Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____to_____ COMMISSION FILE NUMBER 001-37487 AETHLON MEDICAL, INC. (Exact name of registrant as specified in its charter) NEVADA 13-363 ...

Financial Performance - Total current assets decreased from $4,038,116 as of March 31, 2019, to $2,644,071 as of June 30, 2019, representing a decline of approximately 34.4%[4] - Government contract revenue for the three months ended June 30, 2019, was $30,000, down 79.9% from $149,625 in the same period of 2018[6] - Total revenues for the three months ended June 30, 2019, were $30,000, a decrease of 80% from $149,625 in the same period of 2018[66] - The net loss for the three months ended June 30, 2019, was $2,067,284, compared to a net loss of $1,152,376 for the same period in 2018, indicating an increase in loss of 79.2%[6] - Basic and diluted loss per common share was $0.11 for the three months ended June 30, 2019, compared to $0.06 in the same period of 2018[6] - Total operating losses for the three months ended June 30, 2019, were $(1,566,188), compared to $(1,097,272) for the same period in 2018, representing a 43% increase in losses[66] - Cash reserves as of June 30, 2019, were $2,492,354, down from $6,122,902 a year earlier, reflecting a decrease of 59%[66] Operating Expenses - Total operating expenses increased to $1,596,188 for the three months ended June 30, 2019, compared to $1,246,897 in the prior year, marking a rise of 28.0%[6] - Professional fees increased to $607,578 for the three months ended June 30, 2019, from $449,435 in the same period of 2018, an increase of 35.3%[6] - Other expenses for the three months ended June 30, 2019, totaled $501,096, a significant increase from $55,104 in the same period in 2018, primarily due to a loss on debt extinguishment of $447,011[99] Cash Flow and Liquidity - Cash at the end of the period decreased to $2,492,354 from $3,828,074 at the beginning of the period, reflecting a decrease of 34.9%[12] - Cash used in operating activities was approximately $1,248,000 for the three months ended June 30, 2019, compared to approximately $818,000 for the same period in 2018, driven by a $915,000 increase in net loss[110] - The company is addressing liquidity issues by seeking additional investment capital through common stock issuances and government grants[25] Stockholder Equity - Total stockholders' equity decreased from $2,299,078 as of March 31, 2019, to $1,018,192 as of June 30, 2019, a decline of approximately 55.7%[5] - The weighted average number of common shares outstanding increased to 19,057,255 for the three months ended June 30, 2019, from 17,754,728 in the same period of 2018, an increase of 7.3%[6] - The company raised aggregate net proceeds of $36,622 from the sale of 46,300 shares at an average price of $0.79 per share during the three months ended June 30, 2019[41] Research and Development - The company is preparing to initiate clinical trials for the Hemopurifier, focusing on advanced and metastatic cancers, particularly solid tumors[15] - Aethlon Medical's Hemopurifier has been validated to capture multiple life-threatening viruses, including HIV, Ebola, and Zika virus, through early feasibility studies[16] - The company incurred research and development expenses during the three months ended June 30, 2019, but specific figures were not disclosed in the provided content[30] Debt and Financing - The company incurred a loss on debt extinguishment of $447,011 during the three months ended June 30, 2019[6] - The conversion price on the convertible notes was reduced from $3.00 per share to $0.68 per share, resulting in a loss on debt extinguishment of $447,011[36] - Aethlon Medical recorded total interest expense of $54,046 related to its convertible notes for the three months ended June 30, 2019[35] Compliance and Risks - The company faces risks related to compliance with Nasdaq continued listing requirements, including a minimum closing bid price of $1.00 per share and minimum stockholder's equity of $2,500,000[124] - Failure to meet Nasdaq's listing requirements could lead to a de-listing of the company's common stock, negatively impacting stock price and trading ability[124] - The company is not currently involved in any pending or threatened legal proceedings that could materially affect its operations[121] Other Information - Aethlon Medical reported an accumulated deficit of approximately $107.72 million as of June 30, 2019, raising concerns about its ability to continue as a going concern[23] - The company is the majority owner of Exosome Sciences, Inc., which is focused on discovering exosomal biomarkers for diagnosing life-threatening diseases[17] - Exosome Sciences, Inc. (ESI) is advancing a TauSomeTM biomarker candidate to diagnose chronic traumatic encephalopathy, with documented levels in former NFL players being nine times higher than controls[84] - The company has effective disclosure controls and procedures in place for timely reporting as required by the Securities Exchange Act of 1934[118] - There have been no changes in internal control over financial reporting that materially affected the company during the last fiscal quarter[119]

Financial Performance - The company has incurred significant losses, generating revenues of $229,625 in fiscal year 2019 and $149,625 in fiscal year 2018, primarily from NIH contracts[86]. - Government contract revenue for the fiscal year ended March 31, 2019, totaled $229,625, an increase of $80,000 from $149,625 in the previous fiscal year[270]. - The Breast Cancer Grant awarded by the NCI is valued at $298,444, with $80,000 recognized in revenue during the fiscal year ended March 31, 2019[271][272]. - The Melanoma Cancer Contract with the NCI resulted in $149,625 invoiced during the fiscal year ended March 31, 2019, completing the contract[273][276]. - Consolidated operating expenses increased to $6,228,642 for the fiscal year ended March 31, 2019, up from $4,980,741 in the previous year, reflecting a rise of $1,247,901[277]. - Professional fees increased by $638,844, primarily due to higher scientific consulting fees, legal fees, and directors' fees[278]. - Payroll and related expenses rose by $448,179, largely due to a $472,639 accrual for separation payments to the former CEO[279]. - General and administrative expenses increased by $160,878, driven by higher insurance, clinical trial, laboratory supplies, and rent expenses[280]. - Other expenses decreased significantly to $220,487 in the fiscal year ended March 31, 2019, from $868,721 in the previous year, a reduction of $648,234[281]. - There was no loss on debt extinguishment for the fiscal year ended March 31, 2019, compared to a loss of $376,909 in the previous year[283]. Regulatory and Compliance Risks - Regulatory