ENGLEWOOD, Colo., April 3, 2024 /PRNewswire/ -- Ampio Pharmaceuticals, Inc. (NYSE American: AMPE) (the "Company" or "Ampio") today announced that, as previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2023, which was filed on March 27, 2024 with the Securities and Exchange Commission, the audited financial statements contained an unqualified audit opinion from its independent registered public accounting firm that included an explanatory paragraph related to the Company's ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-35182 AMPIO PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | - ...

ENGLEWOOD, Colo., Feb. 14, 2024 /PRNewswire/ -- Ampio Pharmaceuticals, Inc. (NYSE American: AMPE) (the "Company" or "Ampio"), a pre-revenue stage biopharmaceutical company focused on development of a potential treatment for osteoarthritis as part of its OA-201 program, today announced the efficacy results from recently completed nonclinical pre-IND enabling studies with OA-201, Ampio's only product development opportunity.  Ampio reported that the efficacy results of these studies do not support an Investig ...

ENGLEWOOD, Colo., Jan. 11, 2024 /PRNewswire/ -- Ampio Pharmaceuticals, Inc. (NYSE American: AMPE) (the "Company" or "Ampio"), a pre-revenue stage biopharmaceutical company focused on development of a potential treatment for osteoarthritis as part of its OA-201 program, today announced that it has reached settlements in principle 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 Di ...

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) Ampio Pharmaceuticals, Inc. is a Delaware-incorporated company whose common stock (AMPE) is registered on the NYSE American [Registrant Information](index=1&type=section&id=Registrant%20Information) Ampio Pharmaceuticals, Inc. is a Delaware-incorporated company with principal executive offices in Englewood, Colorado - Ampio Pharmaceuticals, Inc. is incorporated in Delaware and its common stock trades on the NYSE American under the symbol **AMPE**[2](index=2&type=chunk) [Filing Status and Shares Outstanding](index=1&type=section&id=Filing%20Status%20and%20Shares%20Outstanding) The registrant is a Non-Accelerated Filer and Smaller Reporting Company, with 832,021 common shares outstanding as of November 10, 2023 - The company is a **Non-Accelerated Filer** and a **Smaller Reporting Company**[3](index=3&type=chunk) - As of November 10, 2023, there were **832,021 outstanding shares** of common stock[3](index=3&type=chunk) [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights forward-looking statements regarding future events, financial position, clinical developments, and strategic alternatives, subject to risks and uncertainties [Nature and Scope of Forward-Looking Statements](index=4&type=section&id=Nature%20and%20Scope%20of%20Forward-Looking%20Statements) Forward-looking statements cover anticipated clinical developments, financial position, strategic alternatives, capital needs, legal proceedings, and potential partnerships - Forward-looking statements cover anticipated future clinical developments (**OA-201**), future financial position, management plans, strategic alternatives, capital needs, legal proceedings, and ability to identify strategic partners[7](index=7&type=chunk) - The company undertakes no obligation to update or revise these statements, which are subject to risks and uncertainties that could cause actual results to differ materially[8](index=8&type=chunk) [PART I – FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%E2%80%93FINANCIAL%20INFORMATION) This section presents the company's unaudited financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents unaudited condensed financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, with detailed notes [Condensed Balance Sheets](index=6&type=section&id=Condensed%20Balance%20Sheets) The condensed balance sheets show a decrease in cash and total stockholders' equity from December 31, 2022, to September 30, 2023, reflecting a 20-to-1 reverse stock split | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Cash and cash equivalents | $6,398,000 | $12,653,000 | | Total current assets | $7,646,000 | $13,329,000 | | Total assets | $7,646,000 | $13,588,000 | | Accounts payable and accrued expenses | $1,909,000 | $852,000 | | Total current liabilities | $2,271,000 | $1,192,000 | | Total liabilities | $2,271,000 | $1,799,000 | | Total stockholders' equity | $5,375,000 | $11,789,000 | - Balances for September 30, 2023, and December 31, 2022, have been adjusted to reflect a **20-to-1 reverse stock split** effected on September 12, 2023[14](index=14&type=chunk) [Condensed Statements of Operations](index=8&type=section&id=Condensed%20Statements%20of%20Operations) The condensed statements of operations show a significant reduction in net loss for both the three and nine months ended September 30, 2023, primarily due to decreased operating expenses | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development | $329,000 | $2,747,000 | $1,197,000 | $8,177,000 | | General and administrative | $1,071,000 | $2,975,000 | $6,106,000 | $9,504,000 | | Total operating expenses | $1,400,000 | $7,658,000 | $7,359,000 | $19,617,000 | | Total other income | $171,000 | $1,247,000 | $781,000 | $5,500,000 | | Net loss | $(1,229,000) | $(6,411,000) | $(6,578,000) | $(14,117,000) | | Net loss per common share (Basic) | $(1.53) | $(8.51) | $(8.18) | $(18.73) | | Net loss per common share (Diluted) | $(1.53) | $(10.06) | $(8.18) | $(25.88) | - Net loss per common share and weighted average common shares outstanding for all periods have been retroactively adjusted to reflect the **20-to-1 reverse stock split** effected on September 12, 2023[17](index=17&type=chunk) [Condensed Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity) The condensed statements of stockholders' equity reflect changes including the reclassification of warrant derivative liability and the issuance and redemption of Series D Preferred Stock | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------- | :------------------- | :------------------ | | Additional paid-in capital | $245,848,000 | $245,728,000 | | Accumulated deficit | $(240,473,000) | $(233,939,000) | | Total stockholders' equity | $5,375,000 | $11,789,000 | - The reclassification of warrant derivative liability upon adoption of ASU 2020-06 increased accumulated deficit by **$44,000** as of January 1, 2023[19](index=19&type=chunk) - Series D Preferred Stock was issued on May 24, 2023, and subsequently redeemed on July 27, 2023, after the reverse stock split approval[19](index=19&type=chunk) [Condensed Statements of Cash Flows](index=10&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) The condensed statements of cash flows indicate a significant reduction in net cash used in operating activities for the nine months ended September 30, 2023 | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(6,578,000) | $(14,117,000) | | Net cash used in operating activities | $(6,255,000) | $(16,834,000) | | Net cash used in investing activities | $0 | $0 | | Net cash used in financing activities | $0 | $(111,000) | | Net change in cash and cash equivalents | $(6,255,000) | $(16,945,000) | | Cash and cash equivalents at end of period | $6,398,000 | $16,947,000 | [Notes to Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) These notes provide detailed explanations of accounting policies, financial position, and operational changes, including the reverse stock split and going concern uncertainty [Note 1 – The Company and Summary of Significant Accounting Policies](index=11&type=section&id=Note%201%20%E2%80%93%20The%20Company%20and%20Summary%20of%20Significant%20Accounting%20Policies) Ampio Pharmaceuticals, Inc. is a pre-revenue biopharmaceutical company focused on developing OA-201 for osteoarthritis, facing substantial doubt about its going concern ability - Ampio is a pre-revenue biopharmaceutical company focused on developing **OA-201** for osteoarthritis[25](index=25&type=chunk) - The company effected a **20-to-1 reverse stock split** on September 12, 2023, retroactively applied to financial statements[27](index=27&type=chunk) - As of September 30, 2023, the company had an accumulated deficit of **$240.5 million** and expects continued operating losses[33](index=33&type=chunk) - The company believes it has sufficient liquidity to fund business operations into the **first quarter of 2024**, but existing factors raise substantial doubt about its ability to continue as a going concern[34](index=34&type=chunk)[36](index=36&type=chunk) [Note 2 – Current Assets, Excluding Cash and Cash Equivalents](index=15&type=section&id=Note%202%20%E2%80%93%20Current%20Assets,%20Excluding%20Cash%20and%20Cash%20Equivalents) Current assets, excluding cash, include an insurance recovery receivable of $530,000 and prepaid expenses primarily for unamortized commercial insurance premiums - An insurance recovery receivable of **$530,000** was recorded as of September 30, 2023, for defense costs related to lawsuits and an SEC investigation[40](index=40&type=chunk) Prepaid Expenses and Other | Prepaid Expenses and Other | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Unamortized commercial insurance premiums | $517,000 | $610,000 | | Deferred issuance costs | $136,000 | — | | Deposits | $34,000 | $34,000 | | Other | $31,000 | $32,000 | | Total prepaid expenses and other | $718,000 | $676,000 | [Note 3 – Fixed Assets](index=15&type=section&id=Note%203%20%E2%80%93%20Fixed%20Assets) Net fixed assets decreased to zero as of September 30, 2023, due to the sublease of its facility and the sale of all existing fixed assets to the subtenant Fixed Assets, Net | Fixed Assets, Net | September 30, 2023 | December 31, 2022 | | :-------------------- | :------------------- | :------------------ | | Fixed assets, gross | — | $9,429,000 | | Accumulated depreciation | — | $(9,245,000) | | Fixed assets, net | $0 | $184,000 | - Fixed assets were reduced to zero as of September 30, 2023, due to the sublease of the facility and the sale of all existing fixed assets to the subtenant[43](index=43&type=chunk) Depreciation and Amortization Expense | Depreciation and Amortization Expense | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Expense | $0 | $347,000 | $122,000 | $865,000 | [Note 4 – Accounts Payable and Accrued Expenses](index=16&type=section&id=Note%204%20%E2%80%93%20Accounts%20Payable%20and%20Accrued%20Expenses) Total accounts payable and accrued expenses increased to $1,909,000 as of September 30, 2023, driven by higher professional fees and a new commercial insurance premium financing agreement Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses | September 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------------- | :------------------ | | Accounts payable | $459,000 | $97,000 | | Professional fees | $737,000 | $157,000 | | Commercial insurance premium financing | $354,000 | $189,000 | | Preclinical and clinical trials | $185,000 | $89,000 | | Total | $1,909,000 | $852,000 | - In June 2023, the company entered into a nine-month commercial insurance premium financing agreement for **$703,000** at an **8.00% annual interest rate**[48](index=48&type=chunk) [Note 5 – Commitments and Contingencies](index=17&type=section&id=Note%205%20%E2%80%93%20Commitments%20and%20Contingencies) The company has employment agreements, terminated related party research agreements, and a sublease agreement that transferred lease obligations and resulted in a non-cash gain - The CEO's employment agreement was amended on October 1, 2023, to an indefinite term, while the CFO's term ends in October 2024[49](index=49&type=chunk) - All related party research agreements were terminated and no longer in effect as of September 30, 2023[51](index=51&type=chunk) - A sublease agreement for the company's facility, effective March 1, 2023, transferred rent, utilities, and insurance responsibilities to the subtenant[54](index=54&type=chunk) - The sublease resulted in the derecognition of a **$294,000 asset retirement obligation** and a **$288,000 non-cash gain**[54](index=54&type=chunk) [Note 6 – Warrants](index=18&type=section&id=Note%206%20%E2%80%93%20Warrants) Following the adoption of ASU 2020-06, the company reclassified its liability-classified warrants to accumulated deficit, with 52,751 equity-classified warrants outstanding - The company adopted **ASU 2020-06** effective January 1, 2023, reclassifying 'investor' liability-classified warrants to accumulated deficit[58](index=58&type=chunk) - There was no warrant derivative liability as of September 30, 2023[61](index=61&type=chunk) Warrants | Warrants | Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | | :----------------------------- | :----------------- | :------------------------------ | :------------------------------------------ | | Outstanding as of Dec 31, 2022 | 53,263 | $318.80 | 3.80 | | Outstanding as of Sep 30, 2023 | 52,751 | $320.62 | 3.08 | [Note 7 – Fair Value Considerations](index=20&type=section&id=Note%207%20%E2%80%93%20Fair%20Value%20Considerations) The company early adopted ASU 2020-06, reclassifying its warrant derivative liability to stockholder's equity, resulting in no financial liabilities classified in the fair value hierarchy as of September 30, 2023 - The company early adopted **ASU 2020-06**, reclassifying the warrant derivative liability to stockholder's equity effective January 1, 2023[63](index=63&type=chunk) - As of September 30, 2023, there were no financial liabilities classified as Level 1, 2, or 3 in the fair value hierarchy[67](index=67&type=chunk) Liabilities (December 31, 2022) | Liabilities (December 31, 2022) | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :------ | :------ | | Warrant derivative liability | $0 | $0 | $44,000 | $44,000 | [Note 8 – Common Stock](index=21&type=section&id=Note%208%20%E2%80%93%20Common%20Stock) The company has 300 million authorized shares of common stock, with 804,604 outstanding, and established an ATM Offering Agreement for up to $1,250,000, incurring $136,000 in issuance costs - The company has **300,000,000 authorized shares** of common stock[68](index=68&type=chunk)[69](index=69&type=chunk) - As of September 30, 2023, **804,604 shares** of common stock were outstanding[69](index=69&type=chunk) - An At The Market Offering Agreement was entered into on September 18, 2023, to sell up to **$1,250,000** of common stock, but no sales occurred by September 30, 2023, only **$136,000** in deferred issuance costs[70](index=70&type=chunk)[75](index=75&type=chunk) [Note 9 – Mezzanine Equity and Stockholders' Equity](index=23&type=section&id=Note%209%20%E2%80%93%20Mezzanine%20Equity%20and%20Stockholders'%20Equity) Series D Preferred Stock was issued and redeemed, the 2023 Stock and Incentive Plan was approved, and share-based compensation expense significantly decreased due to workforce changes - **15,103 shares** of Series D Preferred Stock were issued on May 24, 2023, and redeemed on July 27, 2023, after the reverse stock split approval, classified as mezzanine equity[77](index=77&type=chunk)[78](index=78&type=chunk)[83](index=83&type=chunk) - The **2023 Stock and Incentive Plan** was approved in July 2023, reserving **1.2 million shares** for future equity awards[84](index=84&type=chunk) Share-based Compensation Expense | Share-based Compensation Expense | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development | $3,000 | $(23,000) | $(27,000) | $118,000 | | General and administrative | $43,000 | $186,000 | $147,000 | $675,000 | | Total | $46,000 | $163,000 | $120,000 | $793,000 | [Note 10 – Earnings Per Share](index=27&type=section&id=Note%2010%20%E2%80%93%20Earnings%20Per%20Share) Basic and diluted net loss per common share significantly improved for both the three and nine months ended September 30, 2023, with potentially dilutive shares excluded due to anti-dilutive effects Earnings Per Share | Earnings Per Share | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss available to common stockholders | $(1,229,000) | $(7,578,000) | $(6,578,000) | $(19,501,000) | | Basic weighted-average common shares outstanding | 804,158 | 753,620 | 804,158 | 753,616 | | Diluted weighted-average shares outstanding | 804,158 | 753,620 | 804,158 | 753,616 | | Earnings per share – basic | $(1.53) | $(8.51) | $(8.18) | $(18.73) | | Earnings per share – diluted | $(1.53) | $(10.06) | $(8.18) | $(25.88) | Potentially Dilutive Shares | Potentially Dilutive Shares | September 30, 2023 | September 30, 2022 | | :------------------------------------ | :------------------- | :------------------- | | Warrants to purchase shares of common stock | 52,751 | 53,257 | | Outstanding stock options | 12,719 | 18,206 | | Restricted stock awards | 447 | 670 | | Total potentially dilutive shares | 65,917 | 72,133 | - Potentially dilutive shares were excluded from EPS calculations due to their anti-dilutive effect[95](index=95&type=chunk) [Note 11 – Subsequent Events](index=29&type=section&id=Note%2011%20%E2%80%93%20Subsequent%20Events) Through October 31, 2023, the company generated $0.1 million in gross proceeds from the sale of 27,417 common shares under its ATM Offering Agreement, offset by $94,000 in offering-related costs - Through October 31, 2023, the company received **$0.1 million** in gross proceeds from the sale of **27,417 common shares** via the ATM Offering Agreement, with **$94,000** in offering costs[96](index=96&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, highlighting reduced net losses and operating expenses, but also ongoing going concern uncertainty [Accounting Policies](index=29&type=section&id=Accounting%20Policies) The company's financial statements adhere to GAAP, with no substantial changes in significant accounting policies or estimates from the prior annual report - The company's financial statements are prepared in accordance with GAAP, and significant accounting policies and estimates have not substantially changed from the 2022 Annual Report[98](index=98&type=chunk)[99](index=99&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) The company significantly reduced its net loss and operating expenses for both the three and nine months ended September 30, 2023, driven by cost-cutting measures [Net Loss Comparison](index=29&type=section&id=Net%20Loss%20Comparison) The company significantly reduced its net loss, reporting $1.2 million for the three months and $6.6 million for the nine-month period, primarily due to an 82% decrease in operating expenses for the quarter Net Loss Comparison | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(1.2) million | $(6.4) million | $(6.6) million | $(14.1) million | | Operating expenses | $1.4 million | $7.7 million | $7.4 million | $19.6 million | - Operating expenses decreased by **$6.3 million (82%)** for the three months and **$12.3 