
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value ~~$.0001~~$0.0001 per share	AMPE	NYSE American


			Page
	~~Page~~
	PART I
Item 1	BUSINESS	5
~~Item 1A~~	~~RISK FACTORS~~	14
~~Item 1B~~	~~UNRESOLVED STAFF COMMENTS~~	33
~~Item 2~~	~~PROPERTIES~~	33
~~Item 3~~	~~LEGAL PROCEEDINGS~~	33
~~Item 4~~	~~MINE SAFETY DISCLOSURES~~	33
	~~PART II~~	7
Item 51A	RISK FACTORS	23
Item 1B	UNRESOLVED STAFF COMMENTS	61
Item 2	PROPERTIES	61
Item 3	LEGAL PROCEEDINGS	61
Item 4	MINE SAFETY DISCLOSURES	61
	PART II
Item 5	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	33 61
Item 6	~~SELECTED FINANCIAL DATA~~RESERVED	34 62
Item 7	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34 62
Item 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39 69
Item 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	39 69
Item 9	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	39
~~Item 9A~~	~~CONTROLS AND PROCEDURES~~	40
~~Item 9B~~	~~OTHER INFORMATION~~	41
	~~PART III~~	69
Item 109A	CONTROLS AND PROCEDURES	69
Item 9B	OTHER INFORMATION	70
Item 9C	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	70
	PART III
Item 10	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	42 70
Item 11	EXECUTIVE COMPENSATION	55 71
Item 12	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	60 71
Item 13	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	61 71
Item 14	PRINCIPAL ACCOUNTANT FEES AND SERVICES	62
	~~PART IV~~	71
	PART IV
Item 15	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	64 71
Item 16	~~NONE~~FORM 10-K SUMMARY	67 73
SIGNATURES		68 74


Study Name		Title
AP-013		A Randomized, Controlled, Double-Blind Phase 3 Study to Evaluate the Efficacy and Safety of an Intra-Articular Injection of Ampion in Adults with Pain Due to Severe Osteoarthritis of the Knee
AP-017		A Randomized, Double-Blinded, Placebo-Controlled Phase 2 Study to Evaluate the Safety and Efficacy of Intravenous Ampion in Adult COVID-19 Patients Requiring Oxygen Supplementation
AP-019		A Randomized, Double-Blinded, Placebo-Controlled Phase 2 Study to Evaluate the Safety and Efficacy of Inhaled Ampion in Adults with Respiratory Distress Due to COVID-19
AP-018		A Randomized, Double-Blinded, Placebo-Controlled Phase 1 Study to Evaluate the Safety and Efficacy of Ampion in Patients with Prolonged Respiratory Symptoms due to COVID-19 (Long-COVID)


Human Serum Albumin	Nova Biologics/Octapharma
Line Sets	Sartorius Stedim and ThermoFisher
Caps/vials/stoppers	Afton Scientific


		Cash		Common
	Committee or Committees	Compensation		Stock
Board Annual Retainer:
Chairman		$	20,000
Each non-employee director		$	10,000
Board Meeting Fees:
Each meeting attended in-person		$	1,500
Each meeting attended telephonically or via web		$	1,000
Committee Annual Retainer:
Chairman of each committee	Audit; Compensation; Nominating and Governance; Disclosure	$	20,000
Each non-chair member	Audit	$	12,000
Each non-chair member	Compensation; Nominating and Governance; Disclosure	$	10,000
Committee Chairman Meeting Fees:
Each meeting attended in-person	Audit; Compensation; Nominating and Governance; Disclosure	$	2,500
Each meeting attended telephonically or via web	Audit; Compensation; Nominating and Governance; Disclosure	$	1,500
Committee Member Meeting Fees:
Each meeting attended in-person	Audit; Compensation; Nominating and Governance; Disclosure	$	1,500
Each meeting attended telephonically or via web	Audit; Compensation; Nominating and Governance; Disclosure	$	1,000
Annual Stock Award:				$	20,000


	Fees Earned or		Stock Option		Stock Awards		All Other
Name	Paid in Cash		Awards (1)		(2)		Compensation		Total
David Bar-Or, M.D. (3)	$	23,000	$	11,000	$	20,000	$		$	54,000
Philip H. Coelho (4)	$	112,000	$	49,000	$	20,000	$	—	$	181,000
Richard B. Giles (5)	$	102,000	$	49,000	$	20,000	$	—	$	171,000
David Stevens, Ph.D. (6)	$	98,000	$	34,000	$	20,000	$	—	$	152,000


							Option		All Other
						Stock	Awards		Compensation
Name and Principal Position	Year	Salary ($)		Bonus ($)		Award ($)	($)(1)		($)		Total ($)
(a)	(b)	(c)		(d)		(e)	(f)		(i)		(j)
Named Executive Officers

Michael Macaluso
CEO, effective January 2012	2019	300,000		5,000		—	—		—		305,000
	2018	300,000		5,000		—	—		—		305,000

Daniel G. Stokely
CFO, effective July 2019	2019	120,000	(2)	5,000		—	149,000	(2)	31,000	(2)	305,000
	2018	—		—		—	—		—		—

Thomas E. Chilcott
Former CFO, resigned June 2019	2019	101,000	(3)	—		—	39,000	(3)	161,000	(3)	301,000
	2018	225,000		30,000	(4)	—	34,000	(5) (8)	—		289,000

Holli Cherevka
COO, effective September 2017	2019	223,000	(6)	55,000	(7)	—	89,000	(6)	—		367,000
	2018	200,000		5,000		—	22,000	(8)	—		227,000


