AMPE Ampio Pharmaceuticals, Inc. - 10-K

Item 1A.

Risk Factors.

You should carefully consider the following risk factors and all other information contained herein as well as the information included in this Annual Report and other reports and filings made with the SEC in evaluating our business and prospects.

Risks and uncertainties, in addition to those we describe below, that are not presently known to us or that we currently believe are immaterial may also impair our business operations. If any of the following risks occur, our business and financial results could be harmed, and the price of our common stock could decline. You should also refer to the other information contained in this Annual Report, including our Consolidated Financial Statements and the related Notes.

These risk factors are current through the date of this Annual Report on Form 10-K.

Risks Related to Our Business

Our OA-201 program was our only product development opportunity and with the recent data from non-clinical studies, we have ceased further development activity relating to OA-201.

We do not have any products that are approved for commercial sale and may never be able to develop marketable products. We have generated no revenue from sales of any products or services.  The OA-201 program was our only development program, and the small molecule formulation was our only potential product in development.  Because the data from the recently completed non-clinical pain reduction trial of OA-201 did not support a pain reduction benefit, Ampio determined to cease substantially all non-clinical and clinical development activities relating to OA-201 in February 2024. Our activities currently consist of taking steps to preserve cash to adequately fund an orderly wind down of the Company’s operations and to maximize the Company’s cash position and the pursuit of the resolution of currently pending legal proceedings.

Our available alternatives are limited and there is no assurance that any alternative will result in any distribution to or cash return to our stockholders.

Throughout the months of February and March 2024, the Board of Directors sought to identify and evaluate potential options available to the Company. Based on these evaluations, the Board determined to take steps designed to ensure sufficient cash to adequately fund an orderly wind down of the Company’s operations and to maximize the Company’s cash position. Consistent with this goal, on March 25, 2024, the Board of Directors determined to pursue voluntary delisting of Ampio’s common stock from the NYSE American. After delisting, the Company expects to suspend its reporting obligations under the Exchange Act and deregister its common stock under Section 12(b) of the Exchange Act.

Given our prior efforts to develop strategic options, the Board of Directors believes that more likely options include the liquidation and wind up of the Company through a plan of liquidation and dissolution that would be subject to Board of Director and stockholder approval or bankruptcy (should our net assets decline to levels that would require such action). If we wind up our business and dissolve, there is no assurance that our capital resources will be sufficient to discharge all of our liabilities and fund a distribution to our stockholders. We cannot predict the timing of or the amount of distributions, if any, to our stockholders in a dissolution that may be approved by the Board due to uncertainties as to the ultimate amount of our liabilities, the operating costs and amounts to be reserved for claims, obligations and provisions during the liquidation and winding-up process, and the related timing to complete this process, as well as the time and expense associated with our currently pending legal proceedings and any future legal proceedings in which we may become involved. Examples of uncertainties that could reduce our current cash resources and therefore reduce the amount that may become available to our stockholders in a dissolution if approved by the Board include: costs relating to the current and future legal defense costs in excess of coverage afforded by the existing insurance policies, satisfaction or settlement of lawsuits or other claims threatened against us or our directors or officers in excess of the coverage afforded by the existing insurance policies; amounts necessary to resolve claims of any creditors or other third parties; and delays in the liquidation and dissolution or other winding up process, including relating to seeking stockholder approval of dissolution if approved by the Board.

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We plan to initiate steps to exit from certain reporting requirements under the Exchange Act, which will substantially reduce publicly available information about us.

Our common stock is currently registered under the Exchange Act, which requires that we, and our officers and directors with respect to Section 16 of the Exchange Act, comply with certain public reporting and proxy statement requirements thereunder. Compliance with these requirements is costly and time-consuming. We plan to initiate steps to exit from such reporting requirements in order to curtail expenses. Until we exit from these reporting requirements, we will continue to incur expenses that will reduce the amount available for pursuit of our options and the amount available for payment of our liabilities, reserves or potential distribution to stockholders. If our reporting obligations cease, publicly available information about us will be substantially reduced.

There is substantial doubt about our ability to continue as a going concern.

