ADMA BIOLOGICS INC

ADMA Biologics, Inc. (“ADMA” or the “Company”) is an end-to-end commercial biopharmaceutical company dedicated to manufacturing, marketing and developing specialty biologics for the treatment of immunodeficient patients at risk for infection and others at risk for certain infectious diseases. The Company’s targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disorder or who may be immune-suppressed for medical reasons.

ADMA operates through its wholly-owned subsidiaries ADMA BioManufacturing, LLC (“ADMA BioManufacturing”) and ADMA BioCenters Georgia Inc. (“ADMA BioCenters”). ADMA BioManufacturing was formed in January 2017 to facilitate the acquisition of certain assets held by the Company’s former third-party contract manufacturer, which included the U.S. Food and Drug Administration (“FDA”)-licensed BIVIGAM and Nabi-HB immunoglobulin products, and an FDA-licensed plasma fractionation manufacturing facility located in Boca Raton, FL (the “Boca Facility”). ADMA BioCenters is the Company’s source plasma collection business withten plasma collection facilities located throughout the U.S., all of which hold an approved license with the FDA.

The Company hasthree FDA-approved products, all of which are currently marketed and commercially available: (i)ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), an intravenous immune globulin (“IVIG”) product indicated for the treatment of Primary Humoral Immunodeficiency (“PI”), also known as Primary Immunodeficiency Disease (“PIDD”) or Inborn Errors of Immunity, for which the Company received FDA approval on April 1, 2019 and commenced first commercial sales in October 2019; (ii) BIVIGAM (Immune Globulin Intravenous, Human), an IVIG product indicated for the treatment of PI, and for which the Company received FDA approval on May 9, 2019 and commenced commercial sales in August 2019; and (iii) Nabi-HB (Hepatitis B Immune Globulin, Human), which is indicated for the treatment of acute exposure to blood containing Hepatitis B surface antigen (“HBsAg”) and other listed exposures to Hepatitis B. In addition to its commercially available immunoglobulin products, the Company generates revenues from the sale of intermediate by-products that result from the immunoglobulin production process and from time to time provides contract manufacturing and laboratory services for certain clients. The Company seeks to develop a pipeline of plasma-derived therapeutics, and its products and product candidates are intended to be used by physician specialists focused on caring for immune-compromised patients with or at risk for certain infectious diseases.

As of December 31, 2023, the Company had working capital of $207.2 million, including $51.4 million of cash and cash equivalents, accounts receivable of $27.4 million and $172.9 million of inventories, partially offset by $49.8 million of current liabilities. Based upon the Company’s current projected revenue and expenditures, including capital expenditures and continued implementation of the Company’s commercialization and expansion activities, the Company’s management currently believes that its cash, cash equivalents and accounts receivable, along with its projected future operating cash flow, will be sufficient to fund ADMA’s operations, as currently conducted, through the end of the first quarter of 2025. However, the Company’s current outlook on cash flows and profitability may change based upon several factors, including the success of the Company’s commercial sales of its products, whether or not the assumptions underlying the Company’s projected revenues and expenses are correct and the continued acceptability of ADMA’s immune globulin products by physicians, patients or payers. The Company is subject to risks common to companies in the biotechnology and pharmaceutical manufacturing industries including, but not limited to, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, inflationary pressures, supply chain constraints, protection of proprietary technology, and compliance with FDA and other governmental regulations and approval requirements.

Principles of consolidation and basis of presentation

The accompanying consolidated financial statements include the accounts of ADMA and its wholly-owned subsidiaries, and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with Article 3 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). All intercompany balances have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (the “FASB”). During the years ended December 31, 2023, 2022 and 2021, comprehensive loss was equal to the net loss amounts presented for the respective periods in the accompanying consolidated statements of operations.

Use of estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include rebates and chargebacks deducted from gross revenues, valuation of inventory, assumptions used in projecting future liquidity and capital requirements, assumptions used in the fair value of awards granted under the Company’s equity incentive plans and warrants issued in connection with the issuance of notes payable and the valuation allowance for the Company’s deferred tax assets.

Cash and cash equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

The Company regularly maintains cash and cash equivalents at third-party financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit. Although the Company monitors the daily cash balances in its operating accounts and adjusts the balances as appropriate, these balances could be impacted, and there could be a material adverse effect on the Company’s business, if one or more of the financial institutions with which the Company has deposits fails or is subject to other adverse conditions in the financial or credit markets. To date, the Company has not experienced a loss or lack of access to its deposited cash or cash equivalents; however, the Company cannot provide assurance that access to its cash and cash equivalents will not be impacted by adverse conditions in the financial and credit markets in the future.