approvals for the Hemopurifier are still pending, and the process is costly and time-consuming, with no guarantee of success[104]. - The FDA's compliance assessments can lead to various enforcement actions, including fines and product recalls, which could adversely affect the company's operations and financial condition[111]. - The FDA approval process for new medical devices can take several years and requires substantial resources, with the potential for delays or rejections based on various factors[127]. - The company is subject to evolving regulations regarding medical products for bioterrorism, which may complicate the approval process for its product candidates[132]. - Legislative changes could significantly impact the regulatory landscape, affecting the company's ability to obtain approvals and market its products[136]. - The company may be subject to significant civil, criminal, and administrative penalties if found in violation of federal and state healthcare laws[140]. - The company faces potential legal challenges and enforcement actions due to the complexity of healthcare regulations, which could adversely affect sales and marketing activities[140]. Market and Competitive Landscape - Intense competition exists in the medical device industry, with competitors potentially developing more effective products that could hinder the company's market opportunities[91]. - The healthcare industry is experiencing a trend toward cost containment, which may challenge the pricing of medical products and services[145]. - Adverse changes in reimbursement policies by payors could impact the company's ability to market and sell its products effectively[144]. - The lack of third-party coverage and reimbursement for the company's devices could delay or limit their adoption in both U.S. and international markets[141]. Operational Challenges - The company requires significant additional financing for operations and clinical trials, with potential dilution of existing stockholders' equity due to new debt or equity financings[89]. - The company has limited experience in large-scale manufacturing, which may lead to delays or increased costs in product commercialization[93]. - Delays in clinical trials could jeopardize regulatory approval and increase development costs, impacting financial results and commercial prospects[107]. - The company has only six full-time employees, which may impede its ability to achieve business objectives and attract necessary talent[97]. - The company plans to grow rapidly, which will strain resources and require significant improvements in managerial and operational systems[101]. - The company relies heavily on third-party vendors for clinical trials and manufacturing, making it vulnerable to delays and increased costs if these parties fail to meet their obligations[117]. - The company is preparing for the initiation of clinical trials for the Hemopurifier, focusing on advanced and metastatic cancers, including solid tumors[264]. - The company is in active communication with the FDA in preparation for the initiation of an early clinical trial in the treatment of solid tumors[264]. Intellectual Property and Legal Risks - The company has five issued U.S. patents and seven pending U.S. patent applications, with the first patents beginning to expire in 2019 and the last expiring in 2029[162]. - The company may face challenges in enforcing its patents and intellectual property rights, which could limit its ability to market products and stop competitors from offering similar products[164]. - The company may need to obtain licenses for third-party patents to develop and market its products, and failure to do so could inhibit its commercial exploitation[173]. - The company faces risks related to potential litigation over patent infringement, which could divert management's attention and resources[178]. Shareholder and Stock Information - The company has not paid cash dividends on its common stock and does not anticipate doing so in the foreseeable future, focusing instead on retaining earnings for operational needs[192]. - The company received a letter from Nasdaq in May 2019 indicating non-compliance with the minimum bid price requirement of $1.00 per share, which could lead to delisting if not resolved[190]. - Approximately 6.5% of the outstanding common shares are owned or controlled by officers and directors, which may limit shareholder influence on management decisions[209]. - The company has reserved 6,566,766 shares of common stock for issuance under various compensation plans, indicating potential dilution for existing shareholders[214]. - The company has the ability to issue additional shares without further shareholder approval, which could lead to further dilution of existing holdings[215]. - The common stock is traded on the Nasdaq Capital Market under the symbol "AEMD," with historical volatility and thin trading volume[238]. - The common stock has experienced significant price volatility, with a 52-week high of $1.66 and a low of $0.93, indicating a volatile trading environment[206]. - The company’s stock price is speculative and subject to fluctuations based on various factors, including operational results and market conditions[193]. - The company may be exposed to securities class action lawsuits due to fluctuations in its stock price, which could result in substantial costs and liabilities[195]. - The market for the common shares is characterized by thin trading, which may lead to difficulties in selling shares at desired prices[204]. - The company may face challenges in attracting institutional investors due to its small size and limited operating history, impacting trading volume and stock price stability[206]. - As of March 31, 2019, there were 886,672 securities to be issued upon exercise of outstanding options, with a weighted average exercise price of $3.79[254]. - As of March 31, 2019, there were 6,031,545 common shares available for purchase through outstanding options and warrants at a weighted average exercise price of $2.12 per share[212]. - The company has issued a total of 1,102,741 shares of common stock over the past four fiscal years to pay for debt, including 120,922 shares in the fiscal year ended March 31, 2018[217]. - The company has 86 record holders of its common stock as of June 24, 2019[239]. - The company has approximately 1,711,050 shares available for future issuance under the 2010 Stock Incentive Plan as of March 31, 2019[257]. - In the fiscal year ended March 31, 2019, investors exercised 283,300 warrants for aggregate cash proceeds of $311,630[249]. - In the fiscal year ended March 31, 2019, the company raised aggregate net proceeds of $1,048,371 from the sale of 773,221 shares at an average price of $1.36 per share[248].