In 2023, we experienced net losses of $8.6 million, had no revenue other than interest income, and used $8.6 million in cash to fund our operations. Due to the current level of liquidity at December 31, 2023 and the projected shortfall to cover operating expenses requiring cash for a period of 12 months from the report date of the annual report, management has expressed substantial doubt as to our ability to continue as a going concern.

As of December 31, 2023, our source of liquidity consisted of $4.1 million of cash and cash equivalents and $0.9 million of an insurance recovery receivable. As of February 29, 2024, we had $3.4 million in cash and cash equivalents and $0.5 million of an insurance recovery receivable. While we continued to implement cost reductions in 2023 and additional cost reductions in February and March 2024, we have finite cash resources available to fund our now limited operations. Our activities currently consist of taking steps to preserve cash to adequately fund an orderly wind down of the Company’s operations and to maximize the Company’s cash position and pursuit of the resolution of currently pending legal proceedings.

Currently, pending legal proceedings and any future legal proceedings may adversely affect our cash position and limit our pursuit of strategic options.

We are currently involved in and may in the future be involved in legal proceedings. Please see “ The settlement in principle of certain legal actions is subject to a number of conditions and risks ” for a summary of risks relating to the settlement in principle of certain of the pending legal proceedings. The settlements in principle do not affect the ongoing investigation by the SEC. We intend to continue to cooperate fully with the SEC.

Regardless of whether any claims against us are valid or whether we are liable, any future litigation claims, or regulatory proceedings likely will be expensive and time consuming to defend against, require us to advance substantial amounts to director and officer defendants and other indemnifiable defendants for the defense of their claims, and result in the diversion of management attention and reduce our current cash resources.

We currently expect the amount to be paid in both settlements, including related defense costs, will be covered by, and within the policy limits of our D&O insurance policy. However, if defense costs or the amounts associated with the settlements of the pending actions and stockholder demands exceed Ampio’s current expectation, its insurance coverage may not be adequate to cover the amounts incurred by the Company, including as a result of its indemnification obligations to its current and former officers and directors and other parties. Additionally, insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to the pending SEC investigation that is not resolved through the settlements in principle of the civil litigations.

In addition, insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to any future claims against us. We may be required to expend significant amounts to satisfy our self-insured retention in order to obtain coverage of any future claims against us, our directors and officers and other indemnifiable parties. The costs relating to the defense, satisfaction and/or settlement of lawsuits or other claims threatened against us, our directors and officers or other indemnifiable parties and amounts necessary to resolve claims of any creditors or other third parties will reduce our current cash resources and therefore reduce the amount that may become available to our stockholders in a dissolution if approved by the Board and the Company’s shareholders.

If we are liable in any legal proceeding, such proceeding could result in injunctions or other equitable relief, settlements, penalties, fines, or damages that could materially adversely affect our cash position. Given our limited cash resources, if

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we are exposed to significant liabilities resulting from our current or future legal proceedings that are not covered by insurance or if our cash resources are otherwise insufficient to satisfy all claims and liabilities, we may seek bankruptcy protection.

The settlement in principle of certain legal actions is subject to a number of conditions and risks.

On January 11, 2024, we announced that settlements in principle had been reached in the pending securities fraud class action, Case Number 22-cv-2105-WJM-MEH (the “Securities Class Action”), and the pending consolidated derivative actions in the United States District Court for the District of Colorado, Case Number 22-cv-2803-KLM (the “Consolidated Derivative Actions”).

The settlements are subject to various conditions, including confirmatory discovery in the Securities Class Action, negotiation and execution of the full settlement agreements and obtaining court approval in each action. On January 9, 2024, Ampio along with the other parties to each case filed status reports in both the Securities Class Action and the Consolidated Derivative Actions, advising the respective courts of the status of the settlements in principle. The settlement of the Consolidated Derivative Actions is supported by the plaintiff in the pending Colorado state court derivative action, Case Number 2023CV30287, as well as two stockholders who previously submitted pre-litigation demand letters to the Company’s Board of Directors. If finally approved by the relevant courts, the settlements will result in the dismissal with prejudice of all of the pending actions and the withdrawal of the two stockholder pre-litigation demands.