Accounts receivable

Accounts receivable is reported at realizable value, net of allowances for contractual credits and doubtful accounts in the amount of $0.1 million at December 31, 2023 and 2022, which are recognized in the period the related revenue is recorded. The Company extends credit to its customers based upon an evaluation of each customer’s financial condition and credit history. Evaluations of the financial condition and associated credit risk of customers are performed on an ongoing basis. Based on these evaluations, the Company has concluded that its credit risk is minimal (see Note 16).

Inventories

Raw materials inventory consists ofnormal source plasma (“NSP”) and Respiratory Syncytial Virus (“RSV”) high titer plasma collected at the Company’s plasma collection facilities, along with various materials purchased from suppliers, used in the production of the Company’s products. Work-in-process and finished goods inventories (see Note 3) reflect the cost of raw materials as well as costs for direct and indirect labor, primarily salaries, wages and benefits for applicable employees, as well as an allocation of overhead costs related to the Boca Facility including utilities, property taxes, general repairs and maintenance, consumable supplies and depreciation. The allocation of Boca Facility overhead to inventory is generally based upon the estimated square footage of the Boca Facility that is used in the production of the Company’s products relative to the total square footage of the facility.

Inventories, including plasma intended for resale and plasma intended for internal use in the Company’s manufacturing, commercialization or research and development activities, are carried at the lower of cost or net realizable value determined by the first-in, first-out method. For both the Company’s immune globulin products and plasma intended for resale and internal use, net realizable value is generally determined based upon the consideration the Company expects to receive when the inventory is sold, less costs to deliver the inventory to the recipient. The estimates for net realizable value of inventory are based on contractual terms or upon historical experience and certain other assumptions, and the Company believes that such assumptions are reasonable. Inventory is periodically reviewed to ensure that its carrying value does not exceed its net realizable value, and adjustments are recorded to write down such inventory, with a corresponding charge to cost of product revenue, when the carrying value or historical cost exceeds its estimated net realizable value. In addition, costs associated with the production of engineering lots that would not qualify as immediately available for commercial sale are charged to cost of product revenue and not capitalized into inventory.

Property and equipment

Assets comprising property and equipment (see Note 4) are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the asset’s estimated useful life. Land is not depreciated. The buildings have been assigned a useful life of 30 years. Property and equipment other than land and buildings have useful lives ranging from 3 to 15 years. Leasehold improvements are amortized over the lesser of the lease term or their estimated useful lives.

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired by the Company. Goodwill at December 31, 2023 and 2022 was $3.5 million, all of which is attributable to the Company’s ADMA BioManufacturing business segment. There wereno changes to the carrying amount of goodwill during the years ended December 31, 2023, 2022 and 2021.

Goodwill is not amortized but is assessed for impairment on an annual basis or more frequently if impairment indicators exist. The Company has the option to perform a qualitative assessment of goodwill to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill and other intangible assets. If the Company concludes that this is the case, then it must perform a goodwill impairment test by comparing the fair value of the reporting unit to its carrying value. An impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The Company performs its annual goodwill impairment test as of October 1 of each year. The Company’s annual goodwill impairment tests as of October 1, 2023, 2022 and 2021 did not result in any impairment charges related to goodwill for the years ended December 31, 2023, 2022 and 2021.

Impairment of long-lived assets

The Company assesses the recoverability of its long-lived assets, which include property and equipment and finite-lived intangible assets, whenever significant events or changes in circumstances indicate impairment may have occurred. If indicators of impairment exist, projected future undiscounted cash flows associated with the asset are compared to its carrying amount to determine whether the asset’s carrying value is recoverable. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. For the years ended December 31, 2023, 2022 and 2021, the Company determined that there wasno impairment of its long-lived assets.

Revenue recognition

Revenues for the years ended December 31, 2023, 2022 and 2021 are comprised of (i) revenues from the sale of the Company’s immunoglobulin products, ASCENIV, BIVIGAM and Nabi-HB, (ii) product revenues from the sale of human plasma collected by the Company’s Plasma Collection Centers business segment, (iii) contract manufacturing and laboratory services revenue, (iv) revenues from the sale of intermediate by-products and (v) license and other revenues primarily attributable to the out-licensing of ASCENIV to Biotest, AG (“Biotest”) in 2012 to market and sell this product in Europe and selected countries in North Africa and the Middle East. Biotest has provided the Company with certain services and financial payments in accordance with the related Biotest license agreement and is obligated to pay the Company certain amounts in the future if certain milestones are achieved. Deferred revenue is amortized into income over the term of the Biotest license, representing a period of approximately 22 years.

