Aethlon Medical, Inc.

 

Overview

 

The following discussion and analysis should be read in conjunction with the consolidated Financial Statements and Notes thereto appearing elsewhere in this Annual Report.

 

We are a medical therapeutic company focused on developing the Hemopurifier® (HP), a clinical-stage immunotherapeutic device designed to address unmet needs in oncology, life-threatening infectious diseases, organ transplantation and other disease states in which extracellular vesicles (EVs) contribute to disease progression. The Hemopurifier utilizes a proprietary lectin-based technology to bind and remove enveloped viruses and EVs from biological fluids. EVs have been associated with immune suppression, metastasis, and resistance to therapy in cancer, as well as progression of severe infectious diseases. In pre-clinical studies, the Hemopurifier has also demonstrated the ability to bind disease-associated extracellular vesicles (“EVs”) and a panel of enveloped viruses. The Hemopurifier has been evaluated in human studies, involving 173 treatment sessions in 44 patients with either viral infections or cancer. The device has been well tolerated with an adverse event profile that is consistent with extracorporeal therapy. In certain human studies designed to evaluate viral clearance from biological fluids, findings demonstrated the removal of enveloped viruses. The U.S. Food and Drug Administration (“FDA”) has granted the Hemopurifier “Breakthrough Device” designation for two independent indications:

 

·	the treatment of individuals with advanced or metastatic cancer who are unresponsive to or intolerant of standard of care therapy, and with cancer types in which extracellular vesicles have been shown to contribute to disease progression and
·	the treatment of life-threatening viruses for which no approved therapies exist.

 

Oncology

 

We believe the Hemopurifier may be a potential treatment for patients with advanced and metastatic cancer through its ability to bind to and remove extracellular vesicles (“EVs”) particles that may promote tumor growth and metastasis. In October 2022, we formed a wholly-owned subsidiary in Australia to conduct oncology-related clinical research and pursue regulatory approval and commercialization opportunities for the Hemopurifier in Australia.

 

We previously completed an in vitro binding study of utilizing cancer patient samples, to evaluate the Hemopurifier’s ability to remove EVs from plasma. Results from this translational study provided pre-clinical evidence supporting the design of our oncology clinical trial involving patients with solid tumors who have stable or progressive disease during anti-PD-1 monotherapy treatment, such as Keytruda® (pembrolizumab) or Opdivo® (nivolumab).

 

We are currently conducting a safety, feasibility and dose-finding clinical trial in Australia evaluating the Hemopurifier in patients with solid tumors who have stable or progressive disease during anti-PD-1 monotherapy treatment. The trial is designed to enroll approximately 9 to 18 participants. The primary endpoint of the trial is safety, while exploratory analyses will be conducted to explore the number of HP treatments required to produce sustained reductions of EVs as well as improve anti-tumor T cell activity.

 

Three clinical sites in Australia— Royal Adelaide Hospital in Adelaide, and Pindara Private Hospital on the Gold Coast and GenesisCare North Shore Hospital in Sydney— are currently open for patient enrollment. During fiscal year 2026, we completed enrollment and treatment of the first cohort of three participants, each of whom received a single 4-hour Hemopurifier treatment. Following review of the first cohort data, independent Data Safety Monitoring Board (DSMB) reported no safety concerns and recommended progression to the second cohort. Following the DSMB review of the first cohort, enrollment commenced in the second cohort, in which participants received two Hemopurifier treatments during a one-week treatment period. In March 2026, the Company completed the second cohort and the DSMB subsequently approved advancement to the third cohort of the study. To date, no serious adverse events (“SAEs”) or dose-limiting toxicities ((“DLTs”) related to the Hemopurifier have been reported.

 

 

We previously pursued approval of a similar oncology clinical trial in India and received formal approval from the Central Drugs Standard Control Organization (“CDSCO”) on July 7, 2025. Following evaluation of anticipated site activation timelines and trial execution requirements, the Company elected to not proceed with the India trial in order to conserve resources and focus efforts on the Australian oncology clinical trial.

 

Life-Threatening Viral Infections

 

We believe the Hemopurifier may be applicable in the treatment of life-threatening viral infections involving highly glycosylated, or carbohydrate coated, viruses for which no approved therapies exist. In small-scale or early feasibility human studies conducted under FDA and international regulatory frameworks, the Hemopurifier has been used to treat individuals infected with Ebola, human immunodeficiency virus, HIV, and hepatitis-C and SARS-CoV-2.