The settlements in principle of the pending actions and stockholder demands are subject to a number of conditions, including confirmatory discovery for the Securities Class Action, the execution and delivery of definitive settlement agreements reflecting the terms of the settlements in principle, obtaining preliminary court approval of the settlements, providing notice to stockholders of the proposed settlements, and obtaining final, non-appealable approvals by the respective courts. The timing of completion of the settlement agreements and filing motions to seek court approvals are uncertain. However, we will be endeavoring to finalize and execute the settlement agreements and have motions for preliminary approval submitted to the relevant courts by mid-May 2024. Additionally, the timing of any final decision by any of the respective courts is subject to the discretion of such court and any potential appeal. Ampio currently expects the amount to be paid in both settlements, including related defense costs, will be covered by, and within the limits of, its D&O insurance policies. If defense costs or the amounts associated with the settlements of the pending actions and stockholder demands exceed Ampio’s current expectation, its insurance coverage may not be adequate to cover the amounts incurred by the Company including as a result of its indemnification obligations to its current and former officers and directors.

Accordingly, there can be no assurance that the settlements in principle of the pending actions and stockholder demands will be finalized or approved by the respective courts, or that the settlements will be completed as currently proposed, or at any particular time. Additionally, the settlements in principle do not affect the ongoing investigation by the SEC. We intend to continue to cooperate fully with the SEC.

Our provisional patent applications and proprietary rights in OA-201 may be of limited value.

As part of the OA-201 program, we own a number of United States provisional patent applications covering our proprietary small molecule pharmaceutical formulations, as well as their therapeutic uses and manufacturing processes. Given that we have ceased efforts to continue to develop OA-201, our provisional patent applications and rights in OA-201 may be of limited value. Even if these provisional patent applications and rights have some value, we may not be able to adequately protect our rights due to our limited cash resources.

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. We expect that volatility to continue as a result of our delisting from the NYSE American and Exchange Act deregistration. In addition to delisting, deregistration and the other factors described in this section, the following factors may also have a significant impact on the market price of our common stock:

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uncertainties relating to our wind down of the Company’s operations, including the potential for dissolution of the Company, bankruptcy or strategic transaction;

announcements regarding our estimates of the timing or amount of distributions to our stockholders, if any;

developments in any legal proceeding in which we are or may become involved;

any announcements concerning our retention or loss of key employees;

sales of stock by our stockholders;

economic and other external factors beyond our control; and

public confidence in the securities markets and regulation by or of the securities market.

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.

With the Board approval to delist our stock, we expect a negative impact on the price of our stock and the ability to sell our common stock in the public market.

Currently, our common stock is listed on the NYSE American. Because of our current non-compliance with the NYSE American listing requirements relating to minimum stockholders’ equity and likely other continuing listing standards and, in addition, the expense associated with continuing the listing on the NYSE American, the Board of Directors determined to pursue voluntary delisting of Ampio’s common stock from the NYSE American as part of its cash conservation plan.

Following delisting of our common stock from NYSE American, the Company anticipates that the common stock would be quoted on the Pink Open Market operated by OTC Markets Group Inc. (the “OTC”) under the same symbol (“AMPE”).

If our common stock trades on the OTC market, an investor would find it more difficult to dispose of, or to obtain accurate quotations for the price of, our common stock for various reasons, including:

a limited availability for market quotations for our common stock;

reduced liquidity with respect to our common stock or potentially no liquidity with respect to our common stock;

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;

activity in the secondary trading market for our common stock; and

limited amount of news and other information.

Additionally, delisting from the NYSE American will likely affect the ability or willingness of certain counterparties to engage in certain transactions with us, such as a reverse merger or recapitalization .

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

Critical Accounting Policies, Estimates and Judgments

Our financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles (“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. 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 critical accounting policies have a significant impact on the results we report in our financial statements. Additional information regarding our critical accounting policies and estimates is contained in Notes 2, 6, 8 and 10 to the Financial Statements. We consider the following accounting estimates to be those that are most important to the portrayal of our financial condition and that require a higher degree of judgment.

