The incumbent Board has squandered its cash and failed to complete a single relevant Company-sponsored
Ampligen clinical study and has funded its massive losses and wasteful spending with dilutive and expensive financings. This has been going on for years. As of the record date for the annual meeting, there were 63.7 million shares outstanding
– more than 100x dilution since the incumbent Board took control.7 And AIM stockholders have nothing to show for this massive dilution – a 99+%
decline in value, a lack of clinical progress and a company on the brink of insolvency.
This gross financial mismanagement comes at the expense
of clinical development. AIM has been developing Ampligen for decades. Yet, after almost nine years under the control of the incumbent Board, we see no clear path to FDA approvals or commercialization. AIM’s most recent Form 10-Q does not mention any plans Phase 3 studies, and it is not even clear when disclosed Phase 1 and 2 studies will be completed or next steps. AIM’s strategy is characterized by shifting focuses with no follow
through, hoping to draw positive attention with press releases from time to time, but no clear timelines or goals toward regulatory approval and generating sales. With no revenues, dwindling cash resources, unsustainable financing sources and
a stagnant clinical program, change is desperately needed.
The Incumbent Board Breached Its Fiduciary Duties and Engaged in Gross Waste
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The Delaware Supreme Court ruled in 2024 that the incumbent Board breached its fiduciary duties. In describing
the Board’s adoption of amended bylaws, the court stated that the “primary purpose was to interfere with Kellner’s nomination notice, reject his nominees, and maintain control” and that the bylaws were
“product of an improper motive and purpose, which constitutes a breach of the duty of loyalty.” (emphasis added) |
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This illegal behavior by the AIM Board was not an isolated incident. A federal district court in Florida
sanctioned AIM and its counsel in 2024 in its Section 13(d) claims against members of the Kellner Group and others – claims that have been dismissed multiple times – for pursuing arguments that were “factually and legally
frivolous and advanced for an improper purpose.” (emphasis added) |
The incumbent Board is engaged in gross
waste in pursuit of this improper purpose. Based on AIM’s own disclosures, we estimate that the incumbent Board has spent between $15 to $20 million in just the past approximately two years in their bad
faith effort to prevent a meaningful election of directors and maintain control. 8 This is an unconscionable amount for a company of
AIM’s size – approximately equal to or greater than its entire market capitalization. We believe the incumbent Board bears sole responsibility for this waste—the incumbent directors initiated and continued this effort in
order to entrench themselves and disenfranchise stockholders.
No Board acting in good faith could justify these actions. But for the incumbent
Board, which has overseen a massive destruction in stockholder value and 99+% stock price decline under its control, to engage in this bad faith effort is completely shocking and disqualifying. The
Board’s bad behavior is either intentional or due to incompetence, or a combination of both, either way the incumbent Board has failed miserably and must be dismissed immediately.
The Incumbent Board Has No Strategic Plan and Will Not Change Their Destructive Course
AIM’s mismanagement and lack of progress has been overseen by the incumbent Board. The incumbent Board has been in control of AIM for almost 9 years, with
Equels, Mitchell and Appelrouth having been involved with AIM and each other going back years before then. Bryan is new to the Board, but had a prior relationship with Equels and was hand-picked by him, without any independent search, and has joined
right in with the others.
After decades of reckless oversight and gross mismanagement, the results are clear: an epic failure. The entrenched
incumbent Board has no plan to change their destructive course, no strategic business plan, no initiatives for independent oversight, no plan for proper governance, no plan to reduce excessive compensation, no plan for a focused
| 7 |
See the Company’s Annual Report on Form 10-K for the year ended
December 31, 2015 filed with the SEC on March 29, 2016, with such number adjusted to account for reverse stock splits of 1 for 12 in 2016 and 1 for 44 in 2019. |
| 8 |
Represents Kellner Group estimate based on increase in Company’s G&A expense from 2021 to 2023 and
explanations provided as disclosed in AIM’s Annual Reports on Form 10-K for past two years, together with continued elevated G&A expenses in 2024 to date as disclosed AIM’s most recent Quarterly
Report on Form 10-Q. |