 

In vitro studies have demonstrated the ability of the Hemopurifier to capture multiple enveloped viruses, including Ebola, Marburg virus, Zika, Lassa, MERS-CoV, Cytomegalovirus, Epstein-Barr, Herpes simplex, Chikungunya, Dengue, West Nile, H1N1 swine flu, H5N1 bird flu, and the reconstructed 1918 Spanish flu virus. In several cases, these studies were conducted in collaboration with leading government or non-government research institutes.

 

While we terminated our U.S. and India-based COVID-19 studies due to low ICU patient volume and shifting priorities, these programs demonstrated provided clinical experience with the Hemopurifier in critically ill patients. We continue to maintain an open IDE for viral indications, preserving the ability to evaluate the Hemopurifier in response to future outbreaks or emergent pathogens.

 

We have sufficient inventory of Hemopurifiers to support our ongoing oncology trial in Australia as well as any near-term expansion of that study. While we have received FDA approval to begin manufacturing at our San Diego facility under our IDE supplement, we are still awaiting FDA approval of a separate supplement to qualify an additional supplier of a key Hemopurifier component. We continue to work with the FDA on this process.

 

Pre-Clinical Exploration of Additional Clinical Uses for the Hemopurifier 

 

The Aethlon R&D laboratory continues to explore potential new indications for the Hemopurifier. We have published in the peer-reviewed journal Transplant Immunology the ability of the device to remove extracellular vesicles and their microRNA cargo from acellular perfusates of discarded kidneys that had undergone normothermic machine perfusion.

 

On May 12, 2025, the results of our pre-clinical ex vivo study entitled “Ex Vivo Removal of CD41 positive platelet microparticles from Plasma by a Medical Device containing a Galanthus nivalis agglutinin (GNA) affinity resin” were published in the pre-print vehicle bioRxiv.

 

Platelet-derived extracellular vesicles (PD-EVs) are the most numerous EV population in the body and are released by platelets in response to a variety of stimuli. The cargo contained within these EVs have been noted to take part in damage to blood vessels, activation of immune cells and spread of tumor cells. Excessive levels of PD-EVs have been implicated in a myriad of diseases including cancer, lupus, systemic sclerosis, multiple sclerosis, Alzheimer’s disease, sepsis, acute COVID-19 and Long COVID.

 

In this study, donated healthy human plasma was circulated through the Hemopurifier (HP) to simulate a clinical HP session. The study demonstrated approximately 98.5% removal of platelet-derived EVs at a timepoint equivalent to a four-hour HP treatment. We believe the results support the ongoing Australian oncology clinical trial and may support investigation of the Hemopurifier in additional disease indications.

 

 

In November 2025, we publicly released a separate pre-clinical preprint entitled “Increased mannosylation of extracellular vesicles in Long COVID plasma provides a potential therapeutic target for Galanthus nivalis agglutinin (GNA) affinity resin,” describing exploratory ex vivo laboratory research conducted in collaboration with the University of California, San Francisco Long COVID Clinic examining extracellular vesicle characteristics in plasma samples from individuals with Long COVID. The findings described in these preprints have not been peer reviewed and are based on laboratory analyses rather than clinical studies. These activities are intended to inform potential future research directions and evaluate the broader applicability of the Hemopurifier platform and may not be indicative of clinical outcomes.

 

Successful clinical development and regulatory approvals will be required before the Hemopurifier may be marketed in the United States or foreign jurisdictions. Some of our patents may expire before regulatory approval is obtained; however, the Company believes that its existing patent portfolio and more recently issued patents and patent applications will continue to support protection of the proprietary nature of our Hemopurifier treatment technology.

  

We continue to monitor the impact of inflation, global economic conditions, geopolitical conflicts, capital market volatility and other macroeconomic factors on its business, operations, clinical development programs and future access to capital. The extent to which these factors may affect the Company’s business, financial condition and results of operations remains uncertain and will depend on future developments beyond the Company’s control. 

 

Our executive offices are located at 11555 Sorrento Valley Road, Suite 203, San Diego, California 92121. Our telephone number is (619) 941-0360. Our website address is www.aethlonmedical.com. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this Annual Report.

 

Our common stock is listed on the Nasdaq Capital Market under the symbol “AEMD.”

 

Fiscal Years Ended March 31, 2026 and 2025

 

Results of Operations

 

Operating Costs and Expenses

 

Consolidated operating expenses were $7,293,632 for the fiscal year ended March 31, 2026, compared to $9,341,365 for the fiscal year ended March 31, 2025, a decrease of $2,047,733. The decrease for fiscal year ended March 31, 2026 was primarily attributable to lower payroll and related expenses of $1,086,087, lower professional fees of $414,910 and lower general and administrative expenses of $546,736.