Insurance Recovery Receivable

We reached the retention limit of $2.5 million under our D&O insurance policy during the second quarter of 2023 related to the SEC investigation and class action and derivative lawsuits, which were initiated during the second half of 2022 and continued through the 2023 period. As such, we estimate the percentage of legal invoices that will be reimbursed by the insurance carrier to determine the proper amount to record for the insurance recovery receivable, which offsets the legal fees incurred. The insurance recovery receivable estimate is based off previous insurance reimbursement. During the 2023 period, the average insurance recovery of legal fees was approximately 98% of legal fees incurred. Although we do not expect our estimates to be materially different from the amounts actually received, our understanding of the insurance carriers review and reimbursement process 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 the insurance recovery receivable.

Recent Accounting Pronouncements

Information regarding recently issued and relevant accounting standards (adopted and not adopted as of December 31, 2023) is contained in Note 2 to the Financial Statements.

Results of Operations—Year Ended December 31, 2023 Compared to December 31, 2022

We recognized a net loss for the year ended December 31, 2023 (the “2023 period”) of $8.6 million compared to the net loss recognized of $16.3 million for the year ended December 31, 2022 (the “2022 period”). The net loss during the 2023 period was primarily attributable to operating expenses of $9.6 million; partially offset by interest income and rental income of $0.3 million and $0.3 million, respectively, in addition to a non-cash gain from the elimination of an asset retirement obligation (“ARO”) of $0.3 million. The net loss during the 2022 period was primarily attributable to operating expenses of $22.3 million, which included a $1.9 million impairment loss related to long-lived and ROU assets; partially offset by the non-cash derivative gain and interest income of $5.8 million and $0.2 million, respectively. Operating expenses decreased $12.7 million, or 57%, from the 2022 period to the 2023 period primarily due to a (i) $6.5 million, or 73% decrease in research and development costs, (ii) $4.4 million, or 38%, decrease in general and

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administrative costs, (iii) and no recognition of impairment loss associated with the Company’s long-lived and ROU assets, which totaled $1.9 million during the 2022 period.

Research and Development

Research and development costs decreased by approximately $6.5 million, or 73%, for the 2023 period compared to the 2022 period. Research and development costs with variances above $175,000 and 10% are further explained below.

Years Ended December 31,

Professional fees

Operations/manufacturing

Laboratory

Salaries and benefits

Depreciation

Clinical trial and sponsored research expenses

Other

Share-based compensation

Total research and development

Professional Fees

Professional fees expense increased $36,000, or 5%, from 2022 to 2023. The increase is attributable primarily to costs we incurred during the 2023 period related to contractor fees for drug development and related advisory services for the OA-201 development program as part of our human capital resources strategy; partially offset by costs incurred related to a contracted Chief Medical Officer services required during the 2022 period, to assist with the final closeout of the Ampion clinical trials.

Operations/Manufacturing

Operations/manufacturing expenses increased $0.5 million, or 161%, from 2022 to 2023 as a result of the CDMO agreement, which was executed during the third quarter of 2023 and the completion of the OA-201 development milestones through the end of the 2023 period. This increase is partially offset by the shut-down and discontinued use/support of the cleanroom and overall manufacturing facility which completed in the second half 2022.

Laboratory

Laboratory operations/manufacturing expenses decreased $0.5 million, or 57%, from 2022 to 2023 as a result of the shift to outsourced non-clinical lab work related to the continued development of OA-201, which commenced during the first quarter of 2023. During the 2022 period we conducted laboratory operations to support the AP-017 and AP-019 clinical trials, combined with outsourced services to support the development of AR-300. This decrease is partially offset by the non-clinical trials conducted with research institutions for the OA-201 program during the fourth quarter of 2023, which is included in the Professional Fees line item above. In February and March 2024, we terminated agreements with research institutions relating to the non-clinical studies.

Salaries and benefits

Salaries and benefits expenses decreased $2.4 million, or 88%, from 2022 to 2023 as a result of the reduction in force (“RIF”) which was implemented in third quarter 2022 and completed in early first quarter 2023, which resulted in a 78% reduction of our workforce and the termination of a certain officer.