million (63%)** for the nine months, primarily due to reductions in R&D and G&A costs[104](index=104&type=chunk)[105](index=105&type=chunk) [Operating Expenses](index=31&type=section&id=Operating%20Expenses) Operating expenses saw substantial reductions in R&D (88% for the quarter) and G&A (64% for the quarter) due to workforce reductions, asset impairments, and discontinued clinical trials Operating Expense Category | Operating Expense Category | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and Development | $329,000 | $2,747,000 | $1,197,000 | $8,177,000 | | General and Administrative | $1,071,000 | $2,975,000 | $6,106,000 | $9,504,000 | - R&D costs decreased by **$2.4 million (88%)** for the quarter and **$7.0 million (85%)** for the nine-month period, primarily due to a **78% workforce reduction** and shift to pre-clinical contract lab services for **OA-201**[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[117](index=117&type=chunk)[120](index=120&type=chunk) - G&A costs decreased by **$1.9 million (64%)** for the quarter and **$3.4 million (36%)** for the nine-month period, mainly due to lower legal and defense costs (offset by insurance recovery) and reduced consulting expenses[125](index=125&type=chunk)[126](index=126&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - Clinical trial and sponsored research expenses decreased by **103%** for the quarter and **100%** for the nine-month period due to the discontinuation/finalization of Ampion clinical trials[116](index=116&type=chunk)[125](index=125&type=chunk) [Other Income](index=37&type=section&id=Other%20Income) Other income decreased for the nine months ended September 30, 2023, primarily due to the absence of a derivative gain, despite increased interest income and a non-cash gain from a sublease Other Income Category | Other Income Category | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest income | $79,000 | $80,000 | $280,000 | $116,000 | | Rental income | $92,000 | — | $213,000 | — | | Gain from elimination of ARO obligation, net | — | — | $288,000 | — | | Derivative gain | — | $1,167,000 | — | $5,384,000 | | Total other income | $171,000 | $1,247,000 | $781,000 | $5,500,000 | - Interest income increased by **$0.2 million** for the nine-month period due to higher interest rates[138](index=138&type=chunk) - A non-cash gain of **$0.3 million** was recognized from the elimination of an asset retirement obligation and **$0.2 million** in rental income, both associated with the March 2023 sublease agreement[138](index=138&type=chunk) - No derivative gain was recognized in 2023 due to the adoption of **ASU 2020-06**, which converted warrant liability to stockholder's equity[138](index=138&type=chunk) [Cash Flows](index=39&type=section&id=Cash%20Flows) Net cash used in operating activities significantly decreased to $6.3 million for the nine months ended September 30, 2023, with no cash flows from investing or financing activities in the 2023 period Cash Flow Category | Cash Flow Category | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(6,255,000) | $(16,834,000) | | Net cash provided by investing activities | — | — | | Net cash used in financing activities | — | $(111,000) | | Net change in cash and cash equivalents | $(6,255,000) | $(16,945,000) | - Net cash used in operating activities decreased by **$10.6 million** for the nine months ended September 30, 2023, compared to the prior year[141](index=141&type=chunk) - No cash was used in investing or financing activities during the nine months ended September 30, 2023[142](index=142&type=chunk)[143](index=143&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) As a pre-revenue company with an accumulated deficit, Ampio expects continued operating losses and relies on capital raising, facing substantial doubt about its going concern ability - The company is a pre-revenue stage biopharmaceutical company that expects continued operating losses and relies on capital raising[144](index=144&type=chunk) - As of September 30, 2023, the company had **$6.4 million** in cash and cash equivalents and expects sufficient liquidity into the **first quarter of 2024**[145](index=145&type=chunk) - Existing factors raise substantial doubt about the company's ability to continue as a going concern, with plans to fund the **OA-201** program through equity offerings[146](index=146&type=chunk)[150](index=150&type=chunk) - Risks include significant stockholder dilution, challenges in raising funds due to depressed stock price, and potential delays in **OA-201** development or even liquidation if funding is insufficient[149](index=149&type=chunk)[150](index=150&type=chunk) [Off Balance Sheet Arrangements](index=41&type=section&id=Off%20Balance%20Sheet%20Arrangements) The company does not have any off-balance sheet arrangements, financings, or relationships with unconsolidated entities - The company does not have any off-balance sheet arrangements[151](index=151&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Ampio Pharmaceuticals, Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Ampio Pharmaceuticals, Inc. is exempt from providing quantitative and qualitative disclosures about market risk[152](index=152&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's CEO and CFO concluded that its disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting [Disclosure Controls and Procedures](index=41&type=section&id=Disclosure%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2023 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[153](index=153&type=chunk)[154](index=154&type=chunk) [Changes in Internal Control over Financial Reporting](index=43&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no material changes in the company's internal control over financial reporting during the period covered by the report - There were no material changes in the company's internal controls over financial reporting during the period covered by the report[155](index=155&type=chunk) [PART II – OTHER INFORMATION](index=43&type=section&id=PART%20II%E2%80%93OTHER%20INFORMATION) This section provides information on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Ampio Pharmaceuticals, Inc. is involved in several material legal proceedings, including a securities fraud class action, multiple shareholder derivative complaints, and an ongoing SEC private investigation - The company is a defendant in **Kain v. Ampio Pharmaceuticals, Inc., et al.**, a securities fraud class action, where an amended complaint was filed on October 16, 2023, adding the current CFO and former directors as defendants[156](index=156&type=chunk)[163](index=163&type=chunk) - Multiple shareholder derivative complaints (**Maresca, Marquis, McCann v. Martino, et al.**) have been filed, alleging breach of fiduciary duty, violations of Exchange Act sections, unjust enrichment, and waste of corporate assets, all of which are currently stayed[163](index=163&type=chunk)[169](index=169&type=chunk)[173](index=173&type=chunk)[169](index=169&type=chunk)[171](index=171&type=chunk)[174](index=174&type=chunk) - The **SEC** initiated a private investigation on October 12, 2022, issuing subpoenas to the company and its personnel, with the company intending to cooperate fully[174](index=174&type=chunk) [Item 1A. Risk Factors](index=49&type=page&id=Item%201A.%20Risk%20Factors) A new material risk identified is potential disruptions at the FDA and other government agencies, which could delay product development or capital raising efforts - No material changes to risk factors from the 2022 Annual Report, except for a new risk concerning disruptions at the **FDA** and other government agencies[175](index=175&type=chunk) - Disruptions at the **FDA** or **SEC** due to funding shortages, global health concerns, or U.S. government shutdowns could delay product development (**OA-201** program) or capital raising plans, adversely affecting the business[175](index=175&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable to the company for the reporting period - This item is not applicable[181](index=181&type=chunk) [Item 3. Defaults Upon Senior Securities](index=51&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[181](index=181&type=chunk) [Item 4. Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[181](index=181&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) No directors or officers reported adoption, modification, or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers reported adoption, modification, or termination of **Rule 10b5-1** or non-**Rule 10b5-1** trading arrangements during the quarter ended September 30, 2023[181](index=181&type=chunk) [Item 6. Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished with the Quarterly Report on Form 10-Q, including various certificates of incorporation, bylaws, agreements, and certifications - The report includes a comprehensive list of exhibits, such as corporate governance documents, agreements, and certifications[182](index=182&type=chunk)[183](index=183&type=chunk) [SIGNATURES](index=55&type=section&id=SIGNATURES) This section contains the official signatures of the company's principal executive and financial officers, certifying the accuracy of the report [Report Signatures](index=55&type=section&id=Report%20Signatures) The Quarterly Report on Form 10-Q was duly signed on behalf of Ampio Pharmaceuticals, Inc. by Michael A. Martino, CEO, and Daniel G. Stokely, CFO, on November 14, 2023 - The report was signed by **Michael A. Martino**, CEO, and **Daniel G. Stokely**, CFO, on November 14, 2023[184](index=184&type=chunk)[185](index=185&type=chunk)

[PART I – FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%E2%80%93FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Presents Ampio Pharmaceuticals' unaudited condensed financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, with detailed notes [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) Total assets and stockholders' equity significantly decreased due to reduced cash and an accumulated deficit, while current liabilities increased | Metric | June 30, 2023 | December 31, 2022 | Change (Absolute, $) | Change (%) | | :--------------------------- | :------------ | :---------------- | :---------------- | :--------- | | Cash and cash equivalents | $6,953,000 | $12,653,000 | $(5,700,000) | -45.05% | | Total current assets | $9,149,000 | $13,329,000 | $(4,180,000) | -31.36% | | Total assets | $9,149,000 | $13,588,000 | $(4,439,000) | -32.67% | | Total current liabilities | $2,495,000 | $1,192,000 | $1,303,000 | 109.31% | | Total liabilities | $2,589,000 | $1,799,000 | $790,000 | 43.91% | | Accumulated deficit | $(239,244,000) | $(233,939,000) | $(5,305,000) | 2.27% | | Total stockholders' equity | $6,560,000 | $11,789,000 | $(5,229,000) | -44.36% | [Condensed Statements of Operations](index=7&type=section&id=Condensed%20Statements%20of%20Operations) Net loss decreased due to significant reductions in operating expenses, particularly R&D and G&A costs | Metric (Unaudited) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $344,000 | $1,743,000 | $868,000 | $5,430,000 | | General and administrative | $1,216,000 | $3,245,000 | $5,036,000 | $6,528,000 | | Total operating expenses | $1,560,000 | $4,988,000 | $5,960,000 | $11,958,000 | | Total other income | $189,000 | $2,918,000 | $611,000 | $4,252,000 | | Net loss | $(1,371,000) | $(2,070,000) | $(5,349,000) | $(7,706,000) | | Basic Net loss per share | $(0.09) | $(0.14) | $(0.35) | $(0.51) | | Diluted Net loss per share | $(0.09) | $(0.33) | $(0.35) | $(0.79) | [Condensed Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased from **$11.8 million** to **$6.6 million** due to net loss, partially offset by warrant reclassification and share-based compensation | Metric | December 31, 2022 | June 30, 2023 | Change (Absolute, $) | Change (%) | | :----------------------------------------- | :---------------- | :------------ | :---------------- | :--------- | | Total Stockholders' Equity | $11,789,000 | $6,560,000 | $(5,229,000) | -44.36% | | Accumulated Deficit | $(233,939,000) | $(239,244,000) | $(5,305,000) | 2.27% | | Reclassification of warrant derivative | — | $44,000 | $44,000 | N/A | | Share-based compensation, net of forfeitures | $245,726,000 (APIC) | $245,802,000 (APIC) | $76,000 | 0.03% | - Issuance of **15,103 Series D Preferred Stock shares** as a dividend on May 24, 2023, subsequently redeemed on July 27, 2023, upon stockholder approval of a reverse stock split[21](index=21&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) [Condensed Statements of Cash Flows](index=9&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly decreased to **$5.7 million** due to lower net loss and working capital changes | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change (Absolute, $) | Change (%) | | :---------------------------------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Net cash used in operating activities | $(5,700,000) | $(10,891,000) | $5,191,000 | -47.66% | | Net cash provided by investing activities | — | — | — | N/A | | Net cash used in financing activities | — | $(111,000) | $111,000 | -100.00% | | Net change in cash and cash equivalents | $(5,700,000) | $(11,002,000) | $5,302,000 | -48.19% | [Notes to Condensed Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Detailed notes explain financial statements, covering accounting policies, asset/liability changes, commitments, equity, and subsequent events [Note 1 – The Company and Summary of Significant Accounting Policies](index=10&type=section&id=Note%201%20%E2%80%93%20The%20Company%20and%20Summary%20of%20Significant%20Accounting%20Policies) Ampio is a pre-revenue biopharmaceutical company focused on the OA.201 program, facing substantial doubt about its going concern ability - Ampio is a pre-revenue biopharmaceutical company, shifting focus from Ampion and AR-300 to the **OA.201 program**, which involves optimizing two potential small molecule formulations for clinical development[27](index=27&type=chunk) - The company adopted **ASU 2020-06** effective January 1, 2023, which did not have a material impact on its financial statements[40](index=40&type=chunk) - The company has an accumulated deficit of **$239.2 million** as of June 30, 2023, and expects continued operating losses, raising substantial doubt about its ability to continue as a going concern[34](index=34&type=chunk)[37](index=37&type=chunk) [Note 2 – Current Assets, Excluding Cash and Cash Equivalents](index=14&type=section&id=Note%202%20%E2%80%93%20Current%20Assets,%20Excluding%20Cash%20and%20Cash%20Equivalents) The company recorded a **$1.38 million** insurance recovery receivable, and prepaid expenses increased due to higher unamortized commercial insurance premiums - Insurance recovery receivable of **$1,380,000** as of June 30, 2023, for legal defense costs above the **$2.5 million** self-insured retention, with **$1.0 million** received in early Q3 2023[42](index=42&type=chunk)[35](index=35&type=chunk) Prepaid Expenses and Other | Prepaid Expenses and Other | June 30, 2023 | December 31, 2022 | | :------------------------- | :------------ | :---------------- | | Unamortized commercial insurance premiums | $696,000 | $610,000 | | Deposits | $34,000 | $34,000 | | Professional fees | $48,000 | $19,000 | | Other | $38,000 | $13,000 | | Total | $816,000 | $676,000 | [Note 3 – Fixed Assets](index=14&type=section&id=Note%203%20%E2%80%93%20Fixed%20Assets) Fixed assets, net, decreased to **$0** due to facility sublease and asset sale, significantly reducing depreciation expense Fixed Assets, Net | Fixed Assets, Net | June 30, 2023 | December 31, 2022 | | :---------------- | :------------ | :---------------- | | Fixed assets, net | $0 | $184,000 | - All fixed assets were sold to a subtenant as part of a sublease agreement effective March 1, 2023, resulting in **zero net fixed assets**[44](index=44&type=chunk) Depreciation and Amortization Expense | Depreciation and Amortization Expense | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Expense | $0 | $256,000 | $122,000 | $518,000 | [Note 4 – Accounts Payable and Accrued Expenses](index=16&type=section&id=Note%204%20%E2%80%93%20Accounts%20Payable%20and%20Accrued%20Expenses) Accounts payable and accrued expenses increased significantly to **$2.14 million**, driven by higher professional fees, accounts payable, and insurance premium financing Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses | June 30, 2023 | December 31, 2022 | Change (Absolute, $) | Change (%) | | :------------------------------------ | :------------ | :---------------- | :---------------- | :--------- | | Professional fees | $596,000 | $157,000 | $439,000 | 279.62% | | Accounts payable | $627,000 | $97,000 | $530,000 | 546.39% | | Preclinical and clinical trials | $271,000 | $89,000 | $182,000 | 204.49% | | Commercial insurance premium financing | $545,000 | $189,000 | $356,000 | 188.36% | | Accrued severance | $1,000 | $143,000 | $(142,000) | -99.30% | | Total | $2,141,000 | $852,000 | $1,289,000 | 151.29% | - Entered into a nine-month insurance premium financing agreement for **$703,000** in June 2023, with an **8.00%** annual interest rate and monthly payments of **$59,000**[50](index=50&type=chunk) [Note 5 - Commitments and Contingencies](index=16&type=section&id=Note%205%20-%20Commitments%20and%20Contingencies) The company has employment agreements with severance, terminated related party research, and subleased its facility, gaining from ARO derecognition - Employment agreements are in place for the CFO (Daniel Stokely, term until Oct 2024, salary **$335,000**) and CEO (Michael A. Martino, term until Nov 2023, salary **$550,000**), both with severance clauses[51](index=51&type=chunk) - All related party research agreements were terminated by November 4, 2022, with remaining obligations paid, and no related party agreements were in effect as of June 30, 2023[52](index=52&type=chunk) - Effective March 1, 2023, the company subleased its facility, transferring rent, utilities, and insurance responsibilities to the subtenant, leading to the derecognition of a **$294,000 ARO** and a non-cash gain of **$288,000**[54](index=54&type=chunk) Lease Liability (June 30, 2023) | Lease Liability (June 30, 2023) | Amount ($) | | :------------------------------ | :---------- | | Remaining Facility Lease Payments | $464,000 | | Less: Discount Adjustment | $(16,000) | | Total lease liability | $448,000 | | Lease liability-current portion | $354,000 | | Long-term lease liability | $94,000 | [Note 6 – Warrants](index=19&type=section&id=Note%206%20%E2%80%93%20Warrants) Following ASU 2020-06 adoption, liability-classified warrants were reclassified, with **1.065 million** equity-classified warrants outstanding and no derivative liability - Adoption of **ASU 2020-06** on January 1, 2023, reclassified "investor" liability-classified