	Option Awards								Stock Awards
												Equity
											Equity	Incentive
											Incentive Plan	Plan Awards:
				Equity Incentive							Awards:	Market or
		Number of		Plan Awards:							Number of	Payout Value
	Number of	Securities		Number of							Unearned	of Unearned
	Securities	Underlying		Securities					Number of	Market Value	Shares, Units	Shares, Units
	Underlying	Unexercised		Underlying					Shares or	of Shares or	or Other	or Other
	Unexercised	Options		Unexercised	Option		Option		Units of Stock	Units of Stock	Rights That	Rights That
	Options Exercisable	Unexercisable		Unearned	Exercise		Expiration		That Have Not	That Have Not	Have Not	Have Not
Name	(#)	(#)		Options (#)	Price ($)		Date		Vested (#)	Vested ($)	Vested (#)	Vested ($)
(a)	(b)	(c)		(d)	(e)		(f)		(g)	(h)	(i)	(j)

Current Named Executive Officers

Michael Macaluso	266,666	133,334	(1)	—	0.81		3/9/2027		—	—	—	—
Michael Macaluso	180,000	—		—	3.46		12/20/2024		—	—	—	—
Michael Macaluso	250,000	—		—	2.76		5/7/2022		—	—	—	—
Michael Macaluso	180,000	—		—	1.70		8/27/2020		—	—	—	—
Michael Macaluso	220,000	—		—	1.03		8/12/2020		—	—	—	—
Daniel G. Stokely	200,000	200,000	(2)	—	0.43		8/20/2029
Thomas E. Chilcott	75,000	—		—	0.51		6/12/2020	(3)
Thomas E. Chilcott	200,000	—		—	0.48		6/12/2020	(3)	—	—	—	—
Thomas E. Chilcott	100,000	—	(3)	—	0.60		6/12/2020	(3)	—	—	—	—
Thomas E. Chilcott	75,000	—		—	0.75	(4)	6/12/2020	(3)	—	—	—	—
Holli Cherevka	100,000	100,000	(5)	—	0.51		9/16/2029
Holli Cherevka	200,000	—		—	0.55		9/19/2027		—	—	—	—
Holli Cherevka	30,000	—		—	0.51		8/8/2027		—	—	—	—
Holli Cherevka	170,000	—		—	0.75	(4)	7/15/2026		—	—	—	—
Holli Cherevka	30,000	—		—	0.75	(4)	10/6/2024		—	—	—	—
Holli Cherevka	9,402	—		—	0.75	(4)	11/8/2023		—	—	—	—
Holli Cherevka	70,598	—		—	8.62		11/8/2023
Holli Cherevka	45,000	—		—	0.75	(4)	4/2/2023		—	—	—	—
Holli Cherevka	35,000	—		—	0.75	(4)	1/14/2023		—	—	—	—


	Cause; Without Good		Without Cause; Good
Recipient and Benefit	Reason;		Reason		Death; Disability		Change in Control

Michael Macaluso
Salary	$	—	$	150,000	$	—	$	—
Stock Options (1)		—		—		—		—
Total	$	—	$	150,000	$	—	$	—

Daniel G. Stokely
Salary	$	—	$	142,500	$	—	$	—
Stock Options (1)		—		60,000		—		—
Total	$	—	$	202,500	$	—	$	—

Holli Cherevka
Salary	$	—	$	140,000	$	—	$	—
Stock Options (1)		—		22,000		—		—
Total	$	—	$	162,000	$	—	$	—


	Number of Shares Beneficially	Percentage of Shares
Name and Address of Beneficial Owner	Owned	Beneficially Owned (1)
5% Stockholders
Empery Asset Management, LP (2) 1 Rockefeller Plaza, Suite 1205 New York, NY 10020	12,827,571	8.1	%
CVI Investments, Inc. (3) C/O Heights Capital Management, Inc. 101 California Street, Suite 3250 San Francisco, CA 94111	12,454,835	7.8	%
Bruce Terker (4) 950 W. Valley Road, Suite 2900 Wayne, PA 19087	11,525,331	7.3	%
Directors and Name Executive Officers
Michael Macaluso (5)	3,016,752	1.9	%
David Bar-Or (6)	118,287	0.1	%
Richard B. Giles (7)	1,068,108	0.6	%
Philip H. Coelho (8)	819,291	0.5	%
Holli Cherevka (9)	690,000	0.4	%
Thomas Chilcott (10)	450,000	0.3	%
David R. Stevens (11)	436,799	0.3	%
Daniel G. Stokely (12)	215,000	0.1	%

Directors and executive officers as a group (eight people)	6,814,237	4.2	%


			(c) Number of
	(a) Number of securities	(b) Weighted	securities remaining
	to be issued upon	average exercise	available for future
	exercise of outstanding	price of	issuance under equity
	options, warrants and	outstanding options,	compensation plans
	rights	warrants and rights	(excluding securities reflected
Plan Category	(#)	($)	in column (a)) (#)

Equity compensation plans approved by stockholders	13,116,856	1.33	9,856,000
Equity compensation plans not approved by stockholders	-	-	-
Total	13,116,856	1.33	9,856,000


	Year Ended December 31,
	2019		2018
Moss Adams LLP
Annual Audit and Quarterly Review Fees	$	212,000	$	—
Audit-related fees (1)		—		—
Tax fees (2)		—		—
Total fees	$	212,000	$	—

Large ~~Accelerated Filer~~accelerated filer

Accelerated ~~Filer~~filer

Non-accelerated filer

~~Non-Accelerated Filer~~

Smaller reporting company

Emerging growth company