 

Payroll and related expenses decreased by $1,086,087 for the fiscal year ended March 31, 2026, compared to the prior year. The decrease was primarily driven by a $949,401 reduction in salaries and related expenses and a $136,686 decrease in stock-based compensation. The reduction in salary expense primarily reflects that fiscal year 2025 included partial-year salary and severance expense associated with two executives terminated in July 2024 and October 2024, respectively, as well as costs associated with non-executive employees affected by a workforce reduction implemented in August 2024, whereas such costs were not incurred in fiscal year 2026.

 

Professional fees decreased by $414,910 for the fiscal year ended March 31, 2026, compared to the prior year. The decrease was primarily attributable to lower investor relations expenses due to reduced investor relations activities during fiscal year 2026, as well as lower accounting fees resulting from the transition to new accounting service providers and certain non-recurring accounting and audit related matters.

 

 

General and administrative expenses decreased by $546,736 for the fiscal year ended March 31, 2026, compared to the prior year. The decrease was primarily attributable to lower clinical trial expenses related to reduced COVID-19 and oncology trial activities in India, the impact of the Australian research and development tax credit of $218,000, lower manufacturing supply costs related to Hemopurifier raw materials, lower insurance expense, reduced and software subscription costs. These decreases were partially offset by higher licenses and permits expense associated with Nasdaq delisting appeal costs and a nonrecurring charge related to the forfeiture of a deposit associated with a previously rented mobile clean room.

 

As a result of the above factors, our operating loss decreased to $7,293,632 for the fiscal year ended March 31, 2026, from $9,341,365 for the fiscal year ended March 31, 2025.

 

Other Income (Expense)

 

Other income (expense), net changed significantly for the fiscal year ended March 31, 2026 compared to the prior year primarily due to the absence of the non-cash warrant inducement expense and Employee Retention Tax Credit income recognized during fiscal year 2025. Other income (expense), net for fiscal year 2026 primarily consisted of interest income earned on cash and cash equivalents and interest expense related to the financing of directors’ and officers’ insurance premiums.

 

Liquidity and Capital Resources

 

As of March 31, 2026, we had a cash balance of $5,026,458 and working capital of $4,122,702. This compares to a cash balance of $5,501,261 and working capital of $4,050,514 at March 31, 2025.

 

During the fiscal year ended March 31, 2026, we raised capital through a warrant inducement offer, a PIPE financing and a registered direct offering. In addition, during fiscal year 2026, we filed a registration statement on Form S-3 and amended our At The Market Offering Agreement, or ATM Agreement, with H.C. Wainwright & Co., LLC. No sales were made under the ATM Agreement during fiscal year 2026. In October 2024, the registration statement underlying our prior ATM program expired, and no additional sales could be made thereunder until the new registration statement on Form S-3 became effective.

 

On February 19, 2026, stockholders approved an amendment to the Company’s Articles of Incorporation increasing the authorized shares of common stock from 6,000,000 to 100,000,000 shares, which increased the Company’s flexibility to pursue future equity financings and other corporate purposes.

 

We have incurred recurring losses from operations and expect to continue to incur significant operating losses for the foreseeable future as we continue our research and development activities and clinical trial programs. While we continue to evaluate potential expense reduction opportunities, such opportunities may not materialize, and patient recruitment may occur more rapidly than expected, resulting in increased operating expenses. Based on our current operating plan and existing cash and cash equivalents, we expect that additional capital will be required to fund operations. Accordingly, substantial doubt exists regarding our ability to continue as a going concern for a period of at least one year from the date these financial statements are issued. We are actively evaluating additional financing alternatives; however, there can be no assurance that additional financing will be available on acceptable terms, or at all.

 

Financings During the Fiscal Year Ended March 31, 2026:

 

Net cash provided by financing activities for the year ended March 31, 2026 was approximately $6.5 million. Financing activities primarily consisted of proceeds from equity offerings and warrant exercises totaling approximately $7.8 million, offset by $1.2 million in offering costs and placement agent commissions. The proceeds were used primarily for working capital and general corporate purposes.

 

 

Financings During the Fiscal Year Ended March 31, 2025:

 

During the fiscal year ended March 31, 2025, the Company raised aggregate net proceeds of approximately $7.7 million from equity financing transactions, including a public offering completed in May 2024, subsequent warrant exercises and a warrant inducement transaction completed in March 2025. Net proceeds were used primarily for working capital and general corporate purposes. 