Financial Performance - Total revenues for the nine months ended December 31, 2018, were $149,625, compared to $74,813 for the same period in 2017, representing a 99% increase[6] - The net loss attributable to Aethlon Medical, Inc. for the nine months ended December 31, 2018, was $4,552,613, compared to a net loss of $4,360,695 for the same period in 2017, reflecting a 4% increase in losses[6] - Total operating expenses for the nine months ended December 31, 2018, were $4,557,724, up from $3,634,862 in the same period of 2017, indicating a 25% increase[6] - Operating losses for Aethlon were $4,304,082, an increase from $3,495,189 in the prior year, while ESI reported operating losses of $104,017[74] - The net loss for Aethlon was $4,469,399 for the nine months ended December 31, 2018, compared to $4,308,807 for the same period in 2017, reflecting an increase of about 4%[74] Cash and Equity - Cash at the end of the period on December 31, 2018, was $4,824,901, down from $5,610,799 at the end of the same period in 2017, showing a decrease of 14%[7] - Total stockholders' equity decreased to $3,170,030 as of December 31, 2018, from $6,032,794 as of March 31, 2018, a decline of 47%[5] - Total cash as of December 31, 2018, was $4,824,901, down from $5,610,799 at the end of the previous year[74] - Cash reserves for Aethlon decreased to $4,824,225 as of December 31, 2018, down from $5,610,061 at the end of 2017, a decline of approximately 14%[74] Research and Development - Research and development expenses for the three months ended December 31, 2018, were $243,843, a significant increase from $129,207 for the same period in 2017, representing an increase of approximately 88.5%[19] - For the nine months ended December 31, 2018, research and development expenses totaled $655,760, compared to $462,640 for the same period in 2017, reflecting an increase of about 41.7%[19] Debt and Liabilities - Total current liabilities as of December 31, 2018, were $1,780,725, significantly higher than $477,957 reported on March 31, 2018[4] - The total convertible notes payable, net, as of December 31, 2018, amounted to $932,014, with accrued interest of $34,758[20] - The company recorded a loss on debt extinguishment of $536,889 related to modifications of the November 2014 10% Convertible Notes[30] - The company recorded a loss on debt extinguishment of $198,254 due to the modification of the December 2016 Notes[40] - The company accrued unpaid Board fees of $69,750 owed to non-employee directors as of December 31, 2018[50] Stock and Compensation - The total stock-based compensation expense for the nine months ended December 31, 2018 was $944,512, impacting the basic and diluted loss per common share by $(0.05)[52] - The company issued 250,676 Restricted Stock Units (RSUs) during the nine months ended December 31, 2018, resulting in a net issuance of 138,311 shares after cancellations[57] - The company issued a total of 107,196 RSUs to independent directors, with a total expense of $928,762 related to RSU grants during the nine months ended December 31, 2018[57] - The company has approximately $1,740,025 of unrecognized compensation cost related to share-based payments expected to be recognized over a weighted average period of 1.3 years[62] Grants and Contracts - The total amount of the Breast Cancer Grant awarded by NCI is $298,444, with the grant period running from September 14, 2018, through August 31, 2019[65] - As of December 31, 2018, the company had not recognized any revenue under the Breast Cancer Grant[66] - The company entered into a contract with the NCI with potential total payments of $299,250 over nine months, requiring achievement of specific milestones[67] FDA Designation and Product Development - Aethlon Medical's Hemopurifier device has received FDA designation as a "Breakthrough Device" for treating life-threatening viruses and advanced cancer[8] - The company is focused on advancing the Hemopurifier through investigational device exemptions (IDEs) approved by the FDA, with recent feasibility studies demonstrating safety in health-compromised individuals[9] - The company has not recognized any revenue under the $298,444 government grant awarded by the National Cancer Institute for the Hemopurifier Device as of December 31, 2018[66] Subsequent Events - Subsequent to December 31, 2018, the company raised net proceeds of $290,954 from the sale of 210,271 shares of common stock[82] - The company received a disbursement of $50,000 from the NCI under a grant agreement subsequent to December 31, 2018[83]