Depreciation

Depreciation expense decreased by $0.9 million, or 88%, from 2022 to 2023 as a result of (i) the initial impairment of our long-lived assets in third quarter 2022, with a final adjustment in March 2023, as a result of the sublease of the Ampio’s premises and (ii) a sale of all existing personal property to the subtenant in conjunction with the provisions of the sublease agreement.

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Clinical trial and sponsored research expenses

The clinical trial and sponsored research expenses decreased by approximately $3.0 million, or 100%, from 2022 to 2023 primarily due to the close-out efforts relating to the AP-017 and AP-019 studies reflecting costs totaling $2.3 million during the 2022 period. In addition, we incurred $0.7 million during the 2022 period related to the final close-out of the AP-013 clinical trial. The Company was not engaged in any clinical trials during the 2023 period.

General and Administrative

General and administrative expenses decreased $4.4 million, or 38%, for the 2023 period compared to the 2022 period. General and administrative costs with variances above $175,000 and 10% are further explained below.

Year Ended December 31,

Professional fees

Salaries and benefits

Insurance

Director fees

Other

Facilities

Share-based compensation

Total general and administrative

Professional fees

Professional fees decreased $2.7 million, or 39%, from 2022 to 2023 due primarily to the SEC investigation and class action and derivative lawsuits that were initiated in second half of 2022 and continued through the 2023 period. The retention limit of $2.5 million under the Company’s D&O insurance policy was reached during the second quarter of 2023. As such, the legal defense costs for the 2023 period representing covered claims as further defined under the provisions of the D&O policy, were offset by an insurance recovery totaling $3.3 million. Professional fees in the 2022 period primarily related to investigations conducted by the independent special committee of our Board of Directors. In addition, consulting expenses decreased approximately $1.1 million, as we discontinued certain contracts associated with analyzing potential strategic alternatives.

Salaries and benefits

Salaries and benefit expense decreased $0.4 million, or 25%, from 2022 to 2023 as a result of lower weighted average incremental headcount during the 2023 period resulting from the termination of a former officer and the RIF which was initiated in third quarter 2022.

Facilities

Facilities expense decreased $0.3 million, or 64%, from 2022 to 2023 as a result of the execution of the sublease agreement in March 2023, which resulted in the transfer of all utilities and operating costs of the premises to the subtenant and the full write-off of the ROU asset and future amortization (rent expense).

Share-based Compensation

Share-based compensation expense decreased $0.6 million, or 77%, from 2022 to 2023 as a result of forfeitures and cancellations of unvested stock options from employee terminations and board resignations in 2022.

Impairment of Long-lived Fixed and ROU Assets

In accordance with ASC Topic 360, Property, Plant and Equipment, the Company assesses all of its long-lived assets for impairment when impairment indicators are identified. Based on the assessment performed on September 30, 2022, the Company recorded a non-cash impairment related to its long-lived assets which was triggered by the Company’s

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announcement during the third quarter reporting period that it was discontinuing further development of its lead development asset, Ampion. Since the carrying value of the long-lived assets exceeded its undiscounted cash flows, an impairment loss, calculated as the difference between carrying value and fair value, was necessary. Accordingly, the Company recorded a $1.6 million impairment loss for the year ended December 31, 2022 through a direct reduction to the cost basis of the affected assets in its balance sheet.

In addition, the Company performed an assessment of potential impairment of the ROU asset consistent with the approach applied to other long-lived assets. ROU assets are reviewed for recoverability whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying amount over its fair value. Accordingly, the Company recorded a $0.3 million impairment loss on the ROU asset for the year ended December 31, 2022.

There were no impairment charges for the year ended December 31, 2023.