 

Material Cash Requirements

 

We expect our clinical trial expenses related to our oncology studies in Australia to continue for the foreseeable future. These expenses primarily relate to trial activities and manufacturing of additional Hemopurifiers to support the studies.

 

In addition, we maintain leases for our headquarters, laboratory and manufacturing facilities. We are currently evaluating certain lease arrangements as we continue to assess our operational and facility requirements.

 

Future capital requirements will depend upon many factors, including progress and results of our clinical trials, the number and scope of development programs, the costs of manufacturing Hemopurifier devices, the timing and costs associated with regulatory approvals, the costs involved in protecting and maintaining our intellectual property portfolio, and our ability to establish strategic collaborations or other financing arrangements.

 

We have incurred recurring losses from operations and negative cash flows from operating activities and expect such conditions to continue for the foreseeable future. Accordingly, we will require additional capital to fund our operations and clinical programs. We expect to seek additional financing through equity offerings, debt financings and/or strategic transactions; however, there can be no assurance that such financing will be available on acceptable terms, if at all.

 

Because of the numerous risks and uncertainties associated with the development of the Company’s therapeutic technologies, the Company cannot predict the timing or amount of future operating expenditures and may never achieve profitability or positive cash flows from operations

 

Global economic and geopolitical conditions, including inflationary pressures, interest rate volatility, geopolitical conflicts and uncertainty in the capital markets, may adversely impact the Company’s ability to obtain additional financing on acceptable terms, or at all. Continued volatility in the equity and credit markets could make future financings more difficult, more costly and/or more dilutive to stockholders.

 

Cash Flows

 

Cash flows from operating, investing and financing activities, as reflected in the accompanying Consolidated Statements of Cash Flows, are summarized as follows (in thousands):

 

	For the year ended
	March 31, 2026				March 31, 2025
Cash provided by (used in):
Operating activities	$	(6,998	)		$	(7,646	)
Investing activities		(4	)			–
Financing activities		6,521				7,727
Effect of exchange rate on cash		7				(12	)
Net increase (decrease) in cash	$	(474	)		$	69

 

 

Net Cash Used in Operating Activities

 

We used cash in our operating activities due to our losses from operations. Net cash used in operating activities was approximately $7.0 million in fiscal 2026, compared to approximately $7.6 million in fiscal 2025, a decrease of approximately $600,000. The decrease in cash used in operating activities was primarily attributable to a lower net loss in fiscal 2026, partially offset by lower non-cash charges, including the absence of warrant inducement expense recorded in fiscal 2025. Changes in working capital also contributed to the change in operating cash flows, primarily due to decreases in accounts payable and other current liabilities and amounts due to related parties.

 

Net Cash Used in Investing Activities

 

During fiscal 2026, the Company purchased approximately $4,000 of equipment. The Company did not purchase any equipment during fiscal 2025.

 

Net Cash from Financing Activities

 

Net cash provided by financing activities decreased from approximately $7.7 million during the fiscal year ended March 31, 2025 to approximately $6.5 million during the fiscal year ended March 31, 2026.

 

Financing activities during fiscal 2026 primarily consisted of proceeds from the issuance of common stock and exercises of warrants. These proceeds were partially offset by commissions, offering-related expenses and tax withholding payments associated with the vesting of restricted stock units (“RSUs”).

 

Financing activities during fiscal 2025 primarily consisted of proceeds from the issuance of common stock and warrant-related financing transactions, partially offset by tax withholding payments associated with the vesting of RSUs.

 

Critical Accounting Policies and Significant Judgments and Estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires us to make a number of estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. Actual results could differ from these estimates under different future assumptions or conditions.

 

We believe that the following accounting policies and estimates involve significant judgments and assumptions used in the preparation of our consolidated financial statements and are important to the portrayal of our financial condition and results of operations.

 

Warrant Inducement Transactions

 

From time to time, the Company may enter into warrant inducement arrangements, in which modifications to the terms of outstanding equity-classified warrants—such as reductions in exercise price or the issuance of additional warrants—are offered to incentivize early exercise. These transactions require significant judgment in determining whether the arrangement constitutes a routine equity modification or a substantive inducement that should be accounted for as an expense. In making this determination, the Company evaluates the structure and purpose of the transaction, including whether incremental value was transferred to the holder to accelerate capital inflows. In cases where the substance of the arrangement reflects an inducement, the Company records the incremental value as an expense in the period the transaction occurs. Determining the fair value of such inducements and the appropriate timing of recognition involves complex estimates and careful consideration of the facts and circumstances of each arrangement.