warrants to accumulated deficit[59](index=59&type=chunk) Warrant Status | Warrant Status | Number of Warrants | Weighted Average Exercise Price ($) | Weighted Average Remaining Contractual Life (years) | | :-------------------------- | :----------------- | :------------------------------ | :------------------------------------------ | | Outstanding as of Dec 31, 2022 | 1,065,137 | $15.94 | 3.80 years | | Outstanding as of Jun 30, 2023 | 1,065,137 | $15.94 | 3.30 years | - No warrant derivative liability as of June 30, 2023, compared to **$44,000** as of December 31, 2022[61](index=61&type=chunk) [Note 7 - Fair Value Considerations](index=19&type=section&id=Note%207%20-%20Fair%20Value%20Considerations) After adopting ASU 2020-06, warrant derivative liability was reclassified, resulting in no Level 1, 2, or 3 financial liabilities - The company adopted **ASU 2020-06** effective January 1, 2023, reclassifying the warrant derivative liability to stockholders' equity[64](index=64&type=chunk)[66](index=66&type=chunk) Liabilities (December 31, 2022) | Liabilities (December 31, 2022) | Level 1 ($) | Level 2 ($) | Level 3 ($) | Total ($) | | :------------------------------ | :------ | :------ | :-------- | :-------- | | Warrant derivative liability | $— | $— | $44,000 | $44,000 | - As of June 30, 2023, there were no financial liabilities classified as Level 1, 2, or 3 in the fair value hierarchy[66](index=66&type=chunk) [Note 8 - Common Stock](index=20&type=section&id=Note%208%20-%20Common%20Stock) The company has **300 million** authorized common shares, with **15.1 million** outstanding and **283.1 million** available, and its ATM program expired Common Stock Metrics (June 30, 2023) | Common Stock Metrics (June 30, 2023) | Number of Shares | | :----------------------------------- | :--------------- | | Authorized shares | 300,000,000 | | Common stock outstanding | 15,102,877 | | Options outstanding | 254,388 | | Warrants outstanding | 1,065,137 | | Reserved for issuance under 2019 Plan | 484,372 | | Available shares for future issuance | 283,093,226 | - The ATM equity offering program expired on May 6, 2023, and had no activity during the three months ended June 30, 2023[71](index=71&type=chunk) [Note 9 – Mezzanine Equity and Stockholders' Equity](index=22&type=section&id=Note%209%20%E2%80%93%20Mezzanine%20Equity%20and%20Stockholders'%20Equity) A Series D Preferred Stock dividend was declared and redeemed, classified as mezzanine equity, while stock options decreased due to forfeitures - On May 24, 2023, a dividend of **15,103 Series D Preferred Stock shares** was declared, each carrying **1,000,000 votes** for reverse stock split and adjournment proposals, classified as mezzanine equity and redeemed on July 27, 2023[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk)[77](index=77&type=chunk) Stock Option Activity | Stock Option Activity | Number of Options | Weighted Average Exercise Price ($) | Weighted Average Remaining Contractual Life (years) | | :-------------------------------- | :---------------- | :------------------------------ | :------------------------------------------ | | Outstanding as of Dec 31, 2022 | 297,460 | $14.97 | 6.41 years | | Forfeited, expired and/or cancelled | (43,072) | N/A | N/A | | Outstanding as of Jun 30, 2023 | 254,388 | $15.87 | 7.08 years | - No options were granted or modified during the quarter ended June 30, 2023[85](index=85&type=chunk) [Note 10 - Earnings Per Share](index=27&type=section&id=Note%2010%20-%20Earnings%20Per%20Share) Basic and diluted net loss per common share decreased, reflecting reduced net loss, with potentially dilutive shares excluded due to anti-dilutive effect EPS Metric (Unaudited) | EPS Metric (Unaudited) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss available to common stockholders | $(1,371,000) | $(4,956,000) | $(5,349,000) | $(11,923,000) | | Basic EPS | $(0.09) | $(0.14) | $(0.35) | $(0.51) | | Diluted EPS | $(0.09) | $(0.33) | $(0.35) | $(0.79) | Potentially Dilutive Shares (Excluded) | Potentially Dilutive Shares (Excluded) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Warrants | 1,065,137 | 1,065,137 | 1,065,137 | 1,065,137 | | Outstanding stock options | 254,388 | 436,608 | 254,388 | 436,608 | | Restricted stock awards | 8,933 | 13,400 | 8,933 | 13,400 | | Total | 1,328,458 | 1,515,145 | 1,328,458 | 1,515,145 | [Note 11 – Subsequent Events](index=28&type=section&id=Note%2011%20%E2%80%93%20Subsequent%20Events) Post-quarter, stockholders approved a reverse stock split and the 2023 Stock and Incentive Plan, leading to Series D Preferred Stock redemption - On July 27, 2023, stockholders approved a reverse stock split proposal (ratio between **5-to-1** and **20-to-1**) and the **2023 Stock and Incentive Plan**, which replaced the 2019 plan and reserved **1,200,000 shares**[93](index=93&type=chunk)[95](index=95&type=chunk) - All **15,103 Series D Preferred Stock shares** were redeemed and retired on July 27, 2023, following the Annual Meeting approvals[94](index=94&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net loss decreased due to reduced operating expenses, but liquidity is a concern, requiring future capital or strategic alternatives [ACCOUNTING POLICIES](index=28&type=section&id=ACCOUNTING%20POLICIES) Financial statements adhere to GAAP, relying on management estimates, with no substantial changes to accounting policies from the 2022 Annual Report - Financial statements are prepared under GAAP, relying on management estimates and judgments[97](index=97&type=chunk) - Significant accounting policies and estimates remain largely unchanged from the 2022 Annual Report[99](index=99&type=chunk) [RESULTS OF OPERATIONS](index=30&type=section&id=RESULTS%20OF%20OPERATIONS) Net loss reduced in Q2 and H1 2023 due to significant decreases in total operating expenses, particularly R&D and G&A costs [Results of Operations – June 30, 2023 Compared to June 30, 2022](index=30&type=section&id=Results%20of%20Operations%20%E2%80%93%20June%2030,%202023%20Compared%20to%20June%2030,%202022) Net loss decreased to **$1.4 million** for Q2 2023 and **$5.3 million** for H1 2023, primarily due to significant operating expense reductions | Metric (Unaudited) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(1,371,000) | $(2,070,000) | $(5,349,000) | $(7,706,000) | | Total operating expenses | $1,560,000 | $4,988,000 | $5,960,000 | $11,958,000 | [Operating Expenses](index=31&type=section&id=Operating%20Expenses) Total operating expenses significantly decreased, with R&D down **80%** and G&A down **63%** for the quarter, due to program discontinuation and cost reductions [Research and Development](index=31&type=section&id=Research%20and%20Development) R&D costs decreased by **80%** for Q2 and **84%** for H1, driven by Ampion trial discontinuation, RIF, facility shutdown, and outsourced services R&D Expense Category (Unaudited) | R&D Expense Category (Unaudited) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Pre-clinical, clinical trial & sponsored research | $49,000 | $162,000 | $32,000 | $2,087,000 | | Salaries and benefits | $60,000 | $580,000 | $186,000 | $1,352,000 | | Depreciation | $0 | $250,000 | $123,000 | $506,000 | | Laboratory | $111,000 | $246,000 | $317,000 | $506,000 | | Professional fees | $121,000 | $314,000 | $245,000 | $508,000 | | Operations/manufacturing | $0 | $75,000 | $(6,000) | $280,000 | | Share-based compensation | $3,000 | $95,000 | $(30,000) | $141,000 | | Total R&D | $344,000 | $1,743,000 | $868,000 | $5,430,000 | - R&D costs decreased due to discontinuation/finalization of Ampion clinical trials (AP-013, AP-017, AP-018, AP-019) and a **78% reduction in force**[107](index=107&type=chunk)[108](index=108&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - Operations/manufacturing expenses ceased due to the shutdown of the clean room/manufacturing facility in Q3 2022[109](index=109&type=chunk)[120](index=120&type=chunk) [General and Administrative](index=34&type=section&id=General%20and%20Administrative) G&A costs decreased by **63%** for Q2 and **23%** for H1, primarily due to reduced legal costs, lower salaries, and decreased facilities expense G&A Expense Category (Unaudited) | G&A Expense Category (Unaudited) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Professional fees | $455,000 | $2,581,000 | $3,377,000 | $3,984,000 | | Salaries and benefits | $262,000 | $292,000 | $536,000 | $925,000 | | Share-based compensation | $50,000 | $(181,000) | $106,000 | $488,000 | | Facilities | $68,000 | $148,000 | $183,000 | $285,000 | | Total G&A | $1,216,000 | $3,245,000 | $5,036,000 | $6,528,000 | - Professional fees decreased significantly due to lower legal costs related to SEC investigations and lawsuits, with a **$1.4 million** insurance recovery offsetting costs in Q2 2023[125](index=125&type=chunk)[129](index=129&type=chunk) - Facilities expense decreased due to the sublease agreement in March 2023, transferring utilities and operating costs to the subtenant[127](index=127&type=chunk) [Other income](index=36&type=section&id=Other%20income) Other income for H1 2023 was **$611,000**, primarily from increased interest income and a non-cash gain from ARO elimination due to facility sublease - Interest income increased by **$166,000** to **$201,000** for the six months ended June 30, 2023, due to rising interest rates[133](index=133&type=chunk) - Recognized a non-cash gain of **$288,000** from the elimination of the ARO and derecognition of the ARO asset following the March 2023 sublease agreement[133](index=133&type=chunk) - No derivative gain on warrant liability in 2023 due to the adoption of **ASU 2020-06**, which converted the warrant liability to stockholders' equity[133](index=133&type=chunk) [Cash Flows](index=36&type=section&id=Cash%20Flows) Net cash used in operating activities decreased by **47.66%** to **$5.7 million** due to lower net loss and working capital changes | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change (Absolute, $) | Change (%) | | :---------------------------------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Net cash used in operating activities | $(5,700,000) | $(10,891,000) | $5,191,000 | -47.66% | | Net cash provided by investing activities | — | — | — | N/A | | Net cash used in financing activities | — | $(111,000) | $111,000 | -100.00% | | Net change in cash and cash equivalents | $(5,700,000) | $(11,002,000) | $5,302,000 | -48.19% | - The decrease in cash used in operating activities was primarily due to a lower net loss and a decrease in working capital[134](index=134&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) The pre-revenue company, with **$7.0 million** cash, expects funding only into Q1 2024, requiring future capital and raising going concern doubts - As of June 30, 2023, the company had **$7.0 million** in cash and cash equivalents and a **$1.4 million** insurance recovery receivable, providing liquidity to fund operations into Q1 2024[140](index=140&type=chunk) - Future development of the **OA.201 program** and addressing NYSE American minimum stockholders' equity requirements will likely require equity offerings, potentially leading to significant shareholder dilution[140](index=140&type=chunk)[141](index=141&type=chunk) - Substantial doubt exists about the company's ability to continue as a going concern, with management actively monitoring expenses, utilizing an outsourcing philosophy, and considering strategic alternatives, with liquidation or bankruptcy protection as potential outcomes if capital is not secured[143](index=143&type=chunk) [Off Balance Sheet Arrangements](index=38&type=section&id=Off%20Balance%20Sheet%20Arrangements) The company does not have any off-balance sheet arrangements, financings, or relationships with unconsolidated entities - The company has no off-balance sheet arrangements[144](index=144&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Ampio Pharmaceuticals, Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[145](index=145&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls were effective, with no material changes in internal control over financial reporting [Disclosure Controls and Procedures](index=40&type=section&id=Disclosure%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2023 - The CEO and CFO evaluated and concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[148](index=148&type=chunk) [Changes in Internal Control over Financial Reporting](index=40&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no material changes in internal control over financial reporting during the period covered by the report - No material changes in internal control over financial reporting occurred during the period covered by the report[149](index=149&type=chunk) [PART II – OTHER INFORMATION](index=40&type=section&id=PART%20II%E2%80%93OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) No material developments occurred in pending legal proceedings as of June 30, 2023 - No material developments in pending legal proceedings as of June 30, 2023[150](index=150&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) Readers should consider risk factors from the 2022 Annual Report and other SEC filings, as they could materially affect business or financial condition - Readers should consider risk factors from the 2022 Annual Report and other SEC filings, as they could materially affect business, financial condition, or future results[151](index=151&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable to the current report - Not applicable[151](index=151&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities - None[151](index=151&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the current report - Not Applicable[151](index=151&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) No directors or officers reported adoption, modification, or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers reported adoption, modification, or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2023[152](index=152&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished with the Quarterly Report on Form 10-Q, including certificates, bylaws, and XBRL financial statements - The report includes an Exhibit Index listing various documents such as Certificates of Incorporation, Bylaws, CEO/CFO certifications, and XBRL financial statements[154](index=154&type=chunk)[155](index=155&type=chunk) [SIGNATURES](index=43&type=section&id=SIGNATURES) [SIGNATURES](index=43&type=section&id=SIGNATURES) The report is signed by Michael A. Martino (CEO) and Daniel G. Stokely (CFO) on August 8, 2023, certifying its submission - The report was signed by Michael A. Martino (CEO) and Daniel G. Stokely (CFO) on August 8, 2023[157](index=157&type=chunk)

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed financial statements for Ampio Pharmaceuticals, Inc., including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, financial instrument details, and the company's liquidity position [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) Condensed Balance Sheet Data | Item | March 31, 2023 | December 31, 2022 | | :------------------------------ | :------------- | :---------------- | | Cash and cash equivalents | $10,352,000 | $12,653,000 | | Total assets | $10,735,000 | $13,588,000 | | Total liabilities | $2,857,000 | $1,799,000 | | Total stockholders' equity | $7,878,000 | $11,789,000 | [Condensed Statements of Operations](index=6&type=section&id=Condensed%20Statements%20of%20Operations) Condensed Statements of Operations Data | Item | Three Months 2023 | Three Months Ended March 31, 2022 | | :-------------------------- | :---------------- | :-------------------------------- | | Research and development | $524,000 | $3,687,000 | | General and administrative | $3,819,000 | $3,283,000 | | Total operating expenses | $4,399,000 | $6,970,000 | | Net loss | $(3,978,000) | $(5,636,000) | | Net loss per common share: Basic | $(0.26) | $(0.37) | [Condensed Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity) - Total stockholders' equity decreased from **$11,789,000** at December 31, 2022, to **$7,878,000** at March 31, 2023, primarily due to a net loss of **$3,978,000**[18](index=18&type=chunk) - The accumulated deficit increased to **$(237,873,000)** as of March 31, 2023, from **$(233,939,000)** as of December 31, 2022[18](index=18&type=chunk) - A reclassification of warrant derivative liability of **$44,000** was made to accumulated deficit upon the adoption of ASU 2020-06[18](index=18&type=chunk) [Condensed Statements of Cash Flows](index=8&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Condensed Statements of Cash Flows Data | Item | Three Months 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :---------------- | :-------------------------------- | | Net cash used in operating activities | $(2,301,000) | $(4,944,000) | | Net cash used in financing activities | $— | $(111,000) | | Net change in cash and cash equivalents | $(2,301,000) | $(5,055,000) | | Cash and cash equivalents at end of period | $10,352,000 | $28,837,000 | [Notes to Condensed Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) [Note 1 – The Company and Summary of Significant Accounting Policies](index=9&type=section&id=Note%201%20%E2%80%93%20The%20Company%20and%20Summary%20of%20Significant%20Accounting%20Policies) Ampio Pharmaceuticals, Inc. is a pre-revenue biopharmaceutical company focused on the OA-20X program, aiming to select a small molecule formulation for clinical development in Q3 2023. The company faces significant liquidity challenges, with an accumulated deficit of $237.8 million as of March 31, 2023, raising substantial doubt about its ability to continue as a going concern, despite expecting sufficient liquidity through Q4 2023 - Ampio is a pre-revenue biopharmaceutical company focused on optimizing two potential small molecule formulations for the OA-20X program, with an intent to select one for clinical development in Q3 2023[24](index=24&type=chunk) - The company effected a 15-to-1 reverse stock split on November 9, 2022, retroactively applied to share and per share amounts in the financial statements[26](index=26&type=chunk) - As of March 31, 2023, the company had an accumulated deficit of **$237.8 million** and expects to generate continued operating losses, raising substantial doubt about its ability to continue as a going concern[31](index=31&type=chunk)[34](index=34&type=chunk) - The company believes it has sufficient liquidity to fund operations through Q4 2023, but may require additional capital sooner or in greater amounts[32](index=32&type=chunk) [Note 2 – Prepaid Expenses and Other](index=13&type=section&id=Note%202%20%E2%80%93%20Prepaid%20Expenses%20and%20Other) Prepaid expenses and other current assets decreased from $676,000 at December 31, 2022, to $383,000 at March 31, 2023, primarily