Other Income

Other income is summarized as follows:

Year Ended December 31,

Interest income

Rental income

Gain from elimination of ARO obligation, net

Derivative gain

Total other income

Other income

We recognized interest income of $0.3 million during the 2023 period, which increased $0.1 million from the 2022 period. The increase is attributable to an increase in interest rates since the third quarter of 2022, partially offset by the decrease in cash and cash equivalents. We also recognized a non-cash gain of $0.3 million related to the elimination of its ARO and derecognition of the ARO asset in conjunction with the sublease agreement entered into on March 1, 2023. In addition, we also recognized $0.3 million of rental income associated with the sublease agreement during the 2023 period. There was no derivative gain on the fair value of warrant liability during the 2023 period due to the adoption of ASU 2020-06 which converted the warrant liability to stockholder’s equity effective January 1, 2023.

Cash Flows

Cash flows for the respective periods are as follows:

Year Ended December 31,

Net cash used in operating activities

Net cash used in investing activities

Net cash used in financing activities

Net change in cash and cash equivalents

Net Cash Used in Operating Activities

During the 2023 period, our operating activities used approximately $8.6 million in cash and cash equivalents, which is consistent with our reported net loss of $8.6 million.

During the 2022 period, our operating activities used approximately $21.1 million in cash and cash equivalents, which was more than our reported net loss of $16.3 million. The difference of approximately $4.8 million is attributable to a non-cash adjustment of $5.8 million related to the warrant derivative gain and a decrease in accounts payable and accrued expenses of $4.0 million, partially offset by non-cash charges related to impairment loss, depreciation, accretion,

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amortization and stock-based compensation totaling $3.9 million and decreases in prepaid expenses and other of $1.1

million.

Net Cash Used in Investing Activities

During the 2023 period and the 2022 period, there was no change in cash related to investing activities.

Net Cash Used in (Provided by) Financing Activities

During the 2023 period, we generated gross proceeds of $0.1 million from the sale of 28,826 shares of common stock from the ATM Agreement, which was offset by offering related costs of $0.1 million.

During the 2022 period, we settled a tax liability of $79,000 related to the vesting of restricted stock awards. As a result of the settlement, the Company withheld 9,234 common shares for taxes which represented the fair value of the tax settlement. In addition, the Company paid $32,000 in offering costs in 2022 related to the registered direct offering, which was finalized in December 2021.

Contractual Obligations and Commitments

Our contractual obligations as of December 31, 2023 primarily consist of employment agreements, CDMO agreement, non-clinical agreements with laboratories, and a non-cancellable operating lease arrangement for our office and manufacturing facility. As of December 31, 2023, the value of our obligation under our non-cancellable operating lease arrangement was $0.3 million. For a more detailed description of our contractual obligations see Note 6 to the Financial Statements.

Liquidity and Capital Resources

Since inception, we have not generated operating revenue, profits or operating cash flow. Over this period, we have continued to be focused on research and non-clinical/clinical development, all of which has required raising a substantial amount of capital.

As of December 31, 2023, we had $4.1 million of cash and cash equivalents and an insurance recovery receivable of $0.9 million. As of February 29, 2024, we had $3.4 million in cash and cash equivalents and $0.5 million of an insurance recovery receivable. While we continued to implement cost reductions in 2023 and additional cost reductions in February and March 2024, we have finite cash resources available to fund our now limited operations. Our activities currently consist of taking steps to preserve cash to adequately fund an orderly wind down of the Company’s operations and to maximize the Company’s cash position and pursuit of the resolution of currently pending legal proceedings. Consistent with this goal, on March 25, 2024, the Board of Directors determined to pursue voluntary delisting of Ampio’s common stock from the NYSE American. After delisting, the Company expects to suspend its reporting obligations under the Exchange Act and deregister its common stock under Section 12(b) of the Exchange Act.

Our lack of operating revenue or cash inflows and our cash resources at December 31, 2023 raise substantial doubt as to our ability to continue as a going concern. The financial statements as of and for the year ended December 31, 2023 do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that will likely result when the Company is unable to continue as a going concern.

While the Board of Directors remains open to strategic options, given our prior efforts to develop similar strategic options, the Board of Directors believes that more likely options include the liquidation and wind up of the Company through a dissolution pursuant to a plan of liquidation and dissolution that would be subject to Board and stockholder approval or bankruptcy (should our net assets decline to levels that would require such action).