 

 

Share-based Compensation

 

We account for share-based compensation awards using the fair-value method and record such expense based on the grant date fair value in the consolidated financial statements over the requisite service period. This requires management to make estimates and assumptions regarding the fair value of the awards, including the expected term, volatility, risk-free interest rate, and forfeiture rates. These assumptions are inherently subjective and involve significant judgment. The fair value of stock options is typically determined using the Black-Scholes option pricing model. Compensation expense is recognized over the vesting period of the awards in a manner that reflects the service period or any applicable performance conditions.

 

RSU Grants to Non-Employee Directors

 

The Company maintains the Amended and Restated Non-Employee Director Compensation Policy, or the Director Compensation Policy, which provides for cash and equity compensation for persons serving as non-employee directors of the Company. Under this policy, each new director receives either stock options or a grant of RSUs upon appointment/election, as well as either an annual grant of stock options or of RSUs at the beginning of each fiscal year. The (i) stock options are subject to vesting and (ii) RSUs are subject to vesting and represent the right to be issued on a future date shares of our common stock upon vesting.

 

On April 23, 2025, our Board of Directors approved, pursuant to the terms of the Director Compensation Policy, the grant of the annual RSUs under the Director Compensation Policy to each of the four non-employee directors of the Company then serving on the Board of Directors. The Director Compensation Policy provides for a grant of stock options or $50,000 worth of RSUs at the beginning of each fiscal year for current non-employee directors then serving on the Board of Directors, and for a grant of stock options or $75,000 worth of RSUs for a newly elected non-employee director, with each RSU priced at the average for the closing prices for the five days preceding and including the date of grant. In April 2026 the four eligible directors were each granted an RSU in the amount of 21,815 shares under the Company’s 2020 Equity Incentive Plan, or the 2020 Plan. The RSUs are subject to vesting in four equal installments, with 25% of the restricted stock units vesting on each of June 30, 2025, September 30, 2025, December 31, 2025, and March 31, 2026, subject in each case to the director’s Continuous Service (as defined in the 2020 Plan), through such dates. Vesting will terminate upon the director’s termination of Continuous Service prior to any vesting date.

 

There were no unissued vested RSUs outstanding as of March 31, 2026. 

 

Recent Events

 

Subsequent to March 31, 2026, the Company sold an aggregate of 800,111 shares of common stock under its ATM facility, resulting in gross proceeds of approximately $1,904,212. Net proceeds, after sales commissions of approximately $47,000 and SEC, settlement and delivery fees of approximately $5,900, were approximately $1,851,000. The Company has not reflected additional offering-related costs, including legal and accounting fees, in the net proceeds amount, as such costs will be recorded as a reduction of additional paid-in capital upon final determination. The Company intends to use the proceeds for working capital and general corporate purposes, including clinical development activities and research and development. On June 4, 2026, the Company filed Amendment No. 1 to its prospectus supplement relating to its at-the-market offering program. The amendment updated the amount of securities eligible for sale pursuant to General Instruction I.B.6 of Form S-3. Following the filing of the amendment, the Company may offer and sell shares of its common stock having an aggregate offering price of up to approximately $542,716 pursuant to its at-the-market offering program.

 

On June 4, 2026, we completed treatment of the first participant in Cohort 3 of our Australian oncology trial at Pindara Private Hospital on the Gold Coast of Australia. The participant received three Hemopurifier treatments over a one-week period, each treatment lasting four hours. The participant tolerated the procedures without reported complications. The participant will now undergo a seven-day safety follow-up period during which the participant will be monitored for dose limiting toxicities (“DLTs”) and device-related serious adverse events (SAEs) occurs. Two additional patients must be enrolled and treated to complete this Cohort 3.

 

 

RSU Grants

 

Subsequent to March 31, 2026, on April 17, 2026, the Board of Directors approved annual restricted stock unit (“RSU”) awards to each of the Company’s four non-employee directors pursuant to the Company’s Director Compensation Policy and the Company’s 2020 Equity Incentive Plan. The awards had an aggregate grant date value of approximately $200,000 and covered an aggregate of 87,260 shares of common stock. The awards vest in four equal quarterly installments through March 31, 2027, subject to continued service on the applicable vesting dates. The RSUs and the shares issuable upon settlement thereof were granted in reliance upon exemptions from registration under the Securities Act of 1933, as amended.