due to a reduction in unamortized commercial insurance premiums Prepaid Expenses and Other | Item | March 31, 2023 | December 31, 2022 | | :------------------------------ | :------------- | :---------------- | | Unamortized commercial insurance premiums | $277,000 | $610,000 | | Deposits | $34,000 | $34,000 | | Professional fees | $18,000 | $19,000 | | Other | $54,000 | $13,000 | | **Total prepaid expenses and other** | **$383,000** | **$676,000** | [Note 3 – Fixed Assets](index=13&type=section&id=Note%203%20%E2%80%93%20Fixed%20Assets) All fixed assets were sold effective March 1, 2023, in connection with a sublease agreement, resulting in a $56,000 loss on sale and zero net fixed assets as of March 31, 2023 - The company sold all its existing fixed assets to a subtenant effective March 1, 2023, recognizing a loss on sale of **$56,000**[41](index=41&type=chunk) Fixed Assets, Net | Item | March 31, 2023 | December 31, 2022 | | :------------------------- | :------------- | :---------------- | | Fixed assets, gross | $— | $9,429,000 | | Accumulated depreciation | $— | $(9,245,000) | | **Fixed assets, net** | **$—** | **$184,000** | [Note 4 – Accounts Payable and Accrued Expenses](index=14&type=section&id=Note%204%20%E2%80%93%20Accounts%20Payable%20and%20Accrued%20Expenses) Accounts payable and accrued expenses significantly increased to $2,325,000 at March 31, 2023, from $852,000 at December 31, 2022, primarily driven by a substantial rise in professional fees. The commercial insurance premium financing agreement was paid in full, and accrued severance now mainly covers COBRA benefits Accounts Payable and Accrued Expenses | Item | March 31, 2023 | December 31, 2022 | | :------------------------------ | :------------- | :---------------- | | Professional fees | $1,408,000 | $157,000 | | Accounts payable | $575,000 | $97,000 | | Preclinical and clinical trials | $175,000 | $89,000 | | Commercial insurance premium financing | $— | $189,000 | | Accrued severance | $10,000 | $143,000 | | Other | $157,000 | $177,000 | | **Total accounts payable and accrued expenses** | **$2,325,000** | **$852,000** | - The commercial insurance premium financing agreement was paid in full as of March 31, 2023[47](index=47&type=chunk) - Accrued severance represents the estimated obligation for COBRA benefits elected by former employees following the final phase of the reduction in force on January 31, 2023[48](index=48&type=chunk) [Note 5 - Commitments and Contingencies](index=14&type=section&id=Note%205%20-%20Commitments%20and%20Contingencies) The company has employment agreements with its CEO and CFO, with the CEO's term extended to November 2023. All related party research agreements were terminated by March 31, 2023. A sublease agreement effective March 1, 2023, for its facility released the company from its asset retirement obligation, resulting in a non-cash gain of $288,000, and the Right-of-Use (ROU) asset was fully amortized - Employment agreements are in place for the CFO (term ending October 2024) and CEO (term extended to November 22, 2023)[49](index=49&type=chunk) - No related party research agreements were in effect as of March 31, 2023, following terminations in August 2022[50](index=50&type=chunk) - A sublease agreement effective March 1, 2023, released the company from its asset retirement obligation (ARO), leading to a non-cash gain of **$288,000**[52](index=52&type=chunk) - The Right-of-Use (ROU) asset related to the facility lease was fully amortized as of March 31, 2023[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) [Note 6 – Warrants](index=17&type=section&id=Note%206%20%E2%80%93%20Warrants) Upon adoption of ASU 2020-06 effective January 1, 2023, the company reclassified its 'investor' liability classified warrants to retained earnings, resulting in no warrant derivative liability as of March 31, 2023. The total number of outstanding warrants remained at 1,065,137 with a weighted average exercise price of $15.94 - The company adopted ASU 2020-06 effective January 1, 2023, reclassifying 'investor' liability classified warrants to retained earnings[58](index=58&type=chunk) Warrant Activity | | Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | | :------------------------------ | :----------------- | :------------------------------ | :------------------------------------------ | | Outstanding as of December 31, 2022 | 1,065,137 | $15.94 | 3.80 | | Outstanding as of March 31, 2023 | 1,065,137 | $15.94 | 3.55 | - There was no warrant derivative liability as of March 31, 2023, following the reclassification[60](index=60&type=chunk) [Note 7 - Fair Value Considerations](index=17&type=section&id=Note%207%20-%20Fair%20Value%20Considerations) The company applies a three-level hierarchy for fair value measurements. Effective January 1, 2023, the warrant derivative liability of $44,000 was reclassified to stockholder's equity due to the early adoption of ASU 2020-06, eliminating this liability from the balance sheet - The company uses a fair value hierarchy (Level 1, 2, and 3) for financial instruments[61](index=61&type=chunk)[62](index=62&type=chunk) - The warrant derivative liability of **$44,000** as of December 31, 2022, was reclassified to stockholder's equity effective January 1, 2023, due to the early adoption of ASU 2020-06[63](index=63&type=chunk)[66](index=66&type=chunk) [Note 8 - Common Stock](index=18&type=section&id=Note%208%20-%20Common%20Stock) The company has 300 million authorized shares of common stock, with 15,102,877 shares outstanding as of March 31, 2023. A significant portion of authorized shares remains available for future issuance. The 'at the market' (ATM) equity offering program expired on May 6, 2023, with no sales made under it during the reported periods - The company has **300,000,000** authorized shares of common stock as of March 31, 2023[67](index=67&type=chunk) Common Stock Information | Item | March 31, 2023 | | :-------------------------------------------------- | :------------- | | Authorized shares | 300,000,000 | | Common stock outstanding | 15,102,877 | | Options outstanding | 283,723 | | Warrants outstanding | 1,065,137 | | Reserved for issuance under 2019 Stock and Incentive Plan | 455,037 | | **Available shares for future issuance** | **283,093,226** | - The ATM equity offering program expired on May 6, 2023, and no sales or related issuance costs were incurred under it during the three months ended March 31, 2023, and 2022[69](index=69&type=chunk)[70](index=70&type=chunk) [Note 9 - Equity](index=19&type=section&id=Note%209%20-%20Equity) The 2019 Plan has 455,037 shares available for future equity awards. Stock option activity for Q1 2023 shows 283,723 options outstanding, with 13,737 forfeited/cancelled. Total share-based compensation expense significantly decreased to $23,000 in Q1 2023 from $716,000 in Q1 2022, largely due to expense reversals from expired/forfeited awards - As of March 31, 2023, **455,037** shares remain available for future equity awards under the 2019 Plan[72](index=72&type=chunk) Stock Option Activity | | Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | | :------------------------------ | :---------------- | :------------------------------ | :------------------------------------------ | | Outstanding as of December 31, 2022 | 297,460 | $14.97 | 6.41 | | Forfeited, expired and/or cancelled | (13,737) | $6.83 | — | | Outstanding as of March 31, 2023 | 283,723 | $15.36 | 6.58 | - Total share-based compensation expense, net of forfeitures, was **$23,000** for Q1 2023, a significant decrease from **$716,000** in Q1 2022, primarily due to expense reversals from expired/forfeited stock options and restricted stock awards[80](index=80&type=chunk) [Note 10 - Earnings Per Share](index=22&type=section&id=Note%2010%20-%20Earnings%20Per%20Share) Basic and diluted net loss per common share for Q1 2023 was $(0.26), an improvement from $(0.37) basic and $(0.46) diluted in Q1 2022. Potentially dilutive shares, totaling 1,357,793, were excluded from the calculation due to their anti-dilutive effect Earnings Per Share Calculation | | Three Months 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :---------------- | :-------------------------------- | | Net loss | $(3,978,000) | $(5,636,000) | | Net loss available to common stockholders | $(3,978,000) | $(6,967,000) | | Basic weighted-average common shares outstanding | 15,093,894 | 15,072,222 | | Diluted weighted-average shares outstanding | 15,093,894 | 15,074,047 | | **Earnings per share – basic** | **$(0.26)** | **$(0.37)** | | **Earnings per share – diluted** | **$(0.26)** | **$(0.46)** | - A total of **1,357,793** potentially dilutive shares (warrants, stock options, restricted stock awards) were excluded from the calculation of net loss per share for Q1 2023 due to their anti-dilutive effect[84](index=84&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a reduced net loss in Q1 2023 primarily due to decreased R&D expenses, despite an increase in G&A costs driven by legal fees. The company's liquidity remains a concern, with cash expected to last through Q4 2023, and plans to seek additional equity financing while actively managing expenses [Accounting Policies](index=23&type=section&id=ACCOUNTING%20POLICIES) - Financial statements are prepared in accordance with GAAP, requiring management estimates and assumptions[86](index=86&type=chunk) - Significant accounting policies and estimates have not substantially changed from those disclosed in the 2022 Annual Report[87](index=87&type=chunk) [Results of Operations](index=23&type=section&id=RESULTS%20OF%20OPERATIONS) - Net loss for Q1 2023 was **$4.0 million**, an improvement from **$5.6 million** in Q1 2022[89](index=89&type=chunk) - Total operating expenses decreased by **$2.7 million (37%)** from Q1 2022 to Q1 2023[91](index=91&type=chunk) - Research and development costs decreased by **$3.2 million (86%)** to **$524,000** in Q1 2023, primarily due to the discontinuation of Ampion clinical trials and a reduction in force[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - General and administrative costs increased by **$0.5 million (16%)** to **$3,819,000** in Q1 2023, mainly due to a **$1.5 million (108%)** increase in professional fees related to an SEC investigation and class action/derivative lawsuits[91](index=91&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - The company recognized a **$288,000** gain on the elimination of its asset retirement obligation in Q1 2023[105](index=105&type=chunk) [Cash Flows](index=28&type=section&id=Cash%20Flows) - Net cash used in operating activities decreased to **$2.3 million** in Q1 2023 from **$4.9 million** in Q1 2022[107](index=107&type=chunk) - There was no change in cash related to investing or financing activities during the three months ended March 31, 2023[109](index=109&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash and cash equivalents were **$10.4 million** as of March 31, 2023[111](index=111&type=chunk) - The company expects its current cash balance to support existing business operations through Q4 2023[113](index=113&type=chunk) - The lack of revenue and current cash resources raise substantial doubt about the company's ability to continue as a going concern[116](index=116&type=chunk) - Future OA-20X development and general operating expenses are intended to be funded through an offering of equity securities, subject to market conditions and regulatory limitations[114](index=114&type=chunk) - Cost management measures include a hybrid, virtual organizational model and the recent sublease of facility space, but general and administrative expenses are expected to be negatively impacted by higher professional fees, including legal costs[115](index=115&type=chunk) [Off Balance Sheet Arrangements](index=30&type=section&id=Of%20Balance%20Sheet%20Arrangements) - The company does not have any off-balance sheet arrangements[117](index=117&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Ampio Pharmaceuticals, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide market risk disclosures[118](index=118&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, and reported no material changes in internal control over financial reporting during the period [Disclosure Controls and Procedures](index=30&type=section&id=Disclosure%20Controls%20and%20Procedures) - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[121](index=121&type=chunk) [Changes in Internal Control over Financial Reporting](index=32&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the period[121](index=121&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company refers to its 2022 Annual Report for a summary of material pending legal proceedings and confirms there were no material developments in these proceedings as of March 31, 2023 - No material developments in pending legal proceedings were reported as of March 31, 2023[122](index=122&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company directs readers to the 'Risk Factors' section in its 2022 Annual Report and other SEC filings for a comprehensive understanding of factors that could materially affect its business and financial performance - Readers should refer to the 'Risk Factors' section in the 2022 Annual Report and other SEC filings for additional information[123](index=123&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the current reporting period - This item is not applicable[123](index=123&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities during the period - No defaults upon senior securities were reported[123](index=123&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the current reporting period - This item is not applicable[123](index=123&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) There is no other information to report under this item - No other information is reported[123](index=123&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished with the Quarterly Report on Form 10-Q, including corporate governance documents, agreements, and certifications - The exhibit index lists various documents, including the Certificate of Incorporation, Bylaws, Sublease Agreement, and CEO/CFO certifications[125](index=125&type=chunk) [SIGNATURES](index=34&type=section&id=SIGNATURES) The report is duly signed by Michael A. Martino, Chief Executive Officer, and Daniel G. Stokely, Chief Financial Officer, on May 8, 2023 - The report was signed by Michael A. Martino (Chief Executive Officer) and Daniel G. Stokely (Chief Financial Officer) on May 8, 2023[127](index=127&type=chunk)

PART I [Item 1. Business.](index=6&type=section&id=Item%201.%20Business.) Ampio Pharmaceuticals, a pre-revenue biopharmaceutical company, has refocused on preclinical development of AR-300 for osteoarthritis pain and is evaluating strategic opportunities - Ampio is a pre-revenue biopharmaceutical company, having shifted its focus from Ampion® to the preclinical development of **AR-300** for osteoarthritis-related pain[14](index=14&type=chunk)[15](index=15&type=chunk) - The company is conducting studies to evaluate AR-300's efficacy in osteoarthritis-related pain, with preclinical pain and chondroprotection results expected in the **first half of 2023**[15](index=15&type=chunk)[16](index=16&type=chunk) - Ampio is opportunistically identifying and evaluating strategic opportunities, including acquiring or licensing later-stage assets or merging with other companies, having evaluated over a dozen such opportunities in 2022[17](index=17&type=chunk) - A **15-to-1 reverse stock split** was effected on November 9, 2022, retroactively applied to share and per share amounts in financial statements[18](index=18&type=chunk) - If AR-300 clinical development proceeds, it is estimated to take **five-to-seven years** and require **significant incremental investment**, involving IND-enabling preclinical studies, Phase 1 safety, Phase 2 efficacy, and likely two Phase 3 studies[20](index=20&type=chunk) - The company owns United States provisional patent applications for AR-300, with a single PCT application expected in Q2 2023 and national phase applications in Q3 2024, potentially extending patent protection until **Q2 2043**[22](index=22&type=chunk)[23](index=23&type=chunk) - Starting in 2023, Ampio decided to significantly limit or discontinue much of its existing Ampion® patent portfolio to reduce economic impact and focus resources on AR-300[25](index=25&type=chunk)[27](index=27&type=chunk) - Ampio has implemented a hybrid organizational model, retaining core competencies for public reporting and governance while outsourcing specialized expertise (formulation, preclinical, GMP manufacturing, clinical, regulatory, legal) to third-party independent contractors[28](index=28&type=chunk)[29](index=29&type=chunk) Employee Headcount | Date | Full-time Employees | | :--------------- | :------------------ | | December 31, 2022 | 8 | | February 1, 2023 | 5 | [Item 1A. Risk Factors.](index=9&type=section&id=Item%201A.%20Risk%20Factors.) Ampio faces substantial risks from its sole preclinical asset AR-300, ongoing losses, limited liquidity, legal proceedings, an SEC investigation, and stock price volatility, raising going concern doubts - Ampio is dependent on the success of its AR-300 technology, which is currently its only potential product in development, and there is no certainty that preclinical data will support further development or lead to marketable products[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - The company's history of recurring losses (**$16.3 million in 2022**) and significant cash usage (**$21.1 million in operations in 2022**), combined with limited cash resources (**$12.7 million as of December 31, 2022**), raise substantial doubt about its ability to continue as a going concern[44](index=44&type=chunk)[45](index=45&type=chunk) - Insufficient cash to fund operations, AR-300 development, or strategic transactions could lead to further cost reductions, liquidation, or bankruptcy, making cash distributions to stockholders unlikely[36](index=36&type=chunk)[47](index=47&type=chunk)[49](index=49&type=chunk) - Exploring strategic alternatives is time-consuming and challenging due to competition, cash balance, listing uncertainty, and ongoing legal/regulatory matters, with no assurance of successful identification or completion of a value-generating transaction[37](index=37&type=chunk)[38](index=38&type=chunk) - Reliance on third parties for critical services, including AR-300 development, finance, and administrative support, introduces risks of service unavailability, increased costs, delays, and challenges in managing outsourced activities[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) - The company is involved in legal proceedings (securities fraud class actions, shareholder derivative suits, SEC investigation) that are expensive, time-consuming, divert management attention, and could result in significant liabilities, potentially forcing liquidation[49](index=49&type=chunk)[50](index=50&type=chunk) - Future capital requirements are substantial and depend on AR-300 development, strategic transaction costs, legal defense, intellectual property protection, and corporate overhead, with no assurance of available financing on acceptable terms[51](index=51&type=chunk)[54](index=54&type=chunk) - The price of Ampio's common stock has been extremely volatile and may continue to fluctuate due to factors such as AR-300 development, strategic alternatives, regulatory announcements, legal proceedings, and compliance with NYSE American listing requirements[62](index=62&type=chunk)[63](index=63&type=chunk) - Failure to satisfy NYSE American continued listing requirements (e.g., minimum share price, stockholders' equity) could lead to delisting, resulting in reduced liquidity, limited market quotations, and decreased ability to raise capital[64](index=64&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk) [Item 1B. Unresolved Staff Comments.](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) The company has no unresolved staff comments from the SEC regarding previous filings - The company has no unresolved staff comments[70](index=70&type=chunk) [Item 2. Properties.](index=22&type=section&id=Item%202.%20Properties.) Ampio leases its headquarters and facilities in Englewood, Colorado, under a lease expiring September 2024, with a sublease effective March 2023 - Ampio leases its headquarters, research laboratories, and manufacturing facilities in Englewood, Colorado, with the lease set to expire in September 2024[71](index=71&type=chunk) - Effective March 1, 2023, the company entered into a sublease agreement for the premises, with the consent of the landlord, for a term continuing until the expiration of the original lease[71](index=71&type=chunk) [Item 3. Legal Proceedings.](index=22&type=section&id=Item%203.%20Legal%20Proceedings.) Ampio is involved in securities fraud class actions, shareholder derivative suits, and an SEC investigation concerning Ampion's efficacy and internal controls, with most actions currently stayed - Ampio is a defendant in a securities fraud class action, Kain v. Ampio Pharmaceuticals, Inc., et al., filed in August 2022, alleging false and misleading statements about Ampion's efficacy, clinical trials (AP-013), and FDA communications[72](index=72&type=chunk)[73](index=73&type=chunk) - Multiple shareholder derivative complaints (Maresca, Marquis, McCann v. Martino, et al.) were filed in late 2022 and early 2023, asserting claims against current and former executives and directors for breach of fiduciary duty, gross mismanagement, waste of corporate assets, unjust enrichment, and insider trading, based on similar allegations as the Kain action[74](index=74&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk)[83](index=83&type=chunk) - The allegations in the derivative complaints include failure to timely report unfavorable AP-013 trial results, misstating data unblinding timing, and failing to maintain adequate internal controls[75](index=75&type=chunk)[77](index=77&type=chunk)[80](index=80&type=chunk)[83](index=83&type=chunk) - Most of the legal proceedings, including the consolidated Maresca and Marquis actions and the McCann action, are currently under a temporary stay, deferring all deadlines[79](index=79&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) - The Securities and Exchange Commission (SEC) initiated a private investigation in October 2022 to determine potential securities law violations, issuing subpoenas to the company and various individuals, with Ampio intending to cooperate fully[84](index=84&type=chunk) [Item 4. Mine Safety Disclosures.](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to Ampio Pharmaceuticals - Mine Safety Disclosures are not applicable to the registrant[85](index=85&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.](index=28&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Ampio's common stock trades on NYSE American (AMPE), with 191 registered holders as of March 22, 2023, and no plans for cash dividends, prioritizing AR-300 development - Ampio's common stock trades on the NYSE American under the ticker symbol 'AMPE'[88](index=88&type=chunk) - As of March 22, 2023, there were approximately **191 registered holders** of the company's common stock[88](index=88&type=chunk) - The company has never paid cash dividends and has no plans to do so in the near future, intending to utilize all available liquidity to develop and commercialize AR-300[89](index=89&type=chunk) [Item 6. [Reserved]](index=28&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=28&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Ampio reported a net loss of $16.3 million in 2022, with increased operating expenses and significantly reduced cash, raising substantial doubt about its going concern ability beyond Q4 2023 Net Loss and Operating Expenses (2022 vs. 2021) | Metric | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :----------------- | :-------- | :-------- | :---------- | :--------- | | Net Loss | (16.3) | (17.1) | 0.8 | -4.7% | | Operating Expenses | 22.3 | 20.6 | 1.7 | 8.3% | - The net loss decreased by **$0.8 million**, or **4.7%**, from **$17.1 million in 2021** to **$16.3 million in 2022**[98](index=98&type=chunk)[165](index=165&type=chunk) - Operating expenses increased by **$1.7 million**, or **8.3%**, from **$20.6 million in 2021** to **$22.3 million in 2022**, primarily due to a $2.8 million increase in general and administrative costs and a $1.9 million impairment loss, partially offset by a $3.0 million reduction in research and development costs[98](index=98&type=chunk)[165](index=165&type=chunk) [Critical Accounting Policies, Estimates and Judgments](index=28&type=section&id=Critical%20Accounting%20Policies%2C%20Estimates%20and%20Judgments) Financial statement preparation involves management estimates and assumptions, especially for liquidity, clinical trial accrual, and asset impairment - The preparation of financial statements requires management to make estimates and assumptions, particularly concerning current and long-term liquidity, clinical trial accrual, and potential impairment of long-lived assets and Right-of-Use (ROU) assets[92](index=92&type=chunk)[93](index=93&type=chunk) - Clinical trial accrual estimates are based on trial progress, discussions with service providers, and are adjusted if actual results differ from estimates; all Ampion clinical trials were completed in 2022, so no significant future costs are expected[93](index=93&type=chunk) - Share-based compensation expense is recognized based on the estimated fair value of awards using the Black-Scholes option pricing model for stock options and fair market value for restricted stock, with assumptions for volatility, risk-free interest rate, and expected option life[94](index=94&type=chunk) - Long-lived assets are evaluated for impairment annually or when triggering events occur; a **$1.6 million** impairment loss was recorded in 2022 due to the discontinuation of Ampion development[95](index=95&type=chunk) - Warrants that are potentially exercisable into a variable number of shares are considered derivative liabilities and are measured at fair value using the Black-Scholes pricing model[96](index=96&type=chunk) [Results of Operations—Year Ended December 31, 2022 Compared to December 31, 2021](index=31&type=section&id=Results%20of%20Operations%E2%80%94Year%20Ended%20December%2031%2C%202022%20Compared%20to%20December%2031%2C%202021) Operating results for 2022 compared to 2021 show changes in research and development, general and administrative expenses, and impairment losses [Research and Development](index=31&type=section&id=Research%20and%20Development) Research and development costs decreased by $3.0 million, or 25%, in 2022 compared to 2021, primarily due to completed clinical trials - Research and development costs decreased by approximately **$3.0 million**, or **25%**, for the 2022 period compared to the 2021 period[99](index=99&type=chunk)[101](index=101&type=chunk) - Clinical trial and sponsored research expenses decreased by **$2.8 million (48%)** due to the substantial completion of Ampion clinical trials (AP-017, AP-018, AP-019) and the completion of AP-013[100](index=100&type=chunk)[101](index=101&type=chunk) - Salaries and benefits decreased by **$0.2 million (8%)** due to a reduction in force (RIF) in August 2022, which reduced 11 full-time equivalents, partially offset by $0.7 million in severance costs[103](index=103&type=chunk) - Professional fees increased by **$0.4 million (133%)** due to the engagement of a Chief Medical Officer consultant and additional third-party biostatisticians for Ampion clinical study close-out[104](index=104&type=chunk) - Operations/manufacturing expense decreased by **$0.5 million (62%)** as all studies were completed, eliminating the need to purchase supplies for clinical trial product manufacturing[105](index=105&type=chunk) Research and Development Costs (2022 vs. 2021) | Category | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :------------------------------------- | :---------- | :----------- | :---------- | :--------- | | Clinical trial and sponsored research | 2,991,000 | 5,787,000 | (2,796,000) | -48.3% | | Salaries and benefits | 2,755,000 | 2,981,000 | (226,000) | -7.6% | | Depreciation | 1,031,000 | 1,070,000 | (39,000) | -3.6% | | Laboratory | 890,000 | 779,000 | 111,000 | 14.2% | | Professional fees | 780,000 | 335,000 | 445,000 | 132.8% | | Operations/manufacturing | 308,000 | 816,000 | (508,000) | -62.3% | | Share-based compensation | 139,000 | 46,000 | 93,000 | 202.2% | | Other | 22,000 | 86,000 | (64,000) | -74.4% | | **Total Research and Development** | **8,916,000** | **11,900,000** | **(2,984,000)** | **-25.1%** | [General and Administrative](index=33&type=section&id=General%20and%20Administrative) General and administrative expenses increased by $2.8 million, or 32%, in 2022 compared to 2021, driven by higher professional fees - General and administrative expenses increased by **$2.8 million**, or **32%**, for the 2022 period compared to the 2021 period[106](index=106&type=chunk)[108](index=108&type=chunk) - Professional fees within G&A increased by **$4.4 million (174%)** due to legal costs related to internal investigations, an SEC investigation, and class action/derivative lawsuits, as well as costs for strategic opportunity evaluation and public/investor relations[107](index=107&type=chunk)[109](index=109&type=chunk) - Salaries and benefits increased by **$0.3 million (30%)** due to market-based compensation adjustments for the CEO and CFO, partially offset by lower incremental headcount[111](index=111&type=chunk) - Share-based compensation expense decreased by **$1.9 million (71%)** due to adjustments for forfeitures and cancellations of unvested stock options/restricted stock awards resulting from employee terminations and board resignations[112](index=112&type=chunk) General and Administrative Expenses (2022 vs. 2021) | Category | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :--------------------------- | :---------- | :---------- | :---------- | :--------- | | Professional fees | 6,896,000 | 2,517,000 | 4,379,000 | 174.0% | | Salaries and benefits | 1,485,000 | 1,141,000 | 344,000 | 30.1% | | Insurance | 1,124,000 | 1,186,000 | (62,000) | -5.2% | | Share-based compensation | 814,000 | 2,758,000 | (1,944,000) | -70.5% | | Facilities | 538,000 | 512,000 | 26,000 | 5.1% | | Director fees | 312,000 | 350,000 | (38,000) | -10.9% | | Other | 297,000 | 207,000 | 90,000 | 43.5% | | **Total General and Administrative** | **11,466,000** | **8,671,000** | **2,795,000** | **32.2%** | [Impairment of Long-lived Fixed and ROU Assets](index=35&type=section&id=Impairment%20of%20Long-lived%20Fixed%20and%20ROU%20Assets) Ampio recorded a $1.6 million impairment loss on long-lived assets and $0.3 million on ROU assets in 2022 due to Ampion development discontinuation - Ampio recorded a non-cash impairment loss of **$1.6 million** on its long-lived assets for the year ended December 31, 2022, triggered by the discontinuation of Ampion development[112](index=112&type=chunk) - An additional **$0.3 million** impairment loss was recorded on the Right-of-Use (ROU) asset for the year ended December 31, 2022[113](index=113&type=chunk) - There were no impairment charges for long-lived or ROU assets in the year ended December 31, 2021[113](index=113&type=chunk) [Cash Flows](index=35&type=section&id=Cash%20Flows) Net cash used in operating activities increased to $21.1 million in 2022, while financing activities provided significantly less cash compared to 2021 Cash Flow Summary (2022 vs. 2021) | Cash Flow Activity | 2022 ($) | 2021 ($) | Change ($) | | :--------------------------------- | :------------ | :------------ | :------------ | | Net cash used in operating activities | (21,128,000) | (14,089,000) | (7,039,000) | | Net cash used in investing activities | — | (97,000) | 97,000 | | Net cash (used in) provided by financing activities | (111,000) | 30,732,000 | (30,843,000) | | Net change in cash and cash equivalents | (21,239,000) | 16,546,000 | (37,785,000) | - Net cash used in operating activities increased to **$21.1 million in 2022** from **$14.1 million in 2021**, primarily due to a non-cash derivative gain and a decrease in accounts payable and accrued expenses, partially offset by non-cash charges[114](index=114&type=chunk)[117](index=117&type=chunk)[119](index=119&type=chunk) - Net cash used in investing activities was **$0 in 2022**, compared to $97,000 used for manufacturing machinery and equipment in 2021[120](index=120&type=chunk) - Net cash used in financing activities was **$0.1 million in 2022** (for tax liability settlement and offering costs), a significant decrease from $30.7 million provided in 2021 (from equity offerings and warrant exercises)[121](index=121&type=chunk)[122](index=122&type=chunk) [Contractual Obligations and Commitments](index=37&type=section&id=Contractual%20Obligations%20and%20Commitments) Primary contractual obligations as of December 31, 2022, include employment agreements and a $614,000 operating lease for facilities - As of December 31, 2022, primary contractual obligations include employment agreements and a non-cancellable operating lease for office and manufacturing facilities, with a lease obligation of **$614,000**[123](index=123&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Ampio, a pre-revenue company with recurring losses, faces substantial doubt about its going concern ability beyond Q4 2023 due to limited liquidity - Ampio is a pre-revenue company with recurring losses and has not generated operating revenue since inception, relying on capital raises for research and development[124](index=124&type=chunk)[185](index=185&type=chunk) - Cash and cash equivalents totaled **$12.7 million** as of December 31, 2022, projected to fund existing business operations through the **fourth quarter of 2023**[125](index=125&type=chunk)[185](index=185&type=chunk) - Management has expressed substantial doubt about the company's ability to continue as a going concern due to current liquidity levels and projected shortfalls to cover operating expenses for the next 12 months[130](index=130&type=chunk)[185](index=185&type=chunk) - Future AR-300 clinical development is estimated to require five-to-seven years and incremental investment, which the company intends to fund through equity securities offerings, subject to market and regulatory challenges[126](index=126&type=chunk) - Management's plans to address going concern doubt include active monitoring of operating expenses, utilizing an outsourcing philosophy, and aligning AR-300 development expenses with future capital raising activities[131](index=131&type=chunk) - If cash resources are insufficient, the company may implement further cost reductions, terminate strategic alternatives, or pursue liquidation or bankruptcy, making stockholder distributions unlikely[131](index=131&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk.](index=39&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This item is not applicable to Ampio Pharmaceuticals - Quantitative and Qualitative Disclosures About Market Risk are not applicable[132](index=132&type=chunk) [Item 8. Financial Statements and Supplementary Data.](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section incorporates audited financial statements and supplementary data, including the independent auditor's report, balance sheets, statements of operations, equity, cash flows, and notes [Report of Independent Registered Public Accounting Firm](index=51&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Moss Adams LLP issued an unqualified opinion on Ampio's 2022 and 2021 financial statements, highlighting a going concern uncertainty and critical audit matter regarding asset impairment - Moss Adams LLP issued an **unqualified opinion** on Ampio's financial statements for 2022 and 2021, stating they are presented fairly in all material respects[154](index=154&type=chunk) - The report highlights a going concern uncertainty due to **recurring losses** and **cash used in operations**, as discussed in Note 2 to the financial statements[155](index=155&type=chunk) - The impairment evaluation of long-lived assets and right-of-use asset was identified as a **critical audit matter** due to significant management judgments in estimating fair value, requiring extensive auditor judgment and involvement of valuation specialists[159](index=159&type=chunk)[161](index=161&type=chunk) [Balance Sheets](index=55&type=section&id=Balance%20Sheets) Balance sheets show a significant decrease in total assets, cash, and stockholders' equity from 2021 to 2022, alongside reduced liabilities Balance Sheet Summary (December 31, 2022 vs. 2021) | Metric | December 31, 2022 ($) | December 31, 2021 ($) | | :--------------------------- | :-------------------- | :-------------------- | | Cash and cash equivalents | 12,653,000 | 33,892,000 | | Total current assets | 13,329,000 | 35,632,000 | | Fixed assets, net | 184,000 | 2,564,000 | | Right-of-use asset, net | 75,000 | 629,000 | | Total assets | 13,588,000 | 38,825,000 | | Accounts payable and accrued expenses | 852,000 | 4,811,000 | | Total current liabilities | 1,192,000 | 5,122,000 | | Warrant derivative liability | 44,000 | 5,805,000 | | Total liabilities | 1,799,000 | 11,541,000 | | Total stockholders' equity | 11,789,000 | 27,284,000 | - Total assets decreased significantly from **$38.8 million in 2021** to **$13.6 million in 2022**[163](index=163&type=chunk) - Cash and cash equivalents declined from **$33.9 million in 2021** to **$12.7 million in 2022**[163](index=163&type=chunk) - Total liabilities decreased from **$11.5 million in 2021** to **$1.8 million in 2022**, largely due to a reduction in warrant derivative liability and accounts payable[163](index=163&type=chunk) - Total stockholders' equity decreased from **$27.3 million in 2021** to **$11.8 million in 2022**[164](index=164&type=chunk) [Statements of Operations](index=56&type=section&id=Statements%20of%20Operations) Statements of operations indicate a slight improvement in net loss to $16.3 million in 2022, despite increased operating expenses driven by impairment charges Statements of Operations Summary (2022 vs. 2021) | Metric | 2022 ($) | 2021 ($) | | :------------------------- | :------------ | :------------ | | Research and development | 8,916,000 | 11,900,000 | | General and administrative | 11,466,000 | 8,671,000 | | Long-lived assets impairment | 1,614,000 | — | | Right-of-use asset impairment | 322,000 | — | | Total operating expenses | 22,318,000 | 20,571,000 | | Interest income | 220,000 | 4,000 | | Derivative gain | 5,761,000 | 3,492,000 | | Total other income | 5,981,000 | 3,496,000 | | Net loss | (16,337,000) | (17,075,000) | | Basic Net loss per common share | (1.08) | (1.29) | | Diluted Net loss per common share | (1.47) | (1.51) | - Net loss improved slightly to **$16.3 million in 2022** from **$17.1 million in 2021**[165](index=165&type=chunk) - Total operating expenses increased to **$22.3 million in 2022** from **$20.6 million in 2021**, driven by impairment charges[165](index=165&type=chunk) - Interest income significantly increased from **$4,000 in 2021** to **$220,000 in 2022**[165](index=165&type=chunk) - A derivative gain of **$5.8 million** was recognized in 2022, up from **$3.5 million in 2021**[165](index=165&type=chunk) - Basic net loss per common share improved to **$(1.08) in 2022** from **$(1.29) in 2021**[165](index=165&type=chunk) [Statements of Stockholders' Equity](index=57&type=section&id=Statements%20of%20Stockholders'%20Equity) Statements of stockholders' equity show an increased accumulated deficit and a decrease in total equity from 2021 to 2022 Stockholders' Equity Summary (December 31, 2022 vs. 2021) | Metric | December 31, 2022 ($) | December 31, 2021 ($) | | :------------------------- | :-------------------- | :-------------------- | | Common Stock Amount | 2,000 | 2,000 | | Additional Paid-in Capital | 245,726,000 | 244,884,000 | | Accumulated Deficit | (233,939,000) | (217,602,000) | | Total Stockholders' Equity | 11,789,000 | 27,284,000 | - Accumulated deficit increased to **$(233.9) million in 2022** from **$(217.6) million in 2021**[167](index=167&type=chunk) - Total stockholders' equity decreased from **$27.3 million in 2021** to **$11.8 million in 2022**[167](index=167&type=chunk) - Additional paid-in capital increased by **$0.84 million in 2022**, primarily from share-based compensation, net of forfeitures[167](index=167&type=chunk) [Statements of Cash Flows](index=58&type=section&id=Statements%20of%20Cash%20Flows) Statements of cash flows reveal increased cash usage in operating activities and significantly less cash from financing activities in 2022 compared to 2021 Statements of Cash Flows Summary (2022 vs. 2021) | Cash Flow Activity | 2022 ($) | 2021 ($) | | :--------------------------------- | :------------ | :------------ | | Net cash used in operating activities | (21,128,000) | (14,089,000) | | Net cash used in investing activities | — | (97,000) | | Net cash (used in) provided by financing activities | (111,000) | 30,732,000 | | Net change in cash and cash equivalents | (21,239,000) | 16,546,000 | | Cash and cash equivalents at end of period | 12,653,000 | 33,892,000 | - Net cash used in operating activities increased to **$21.1 million in 2022** from **$14.1 million in 2021**[169](index=169&type=chunk) - Net cash used in financing activities was **$(0.1) million in 2022**, a significant decrease from $30.7 million provided in 2021, reflecting reduced equity raises[169](index=169&type=chunk) - Cash and cash equivalents at the end of the period decreased to **$12.7 million in 2022** from **$33.9 million in 2021**[169](index=169&type=chunk) [Notes to Financial Statements](index=59&type=section&id=Notes%20to%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the financial statements, covering accounting policies, assets, liabilities, and equity [Note 1 – Basis of Presentation](index=59&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation) This note outlines Ampio's business as a pre-revenue biopharmaceutical company focused on AR-300 and details the 15-to-1 reverse stock split - Ampio Pharmaceuticals is a pre-revenue biopharmaceutical company focused on the preclinical development of AR-300 for osteoarthritis-related pain[171](index=171&type=chunk) - A **15-to-1 reverse stock split** was effected on November 9, 2022, and retroactively applied to share and per share amounts in the financial statements[172](index=172&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=59&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note summarizes significant accounting policies, including GAAP conformity, estimates, cash management post-SVB, asset impairment, and the going concern assessment - The company's financial statements are prepared in conformity with U.S. GAAP, requiring management to make estimates and assumptions, particularly for liquidity, clinical trial accrual, and asset impairment[173](index=173&type=chunk) - Following the Silicon Valley Bank receivership in March 2023, Ampio regained access to all deposit funds and refined its cash management strategy to mitigate risks associated with balances exceeding FDIC insured limits[174](index=174&type=chunk) - Ampio recorded impairment charges of **$1.6 million** on long-lived assets and **$0.3 million** on Right-of-Use (ROU) assets in 2022, triggered by the discontinuation of Ampion development[179](index=179&type=chunk) - The company has recorded a full valuation allowance against all its net deferred tax assets, concluding that realization is not more likely than not due to a history of operating losses and lack of foreseeable taxable income[182](index=182&type=chunk) - Management believes current cash resources will fund operations through **Q4 2023**, but due to recurring losses and projected shortfalls, substantial doubt exists about the company's ability to continue as a going concern[185](index=185&type=chunk) [Note 3 – Prepaid Expenses and Other](index=64&type=section&id=Note%203%20%E2%80%93%20Prepaid%20Expenses%20and%20Other) Prepaid expenses and other decreased from $1.74 million in 2021 to $0.68 million in 2022, mainly due to reductions in deposits and professional fees Prepaid Expenses and Other Balances (December 31, 2022 vs. 2021) | Category | December 31, 2022 ($) | December 31, 2021 ($) | | :-------------------------------- | :-------------------- | :-------------------- | | Unamortized commercial insurance premiums | 610,000 | 465,000 | | Deposits | 34,000 | 884,000 | | Professional fees | 19,000 | 235,000 | | Clinical trial inventory | — | 72,000 | | Other | 13,000 | 84,000 | | **Total prepaid expenses and other** | **676,000** | **1,740,000** | - Total prepaid expenses and other decreased from **$1.74 million in 2021** to **$0.68 million in 2022**, primarily due to reductions in deposits and professional fees[191](index=191&type=chunk) [Note 4 – Fixed Assets](index=64&type=section&id=Note%204%20%E2%80%93%20Fixed%20Assets) Fixed assets, net, significantly decreased from $2.56 million in 2021 to $0.18 million in 2022, primarily due to a $1.6 million impairment loss Fixed Assets, Net (December 31, 2022 vs. 2021) | Category | December 31, 2022 ($) | December 31, 2021 ($) | | :--------------------------- | :-------------------- | :-------------------- | | Leasehold improvements | 4,965,000 | 6,075,000 | | Manufacturing facility/clean room | 2,803,000 | 2,984,000 | | Lab equipment and office furniture | 1,661,000 | 1,739,000 | | Fixed assets, gross | 9,429,000 | 10,798,000 | | Accumulated depreciation | (9,245,000) | (8,234,000) | | **Fixed assets, net** | **184,000** | **2,564,000** | - Fixed assets, net, decreased significantly from **$2.56 million in 2021** to **$0.18 million in 2022**[192](index=192&type=chunk) - A **$1.6 million** non-cash impairment loss was recorded in 2022, directly reducing the cost basis of affected assets, due to the discontinuation of Ampion development[192](index=192&type=chunk) Depreciation and Amortization Expense (2022 vs. 2021) | Metric | 2022 ($) | 2021 ($) | | :------------------------------ | :---------- | :---------- | | Depreciation and amortization expense | 1,048,000 | 1,094,000 | [Note 5 – Accounts Payable and Accrued Expenses](index=65&type=section&id=Note%205%20%E2%80%93%20Accounts%20Payable%20and%20Accrued%20Expenses) Accounts payable and accrued expenses significantly decreased from $4.81 million in 2021 to $0.85 million in 2022, mainly due to reduced clinical trial accruals Accounts Payable and Accrued Expenses (December 31, 2022 vs. 2021) | Category | December 31, 2022 ($) | December 31, 2021 ($) | | :------------------------------------- | :-------------------- | :-------------------- | | Accounts payable | 97,000 | 427,000 | | Clinical trials | 89,000 | 2,995,000 | | Professional fees | 157,000 | 510,000 | | Commercial insurance premium financing | 189,000 | 269,000 | | Accrued severance | 143,000 | — | | Accrued compensation | — | 389,000 | | Other | 177,000 | 221,000 | | **Total accounts payable and accrued expenses** | **852,000** | **4,811,000** | - Total accounts payable and accrued expenses decreased significantly from **$4.81 million in 2021** to **$0.85 million in 2022**, primarily due to a large reduction in clinical trial accruals[195](index=195&type=chunk) - The outstanding obligation of **$189,000** from a **$1.2 million** commercial insurance premium financing agreement (entered June 2022) was paid in full in February 2023[196](index=196&type=chunk) [Note 6 – Commitments and Contingencies](index=65&type=section&id=Note%206%20%E2%80%93%20Commitments%20and%20Contingencies) This note details commitments and contingencies, including completed Ampion clinical trial obligations, employment agreements, terminated related party agreements, and a non-cancellable operating lease - All key clinical research trial obligations for Ampion studies (AP-013, AP-018, AP-019, AP-017) were completed as of December 31, 2022, with no commitment for future services[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) - The company has employment agreements with its CEO and CFO, which include severance provisions[201](index=201&type=chunk) - Related party research agreements with Trauma Research, LLC and an individual (a former director) were terminated in August 2022, with remaining obligations paid[202](index=202&type=chunk) - The company has a non-cancellable operating lease for its facility expiring in September 2024, with a total lease liability of **$614,000** as of December 31, 2022[203](index=203&type=chunk)[205](index=205&type=chunk) - An impairment loss of **$0.3 million** was recorded on the Right-of-Use (ROU) asset during 2022[206](index=206&type=chunk) [Note 7 – Warrants](index=69&type=section&id=Note%207%20%E2%80%93%20Warrants) This note details warrant activity, including 1.0 million liability-classified investor warrants outstanding as of December 31, 2022, with no issuances or exercises during the year - Ampio had **1.0 million** liability-classified investor warrants and **0.1 million** equity-classified placement agent warrants outstanding as of December 31, 2022[209](index=209&type=chunk) Warrant Activity (December 31, 2022 vs. 2021) | Metric | December 31, 2022 | December 31, 2021 | | :----------------------------------- | :---------------- | :---------------- | | Number of Warrants Outstanding | 1,065,137 | 1,220,194 | | Weighted Average Exercise Price ($) | 15.94 | 15.36 | | Weighted Average Remaining Contractual Life (years) | 3.80 | 4.24 | - Investor warrants from the December 2021 registered direct offering (**1.0 million shares**, **$16.50 exercise price**) were valued at **$44,000** as of December 31, 2022, a significant decrease from **$5.6 million in 2021**[211](index=211&type=chunk) - No issuances or exercises of warrants occurred during the year ended December 31, 2022[214](index=214&type=chunk) [Note 8 – Fair Value Considerations](index=72&type=section&id=Note%208%20%E2%80%93%20Fair%20Value%20Considerations) This note explains the fair value measurement of the warrant derivative liability using the Black-Scholes model, resulting in a $5.76 million derivative gain in 2022 - The company's warrant derivative liability is measured at fair value using the Black-Scholes valuation methodology, classified as Level 3 in the fair value hierarchy due to unobservable inputs[217](index=217&type=chunk)[219](index=219&type=chunk) Warrant Derivative Liability Fair Value (December 31, 2022 vs. 2021) | Metric | December 31, 2022 ($) | December 31, 2021 ($) | | :------------------------- | :-------------------- | :-------------------- | | Warrant derivative liability | 44,000 | 5,805,000 | - The fair value of the warrant derivative liability decreased from **$5.8 million in 2021** to **$44,000 in 2022**, resulting in a **$5.76 million derivative gain**[221](index=221&type=chunk) [Note 9 – Common Stock](index=73&type=section&id=Note%209%20%E2%80%93%20Common%20Stock) This note details common stock information, including 300 million authorized shares, 15.1 million outstanding shares, and the 2021 registered direct offering - Ampio had **300 million** authorized shares of common stock as of December 31, 2022 and 2021, with **15.1 million** shares outstanding as of December 31, 2022[163](index=163&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) Common Stock Shares (December 31, 2022) | Category | Number of Shares | | :---------------------------------------- | :--------------- | | Authorized shares | 300,000,000 | | Common stock outstanding | 15,102,877 | | Options outstanding | 297,460 | | Warrants outstanding | 1,065,137 | | Reserved for issuance under 2019 Stock and Incentive Plan | 441,300 | | Available shares for future issuance | 283,093,226 | - In December 2021, the company completed a registered direct offering, issuing **1.67 million shares** and **1.0 million investor warrants**, generating **$22.5 million in gross proceeds**[224](index=224&type=chunk) - The investor warrants from the 2021 offering are accounted for as a liability at fair value due to certain derivative features, initially valued at **$6.7 million**[225](index=225&type=chunk) - There was no activity under the ATM equity offering program during the year ended December 31, 2022[227](index=227&type=chunk) [Note 10 – Equity Instruments](index=75&type=section&id=Note%2010%20%E2%80%93%20Equity%20Instruments) This note describes equity instruments, including the 2019 Stock and Incentive Plan, stock option activity, restricted stock awards, and share-based compensation expense - The 2019 Stock and Incentive Plan, approved in December 2019, reserved **10.0 million shares** for equity awards, which was reduced to **666,667 shares** due to the **15-to-1 reverse stock split**[229](index=229&type=chunk) 2019 Plan Activity (December 31, 2022) | Metric | Shares | | :---------------------------------------------- | :---------- | | Total shares reserved for equity awards as of December 31, 2021 | 294,489 | | Options granted | (106,555) | | Forfeited, expired and/or cancelled equity option awards | 184,132 | | Forfeited, expired and/or cancelled equity restricted stock awards | 60,000 | | Shares forfeited to settle exercise price and tax obligation | 9,234 | | Remaining shares available for future equity awards as of December 31, 2022 | 441,300 | Stock Option Activity (December 31, 2022 vs. 2021) | Metric | December 31, 2022 | December 31, 2021 | | :----------------------------------- | :---------------- | :---------------- | | Number of Options Outstanding | 297,460 | 500,466 | | Weighted Average Exercise Price ($) | 14.97 | 16.81 | | Weighted Average Remaining Contractual Life (years) | 6.41 | 7.36 | | Exercisable Options | 257,216 | N/A | | Weighted Average Exercise Price for Exercisable Options ($) | 15.85 | N/A | | Weighted Average Remaining Contractual Life for Exercisable Options (years) | 6.59 | N/A | Restricted Stock Awards Activity (December 31, 2022 vs. 2021) | Metric | December 31, 2022 | December 31, 2021 | | :----------------------------------- | :---------------- | :---------------- | | Nonvested Awards | 13,400 | 97,867 | | Weighted Average Grant-Date Fair Value ($) | 24.60 | 24.60 | - Share-based compensation expense decreased from **$2.8 million in 2021** to **$0.95 million in 2022**, primarily due to reversals for non-vested shares from director and employee forfeitures[240](index=240&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk) [Note 11 – Income Taxes](index=78&type=section&id=Note%2011%20%E2%80%93%20Income%20Taxes) This note explains Ampio's 0.0% effective tax rate due to a full valuation allowance against its $205.0 million net operating loss carryforwards - Ampio's effective tax rate was **0.0%** for both 2022 and 2021, primarily due to a full valuation allowance against its deferred tax assets[244](index=244&type=chunk) - As of December 31, 2022, the company has approximately **$205.0 million** in net operating loss (NOL) carryforwards, with **$74.5 million** carrying forward indefinitely[245](index=245&type=chunk) - A full valuation allowance of **$54.4 million** was recorded against deferred tax assets in 2022, as management concluded it is not more likely than not that these assets will be realized[245](index=245&type=chunk)[246](index=246&type=chunk) [Note 12 – Earnings Per Share](index=80&type=section&id=Note%2012%20%E2%80%93%20Earnings%20Per%20Share) This note details earnings per share, showing an improvement in both basic and diluted net loss per common share in 2022 Earnings Per Share (2022 vs. 2021) | Metric | 2022 ($) | 2021 ($) | | :----------------------------------- | :------------ | :------------ | | Net loss | (16,337,000) | (17,075,000) | | Less: decrease in fair value of investor warrants | (5,761,000) | (3,492,000) | | Net loss available to common stockholders | (22,098,000) | (20,567,000) | | Basic weighted-average common shares outstanding | 15,072,308 | 13,286,605 | | Diluted weighted-average shares outstanding | 15,072,308 | 13,664,202 | | Earnings per share – basic | (1.08) | (1.29) | | Earnings per share – diluted | (1.47) | (1.51) | - Basic earnings per share improved to **$(1.08) in 2022** from **$(1.29) in 2021**[249](index=249&type=chunk) - Diluted earnings per share improved to **$(1.47) in 2022** from **$(1.51) in 2021**[249](index=249&type=chunk) - Potentially dilutive shares, including warrants, stock options, and restricted stock awards, were excluded from diluted EPS calculations due to their anti-dilutive effect[248](index=248&type=chunk)[250](index=250&type=chunk) [Note 13 – Litigation](index=81&type=section&id=Note%2013%20%E2%80%93%20Litigation) This note details Ampio's involvement in securities fraud class actions, shareholder derivative complaints, and an SEC investigation related to Ampion trial results - Ampio is involved in a securities fraud class action (Kain v. Ampio) and multiple shareholder derivative complaints (Maresca, Marquis, McCann v. Martino, et al.) alleging false statements, breach of fiduciary duty, and insider trading related to Ampion trial results[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk)[256](index=256&type=chunk)[258](index=258&type=chunk)[261](index=261&type=chunk) - The lawsuits stem from Ampio's internal investigations in 2022, which revealed issues with the statistical analysis of the AP-013 clinical trial and unauthorized provision of Ampion[252](index=252&type=chunk) - Most legal proceedings are currently under a temporary stay, deferring deadlines, and Ampio intends to vigorously defend itself[253](index=253&type=chunk)[258](index=258&type=chunk)[260](index=260&type=chunk)[262](index=262&type=chunk) - The SEC initiated a private investigation in October 2022, issuing subpoenas to the company and various individuals, with Ampio cooperating fully[263](index=263&type=chunk) [Note 14 – Employee Benefit Plan](index=86&type=section&id=Note%2014%20%E2%80%93%20Employee%20Benefit%20Plan) This note reports Ampio provided $67,000 in matching employee contributions to its 401(k) plan in 2022 - Ampio provided **$67,000** in matching employee contributions to its 401(k) plan during the year ended December 31, 2022[264](index=264&type=chunk) [Note 15 – Subsequent Event](index=86&type=section&id=Note%2015%20%E2%80%93%20Subsequent%20Event) This note discloses a subsequent event: Ampio entered into a sublease agreement for its facilities effective March 1, 2023, until September 2024 - Effective March 1, 2023, Ampio entered into a sublease agreement for its office and manufacturing premises, with the sublease term continuing until the original lease expires on September 30, 2024[265](index=265&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.](index=39&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) There have been no changes in or disagreements with accountants on accounting and financial disclosure - There were no changes in or disagreements with accountants on accounting and financial disclosure[132](index=132&type=chunk) [Item 9A. Controls and Procedures.](index=39&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Ampio's disclosure controls were ineffective as of March 31, 2022, but corrective actions led to their effectiveness by December 31, 2022, with internal controls over financial reporting also deemed effective - Disclosure controls and procedures were deemed **ineffective as of March 31, 2022**, due to matters identified during internal investigations into the AP-013 clinical trial and unauthorized Ampion provision[133](index=133&type=chunk) - Corrective actions taken included terminating two executive officers, restructuring the Board of Directors, reconstituting the Disclosure Committee, enhancing policies, and conducting company-wide training[133](index=133&type=chunk)[135](index=135&type=chunk) - As of December 31, 2022, the company's disclosure controls and procedures were deemed **effective**[135](index=135&type=chunk) - Management concluded that internal controls over financial reporting were **effective as of December 31, 2022**[136](index=136&type=chunk) - There have been no material changes in internal controls over financial reporting during the period covered by this report[137](index=137&type=chunk) [Item 9B. Other Information.](index=41&type=section&id=Item%209B.%20Other%20Information.) This item contains no other information - No other information is reported under this item[137](index=137&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.](index=41&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) This item is not applicable to Ampio Pharmaceuticals - Disclosure Regarding Foreign Jurisdictions that Prevent Inspections is not applicable[137](index=137&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance.](index=41&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) Information on directors, executive officers, corporate governance, and the Code of Business Conduct and Ethics is incorporated by reference from the 2023 Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement[138](index=138&type=chunk) - The company's Code of Business Conduct and Ethics applies to all employees, directors, and officers and is available on its website[140](index=140&type=chunk) [Item 11. Executive Compensation.](index=43&type=section&id=Item%2011.%20Executive%20Compensation.) Information regarding executive compensation is incorporated by reference from the 2023 Proxy Statement - Information on executive compensation is incorporated by reference from the 2023 Proxy Statement[141](index=141&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.](index=43&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) Information on equity compensation plans and security ownership of beneficial owners and management is incorporated by reference from the 2023 Proxy Statement - Information on equity compensation plans and security ownership is incorporated by reference from the 2023 Proxy Statement[142](index=142&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence.](index=43&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) Information on certain relationships, related party transactions, and director independence is incorporated by reference from the 2023 Proxy Statement - Information on certain relationships, related party transactions, and director independence is incorporated by reference from the 2023 Proxy Statement[143](index=143&type=chunk) [Item 14. Principal Accountant Fees and Services.](index=43&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services.) Information regarding principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement[144](index=144&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules.](index=43&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules.) This section lists financial statements and a comprehensive array of exhibits, including corporate governance documents, equity plans, employment agreements, and SEC certifications - The section lists the financial statements filed as part of the Form 10-K, including the Report of Independent Registered Public Accounting Firm, Balance Sheets, Statements of Operations, Statements of Stockholders' Equity, Statements of Cash Flows, and Notes to Financial Statements[145](index=145&type=chunk) - A comprehensive list of exhibits is provided, including corporate governance documents (Certificate of Incorporation, Bylaws), equity compensation plans (2010 and 2019 Stock Incentive Plans), employment agreements, and SEC certifications (302 and 906)[146](index=146&type=chunk)[147](index=147&type=chunk) [Item 16. FORM 10-K SUMMARY.](index=47&type=section&id=Item%2016.%20FORM%2010-K%20SUMMARY.) This item indicates that no Form 10-K summary is provided - No Form 10-K summary is provided under this item[147](index=147&type=chunk) SIGNATURES The report is duly signed by Ampio Pharmaceuticals' CEO, CFO, and other directors on March 27, 2023 - The report is duly signed on behalf of Ampio Pharmaceuticals, Inc. by its Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial and Accounting Officer), along with other directors, on March 27, 2023[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns that forward-looking statements involve known and unknown risks and uncertainties that could materially alter actual results - Forward-looking statements necessarily involve **known and unknown risks and uncertainties** which may cause actual performance, financial results, or other business outcomes to differ **materially**[6](index=6&type=chunk)[7](index=7&type=chunk) - Key areas of forward-looking statements include **projected operating/financial results**, expectations regarding **clinical trial costs**, beliefs about **liquidity position**, **strategic alternatives process**, and ability to identify **strategic partners**[8](index=8&type=chunk) - Risks include **time/expense of internal investigation**, ability to regain **NYSE American listing compliance**, **funding operations**, **substantial doubt about going concern**, potential for **strategic alternatives to fail or incur unexpected costs**, and ability to retain **key employees**[8](index=8&type=chunk) [PART I – FINANCIAL INFORMATION](index=6&type=section&id=PART%20I-FINANCIAL%20INFORMATION) This part presents Ampio Pharmaceuticals' unaudited financial statements, management's discussion, market risk disclosures, and controls for Q2 2022 [Item 1. Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section provides the unaudited condensed financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows [Condensed Balance Sheets](index=6&type=section&id=Condensed%20Balance%20Sheets) The condensed balance sheets show the Company's financial position, reflecting decreases in total assets, stockholders' equity, and total liabilities Condensed Balance Sheet Summary | Metric | June 30, 2022 | December 31, 2021 | | :----------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $22,890,000 | $33,892,000 | | Total current assets | $24,644,000 | $35,632,000 | | Total assets | $27,215,000 | $38,825,000 | | Total current liabilities | $5,082,000 | $5,122,000 | | Warrant derivative liability | $1,588,000 | $5,805,000 | | Total liabilities | $7,118,000 | $11,541,000 | | Total stockholders' equity | $20,097,000 | $27,284,000 | [Condensed Statements of Operations](index=7&type=section&id=Condensed%20Statements%20of%20Operations) The condensed statements of operations show continued net losses, with a decrease for the three months ended June 30, 2022 Condensed Statements of Operations Summary | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $1,743,000 | $2,273,000 | $5,430,000 | $4,568,000 | | General and administrative | $3,245,000 | $1,400,000 | $6,528,000 | $2,923,000 | | Total operating expenses | $4,988,000 | $3,673,000 | $11,958,000 | $7,491,000 | | Derivative gain | $2,886,000 | $116,000 | $4,217,000 | $267,000 | | Net loss | $(2,070,000) | $(3,556,000) | $(7,706,000) | $(7,222,000) | | Net loss per common share (Basic) | $(0.01) | $(0.02) | $(0.03) | $(0.04) | | Net loss per common share (Diluted) | $(0.02) | $(0.02) | $(0.05) | $(0.04) | [Condensed Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity) The condensed statements of stockholders' equity detail changes in common stock, paid-in capital, and accumulated deficit, reflecting net losses Stockholders' Equity Summary | Metric | Balance at Dec 31, 2021 | Balance at Jun 30, 2022 | | :------------------------------------ | :---------------------- | :---------------------- | | Common Stock (Shares) | 227,325,381 | 226,286,867 | | Common Stock (Amount) | $23,000 | $23,000 | | Additional Paid-in Capital | $244,863,000 | $245,382,000 | | Accumulated Deficit | $(217,602,000) | $(225,308,000) | | Total Stockholders' Equity | $27,284,000 | $20,097,000 | - **Net loss** for the six months ended June 30, 2022, was **$(7,706,000)**, contributing to the accumulated deficit[17](index=17&type=chunk) - **Share-based compensation**, net of forfeitures, added **$716,000** to additional paid-in capital for the six months ended June 30, 2022[17](index=17&type=chunk) [Condensed Statements of Cash Flows](index=9&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) The condensed statements of cash flows show increased cash used in operating activities and a net cash outflow from financing activities Cash Flow Summary | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(10,891,000) | $(6,475,000) | | Net cash used in investing activities | $0 | $(81,000) | | Net cash (used in) provided by financing activities | $(111,000) | $9,759,000 | | Net change in cash and cash equivalents | $(11,002,000) | $3,203,000 | | Cash and cash equivalents at end of period | $22,890,000 | $20,549,000 | [Notes to Condensed Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) These notes provide detailed information supporting the condensed financial statements, covering accounting policies, balance sheet items, commitments, and subsequent events - Ampio Pharmaceuticals, Inc. is a **pre-revenue biopharmaceutical company** historically focused on immunomodulatory therapies for osteoarthritis pain[23](index=23&type=chunk) - The Company's board is considering **strategic alternatives**, including potential acquisition of a product/pipeline or a reverse merger[23](index=23&type=chunk) - Financial statements are **unaudited** and prepared in accordance with GAAP for interim information, requiring management estimates and assumptions[24](index=24&type=chunk)[27](index=27&type=chunk) - The Company maintains cash and cash equivalents in bank demand deposits, U.S. federal government-backed treasury securities, and money market funds, with balances often exceeding federally insured limits[26](index=26&type=chunk) [Note 1 – The Company and Summary of Significant Accounting Policies](index=10&type=section&id=Note%201%20%E2%80%93%20The%20Company%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes Ampio Pharmaceuticals as a pre-revenue biopharmaceutical company exploring strategic alternatives, outlining financial statement basis and credit risk [Liquidity / Going Concern](index=12&type=section&id=Liquidity%20%2F%20Going%20Concern) The Company has an accumulated deficit of $225.3 million and expects continued losses, raising substantial doubt about its ability to continue as a going concern - **Accumulated deficit** reached **$225.3 million** as of June 30, 2022, with expectations of continued operating losses[30](index=30&type=chunk) Cash and Cash Equivalents | Metric | June 30, 2022 | | :---------------------- | :-------------- | | Cash and cash equivalents | $22,900,000 | - The Company estimates sufficient liquidity to fund operations and strategic alternatives into the **second half of 2023**, based on current cash and expense projections[32](index=32&type=chunk) - **Substantial doubt** exists about the Company's ability to continue as a **going concern**, and future financing may be difficult due to depressed stock price and NYSE American listing compliance issues[33](index=33&type=chunk)[34](index=34&type=chunk) - The Company implemented a **reduction in force** on August 2, 2022, terminating **10 of 18 employees** (approximately 55.5%) to conserve cash resources[31](index=31&type=chunk) [Recent Accounting Pronouncements](index=12&type=section&id=Recent%20Accounting%20Pronouncements) The Company evaluated ASU 2020-06, simplifying convertible debt accounting, and plans to defer its implementation until December 15, 2023 - FASB issued ASU 2020-06 to simplify accounting for **convertible debt instruments** and diluted net income per share calculation[38](index=38&type=chunk)[39](index=39&type=chunk) - The Company has evaluated ASU 2020-06 and decided to defer its implementation until its effective date for fiscal years beginning after **December 15, 2023**[39](index=39&type=chunk) [Note 2 – Prepaid Expenses and Other](index=14&type=section&id=Note%202%20%E2%80%93%20Prepaid%20Expenses%20and%20Other) This note details prepaid expenses and other current assets, showing a slight increase driven by unamortized commercial insurance premiums Prepaid Expenses and Other Summary | Item | June 30, 2022 | December 31, 2021 | | :------------------------------ | :-------------- | :---------------- | | Deposits | $365,000 | $884,000 | | Unamortized commercial insurance premiums | $1,124,000 | $465,000 | | Professional fees | $110,000 | $235,000 | | Maintenance service contracts | $43,000 | $0 | | Clinical trial inventory | $0 | $72,000 | | Other | $112,000 | $84,000 | | Total prepaid expenses and other | $1,754,000 | $1,740,000 | [Note 3 – Fixed Assets](index=14&type=section&id=Note%203%20%E2%80%93%20Fixed%20Assets) This note breaks down fixed assets, net of accumulated depreciation, showing a decrease due to ongoing depreciation Fixed Assets Summary | Item | June 30, 2022 | December 31, 2021 | | :-------------------------- | :-------------- | :---------------- | | Fixed assets, gross | $10,798,000 | $10,798,000 | | Accumulated depreciation | $(8,752,000) | $(8,234,000) | | Fixed assets, net | $2,046,000 | $2,564,000 | Depreciation and Amortization Expense | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Depreciation and amortization expense | $256,000 | $274,000 | $518,000 | $568,000 | [Note 4 – Accounts Payable and Accrued Expenses](index=16&type=section&id=Note%204%20%E2%80%93%20Accounts%20Payable%20and%20Accrued%20Expenses) This note details accounts payable and accrued expenses, which remained stable, with decreased clinical trial accruals and increased insurance premium financing Accounts Payable and Accrued Expenses Summary | Item | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :-------------- | :---------------- | | Accounts payable | $718,000 | $427,000 | | Clinical trials | $2,161,000 | $2,995,000 | | Professional fees | $1,028,000 | $510,000 | | Accrued compensation | $11,000 | $389,000 | | Commercial insurance premium financing | $757,000 | $269,000 | | Other | $82,000 | $221,000 | | Accounts payable and accrued expenses | $4,757,000 | $4,811,000 | - In June 2022, the Company entered into an insurance premium financing agreement for **$1,159,000** at **3.975% annual interest**, with an outstanding obligation of **$757,000** as of June 30, 2022[44](index=44&type=chunk) [Note 5 - Commitments and Contingencies](index=16&type=section&id=Note%205%20-%20Commitments%20and%20Contingencies) This note outlines contractual commitments for clinical trials, employment agreements, related party research, and a facility lease, highlighting recent terminations - AP-013 OAK study: Estimated final costs to close out the study are **$0.7 million**, with an outstanding future contractual commitment of **$0.3 million** as of June 30, 2022[45](index=45&type=chunk) - AP-018 (inhaled COVID-19) and AP-017 (IV COVID-19) studies are **substantially complete** with minimal future obligations[46](index=46&type=chunk)[48](index=48&type=chunk) - AP-019 (inhaled COVID-19) study enrollment was **terminated on May 3, 2022**, due to no documented beneficial effect, and is substantially complete with no future contractual commitment[47](index=47&type=chunk) - The Company has employment agreements with its CFO (term ending Oct 2024, **$335k salary**) and CEO (term ending Nov 2022, **$550k salary**), including severance provisions[49](index=49&type=chunk) - Related party research agreements with Trauma Research, LLC and Dr. David Bar-Or were terminated effective September 5, 2022, and November 4, 2022, respectively, with remaining obligations estimated at **$21,000** and **$62,000**[50](index=50&type=chunk) Facility Lease Payments | Lease Payment Category | Amount | | :--------------------- | :------- | | Remaining Facility Lease Payments | $823,000 | | Less: Discount Adjustment | $(50,000) | | Total lease liability | $773,000 | | Lease liability-current portion | $325,000 | | Long-term lease liability | $448,000 | [Note 6 – Warrants](index=19&type=section&id=Note%206%20%E2%80%93%20Warrants) This note details outstanding warrants, which decreased to 15,977,050 as of June 30, 2022, due to expirations, with a weighted average exercise price of $1.06 Warrants Summary | Metric | December 31, 2021 | June 30, 2022 | | :-------------------------------- | :---------------- | :-------------- | | Number of Warrants Outstanding | 18,302,897 | 15,977,050 | | Weighted Average Exercise Price | $1.02 | $1.06 | | Weighted Average Remaining Contractual Life (years) | 4.24 | 4.30 | - **2,325,847 warrants expired** on June 1, 2022[53](index=53&type=chunk)[54](index=54&type=chunk) - As of June 30, 2022, **0.8 million warrants were equity-classified** and **15.2 million were liability-classified**[53](index=53&type=chunk) [Note 7 - Fair Value Considerations](index=19&type=section&id=Note%207%20-%20Fair%20Value%20Considerations) This note explains the Company's Level 3 warrant derivative liability, valued using the Black-Scholes model, which significantly decreased to $1.588 million - The Company's **warrant derivative liability** is measured at fair value using **Level 3 unobservable inputs**, primarily valued with the Black-Scholes warrant pricing model[57](index=57&type=chunk)[59](index=59&type=chunk) Warrant Derivative Liability | Metric | December 31, 2021 | June 30, 2022 | | :----------------------- | :---------------- | :-------------- | | Warrant derivative liability | $5,805,000 | $1,588,000 | - The change in fair value of derivative instruments resulted in a gain of **$(1,331,000)** for Q1 2022 and **$(2,886,000)** for Q2 2022[60](index=60&type=chunk) [Note 8 - Common Stock](index=21&type=section&id=Note%208%20-%20Common%20Stock) This note outlines the common stock structure, including authorized and outstanding shares, shares reserved for equity plans, and no ATM sales activity in H1 2022 Common Stock Structure | Item | June 30, 2022 | | :------------------------------------------ | :-------------- | | Authorized shares | 300,000,000 | | Common stock outstanding | 226,286,867 | | Options outstanding | 6,549,116 | | Warrants outstanding | 15,977,050 | | Reserved for issuance under 2019 Stock and Incentive Plan | 4,747,773 | | Available shares | 46,439,194 | - The ATM equity offering program had **no sales of common stock** during the three and six months ended June 30, 2022, compared to **$7.267 million** and **$9.972 million** in gross proceeds for the respective periods in 2021[65](index=65&type=chunk) - No common stock was issued for services to non-employee directors during the six months ended June 30, 2022, compared to **54,052 shares valued at $80,000** in 2021[66](index=66&type=chunk) [Note 9 - Equity](index=23&type=section&id=Note%209%20-%20Equity) This note details equity compensation plans, summarizing stock option and restricted stock award activity, showing decreases in outstanding options and nonvested awards Equity Awards Summary (2019 Plan) | Metric | June 30, 2022 | | :------------------------------------------ | :-------------- | | Total shares reserved for equity awards (2019 Plan) | 10,000,000 | | Remaining shares available for future equity awards | 4,747,773 | Nonvested Restricted Stock Awards | Metric | December 31, 2021 | June 30, 2022 | | :-------------------------------- | :---------------- | :-------------- | | Nonvested Restricted Stock Awards | 1,468,000 | 201,000 | Stock Options Summary | Metric | December 31, 2021 | June 30, 2022 | | :-------------------------------- | :---------------- | :-------------- | | Outstanding Stock Options | 7,506,989 | 6,549,116 | | Exercisable Stock Options | N/A | 4,588,107 | - **Share-based compensation expense** for the six months ended June 30, 2022, was **$630,000**, with unrecognized expense of **$667,000** for stock options and **$201,728** for restricted stock awards[71](index=71&type=chunk) [Note 10 - Earnings Per Share](index=28&type=section&id=Note%2010%20-%20Earnings%20Per%20Share) This note details basic and diluted EPS calculations, showing net losses for both periods, with potentially dilutive shares excluded due to their anti-dilutive effect Earnings Per Share Summary | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :-------------------------------------- | :------------------------------- | :----------------------------- | | Net loss available to common stockholders | $(4,956,000) | $(11,923,000) | | Basic weighted-average common shares outstanding | 226,085,867 | 226,084,605 | | Diluted weighted-average shares outstanding | 226,085,867 | 226,084,605 | | Earnings per share – basic | $(0.01) | $(0.03) | | Earnings per share – diluted | $(0.02) | $(0.05) | Potentially Dilutive Shares | Potentially Dilutive Shares | June 30, 2022 (3 Months) | June 30, 2022 (6 Months) | | :-------------------------------------- | :----------------------- | :----------------------- | | Warrants to purchase common stock | 15,977,050 | 15,977,050 | | Outstanding stock options | 6,549,116 | 6,549,116 | | Restricted stock awards | 201,000 | 201,000 | | Total potentially dilutive shares | 22,727,166 | 22,727,166 | - All potentially dilutive shares were excluded from diluted net loss per share calculations due to their **anti-dilutive effect**[72](index=72&type=chunk)[74](index=74&type=chunk) [Note 11 – Subsequent Events](index=30&type=section&id=Note%2011%20%E2%80%93%20Subsequent%20Events) This note discloses significant post-June 30, 2022 events, including a 55.5% employee reduction in force and termination of related party agreements - On August 2, 2022, the Company committed to a **reduction in force**, terminating **10 of 18 employees (55.5%)** by August 31, 2022[75](index=75&type=chunk) - Expected charges related to the reduction in force include up to **$425,000** for severance and termination benefits in Q3 2022, and up to **$355,000** for retention and severance arrangements through Q4 2022[76](index=76&type=chunk) - The Company terminated personal services and research services agreements with Dr. David Bar-Or and Trauma Research LLC, effective **September 5, 2022**, and **November 4, 2022**, respectively[77](index=77&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the Company's financial condition and results, highlighting its pre-revenue stage, accumulated deficit, and strategic review [Executive Summary](index=30&type=section&id=Executive%20Summary) Ampio Pharmaceuticals, Inc. is a pre-revenue biopharmaceutical company with a $225.3 million accumulated deficit, now exploring strategic alternatives for its lead product, Ampion - Ampio is a **pre-revenue biopharmaceutical company** with an **accumulated deficit of $225.3 million** as of June 30, 2022[79](index=79&type=chunk) - Ampion is the lead product candidate, studied for **osteoarthritis of the knee (OAK)** and **COVID-19 inflammation**[81](index=81&type=chunk) - The Company conducted **four clinical trials** (AP-013, AP-017, AP-019, AP-018) for Ampion, all of which completed enrollment and were in various stages of completion as of June 30, 2022[81](index=81&type=chunk) - The board is considering **strategic alternatives** for Ampio and Ampion, including potential acquisition of a product/pipeline or a reverse merger[82](index=82&type=chunk) [Accounting Policies](index=32&type=section&id=Accounting%20Policies) The financial statements adhere to GAAP, requiring management estimates, with no substantial changes to significant accounting policies since the 2021 Annual Report - Financial statements are prepared in accordance with **GAAP**, requiring management estimates and judgments[83](index=83&type=chunk) - Significant accounting policies and estimates have **not substantially changed** from the 2021 Annual Report[84](index=84&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes the Company's financial performance for the three and six months ended June 30, 2022, detailing changes in net loss, operating expenses, and derivative gains [Results of Operations – June 30, 2022 Compared to June 30, 2021](index=32&type=section&id=Results%20of%20Operations%20%E2%80%93%20June%2030,%202022%20Compared%20to%20June%2030,%202021) Net loss decreased to $2.1 million for the three months ended June 30, 2022, due to a derivative gain, but increased to $7.7 million for the six-month period due to higher operating expenses Net Loss and Operating Expenses | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(2,070,000) | $(3,556,000) | $(7,706,000) | $(7,222,000) | | Total operating expenses | $4,988,000 | $3,673,000 | $11,958,000 | $7,491,000 | | Non-cash derivative gain | $2,886,000 | $116,000 | $4,217,000 | $267,000 | - The decrease in net loss for the three-month period was primarily due to a **$2.9 million non-cash derivative gain**, resulting from a significant decrease in stock price and warrant expirations[88](index=88&type=chunk) - The increase in net loss for the six-month period was primarily due to a **$4.5 million increase in operating expenses**, partially offset by a **$4.2 million non-cash derivative gain**[89](index=89&type=chunk) [Operating Expenses](index=34&type=section&id=Operating%20Expenses) This section analyzes the Company's research and development (R&D) and general and administrative (G&A) expenses for the three and six months ended June 30, 2022, versus 2021 [Research and Development](index=34&type=section&id=Research%20and%20Development) R&D costs decreased by 23% for the three months ended June 30, 2022, due to clinical trial conclusions, but increased by 19% for the six-month period due to higher professional fees Research and Development Expenses | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total research and development | $1,743,000 | $2,273,000 | $5,430,000 | $4,568,000 | | Clinical trial and sponsored research expenses | $162,000 | $808,000 | $2,087,000 | $1,575,000 | | Operations/manufacturing | $75,000 | $228,000 | $280,000 | $617,000 | | Professional fees | $314,000 | $72,000 | $508,000 | $107,000 | | Share-based compensation | $95,000 | $0 | $141,000 | $46,000 | - Clinical trial and sponsored research expenses decreased by **$0.6 million (80%)** for the three-month period due to the conclusion of all clinical trials in May 2022[91](index=91&type=chunk)[92](index=92&type=chunk) - Professional fees in R&D increased by **$0.2 million (336%)** for the three-month period due to engaging a Chief Medical Officer consultant and third-party biostatisticians for study close-out[95](index=95&type=chunk) - Clinical trial and sponsored research expenses increased by **$0.5 million (33%)** for the six-month period, mainly due to AP-019 study costs, partially offset by AP-013 completion[98](index=98&type=chunk) [General and Administrative](index=36&type=section&id=General%20and%20Administrative) G&A costs significantly increased by 132% for the three months and 123% for the six months ended June 30, 2022, driven by higher professional fees and salaries General and Administrative Expenses | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total general and administrative | $3,245,000 | $1,400,000 | $6,528,000 | $2,923,000 | | Professional fees | $2,581,000 | $517,000 | $3,984,000 | $997,000 | | Salaries and benefits | $292,000 | $240,000 | $925,000 | $477,000 | | Share-based compensation | $(181,000) | $67,000 | $488,000 | $267,000 | - Professional fees in G&A increased by **$2.1 million (399%)** for the three-month period and **$3.0 million (300%)** for the six-month period, primarily due to legal costs for internal investigations and advisory services[106](index=106&type=chunk)[110](index=110&type=chunk) - Share-based compensation in G&A decreased by **$0.3 million (370%)** for the three-month period due to forfeitures from employee terminations and board resignations[108](index=108&type=chunk) - Salaries and benefits increased by **$0.4 million (94%)** for the six-month period due to higher headcount and market-based compensation adjustments[111](index=111&type=chunk) [Cash Flows](index=40&type=section&id=Cash%20Flows) Operating activities used significantly more cash in H1 2022 ($10.9 million) due to a non-cash derivative gain and working capital changes, with minimal investing and net financing outflow Cash Flow Summary | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(10,891,000) | $(6,475,000) | | Net cash used in investing activities | $0 | $(81,000) | | Net cash (used in) provided by financing activities | $(111,000) | $9,759,000 | | Net change in cash and cash equivalents | $(11,002,000) | $3,203,000 | - Operating cash outflow increased due to a **$4.2 million non-cash warrant derivative gain** and a decrease in working capital in 2022[114](index=114&type=chunk) - Financing activities in 2022 included settling a **$79,000 tax liability** for restricted stock awards and **$32,000 in offering costs**; in 2021, financing provided **$10.0 million** from ATM equity offering and **$234,000** from warrant/option exercises[117](index=117&type=chunk)[118](index=118&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Ampio, a pre-revenue company with $22.9 million in cash, faces substantial doubt about its going concern ability despite estimated liquidity into H2 2023 and cost-saving measures - As of June 30, 2022, the Company had **$22.9 million in cash and cash equivalents** and has not generated revenue since inception[119](index=119&type=chunk) - Management estimates sufficient liquidity to fund operations and strategic alternatives into the **second half of 2023**[124](index=124&type=chunk) - **Substantial doubt** exists about the Company's ability to continue as a **going concern**, and future financing may be challenging due to depressed stock price and NYSE American listing compliance issues[125](index=125&type=chunk)[126](index=126&type=chunk) - Cost-saving measures include a **reduction in force (55.5% of employees terminated)** and termination of related party agreements, driven by negative conclusions regarding Ampion's continued development[122](index=122&type=chunk)[123](index=123&type=chunk) - If strategic transactions are unsuccessful or additional capital cannot be raised, the Company may pursue further cost reductions, liquidation, or dissolution[128](index=128&type=chunk) [Off Balance Sheet Arrangements](index=42&type=section&id=Off%20Balance%20Sheet%20Arrangements) The Company does not have any off-balance sheet arrangements, financings, or relationships with unconsolidated entities - The Company has **no off-balance sheet arrangements**, financings, or relationships with unconsolidated entities[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Ampio Pharmaceuticals, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a **smaller reporting company** and is not required to provide quantitative and qualitative disclosures about market risk[131](index=131&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls were ineffective as of June 30, 2022, due to prior internal investigation issues, despite implemented but untested changes - The CEO and CFO concluded that **disclosure controls and procedures were not effective** as of June 30, 2022, due to matters identified in internal investigations[133](index=133&type=chunk)[135](index=135&type=chunk) - Changes implemented to improve effectiveness include reconstituting the disclosure committee, separating CEO/Board Chair roles, personnel changes, and company-wide training, but these have **not been fully tested**[134](index=134&type=chunk)[135](index=135&type=chunk) - No other **material changes in internal control over financial reporting** occurred during the period[136](index=136&type=chunk) [PART II – OTHER INFORMATION](index=44&type=section&id=PART%20II%E2%80%93OTHER%20INFORMATION) This part covers other required disclosures, including legal proceedings, risk factors, unregistered sales of equity securities, and exhibits [Item 1. Legal Proceedings.](index=44&type=section&id=Item%201.%20Legal%20Proceedings.) This item states that there are no applicable legal proceedings to report - Not applicable[138](index=138&type=chunk) [Item 1A. Risk Factors.](index=44&type=section&id=Item%201A.%20Risk%20Factors.) This item refers readers to the risk factors detailed in the Company's 2021 Annual Report on Form 10-K and other SEC filings - Readers should carefully consider the **risk factors** described in Part I, 'Item 1A. Risk Factors' in the **2021 Annual Report on Form 10-K** and other SEC reports[139](index=139&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This item states that there are no applicable unregistered sales of equity securities or use of proceeds to report - Not applicable[140](index=140&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) This item indicates that there were no defaults upon senior securities - None[142](index=142&type=chunk) [Item 4. Mine Safety Disclosures.](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item states that mine safety disclosures are not applicable to the Company - Not Applicable[143](index=143&type=chunk) [Item 5. Other Information.](index=46&type=section&id=Item%205.%20Other%20Information.) This item reiterates the termination of the Personal Services Agreement and Research Services Agreement with Dr. David Bar-Or and Trauma Research LLC - The Company terminated Personal Services Agreement with Dr. David Bar-Or (former director) and Research Services Agreement with Trauma Research LLC (owned by Dr. Bar-Or), effective **September 5, 2022**, and **November 4, 2022**, respectively[144](index=144&type=chunk) [Item 6. Exhibits.](index=47&type=section&id=Item%206.%20Exhibits.) This item lists the exhibits filed or furnished with this Quarterly Report on Form 10-Q, including certificates of incorporation, bylaws, and certifications - The report includes various exhibits such as Certificate of Incorporation, Amended and Restated Bylaws, and certifications from CEO and CFO pursuant to Sarbanes-Oxley Act[147](index=147&type=chunk) [SIGNATURES](index=48&type=section&id=SIGNATURES) This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report on behalf of Ampio Pharmaceuticals, Inc - The report is signed by Michael A. Martino, Chief Executive Officer, and Daniel G. Stokely, Chief Financial Officer, on **August 9, 2022**[152](index=152&type=chunk)