Product revenue is recognized when the customer is deemed to have control over the product. Control is determined based on when the product is shipped or delivered and title passes to the customer. Revenue is recorded in an amount that reflects the consideration the Company expects to receive in exchange. Revenue from the sale of the Company’s immunoglobulin products is recognized when the product reaches the customer’s destination, and is recorded net of estimated rebates, wholesaler distribution and related fees, customer incentives, including prompt pay discounts, wholesaler chargebacks, group purchasing organization fees and reimbursements for patient assistance. These estimates are based on contractual arrangements, historical experience and certain other assumptions, and while the Company believes that such estimates are reasonable, they are subject to change based on future developments and other factors. For revenues associated with contract manufacturing and the sale of intermediates, control transfers to the customer and the performance obligation is satisfied when the customer takes possession of the product from the Boca Facility or from a third-party warehouse that is utilized by the Company.

Product revenues from the sale of human plasma collected at the Company’s plasma collection centers are recognized at the time control of the product has been transferred to the customer, which generally occurs at the time of shipment. Product revenues are recognized at the time of delivery if the Company retains control of the product during shipment.

Cost of product revenue

Cost of product revenue includes costs associated with the manufacture of the Company’s FDA approved products and intermediates and for the collection of human source plasma, as well as expenses related to conformance batch production, process development and scientific and technical operations when these operations are attributable to marketed products. When the activities of these operations are attributable to new products in development, the expenses are classified as research and development expenses.

Research and development expenses

Research and development expenses consist of clinical research organization costs, costs related to clinical trials, post-marketing commitment studies for BIVIGAM and ASCENIV and salaries, benefits and stock-based compensation for employees directly related to research and development activities. All research and development costs are expensed as incurred.

Plasma center operating expenses

Plasma center operating expenses consist of certain general and administrative plasma center costs, initial opening, marketing and start-up costs, rent expense, maintenance, utilities and compensation and benefits for administrative staff.

Advertising and marketing expenses

Advertising and marketing expense includes cost for promotional materials and trade show expenses for the marketing of the Company’s products and expenses incurred for attracting donors to the Company’s plasma collection centers. All advertising and marketing expenses are expensed as incurred. Advertising and marketing expenses were $3.3 million, $2.2 million and $1.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Stock-based compensation

The Company follows recognized accounting guidance which requires all equity-based payments, including grants of stock options and restricted stock unit awards (“RSUs”), to be recognized in the statement of operations as compensation expense based on their fair values at the date of grant. Compensation expense related to awards to employees and directors with service-based vesting conditions is recognized on a straight-line basis over the associated vesting period of the award based on the grant date fair value of the award. Stock options granted to employees under the Company’s equity incentive plans generally have afour-year vesting period and a term of 10 years. RSUs granted to employees also have afour-year vesting period. For milestone-based equity awards (see Note 8) the Company periodically assesses the probability of vesting for each milestone-based award and adjusts compensation expense based on its probability assessment. Pursuant to ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), the Company has elected not to establish a forfeiture rate, as stock-based compensation expense related to forfeitures of unvested equity awards is fully reversed at the time of forfeiture.

Income taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or its tax returns. Under this method, deferred tax assets and liabilities are recognized for the temporary differences between the tax bases of assets and liabilities and their respective financial reporting amounts at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company records a valuation allowance on its deferred tax assets if it is more likely than not that the Company will not generate sufficient taxable income to utilize its deferred tax assets (see Note 11). The Company is subject to income tax examinations by major taxing authorities for all tax years since 2019 and for previous periods as it relates to the Company’s net operating loss carryforwards.

Loss Per Share

Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is calculated by dividing net loss attributable to common stockholders as adjusted for the effect of dilutive securities, if any, by the weighted average number of shares of common stock and dilutive common stock outstanding during the period. Potentially dilutive common stock includes the shares of common stock issuable upon the exercise of outstanding stock options and warrants (using the treasury stock method). Potentially dilutive common stock in the diluted net loss per share computation is excluded to the extent that it would be anti-dilutive. No potentially dilutive securities are included in the computation of any diluted per share amounts as the Company reported a net loss for all periods presented. For the years ended December 31, 2023, 2022 and 2021, the following securities were excluded from the calculation of diluted loss per common share because of their anti-dilutive effects:

Fair value of financial instruments

The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable are shown at cost, which approximates fair value due to the short-term nature of these instruments. The debt outstanding under the Company’s senior notes payable (see Note 7) approximates fair value due to the variable interest rate on this debt.

Recent Accounting Pronouncements

In November of 2023 the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this Update are intended to provide financial statement users with more disaggregated expense information about a public entity’s reportable segments, however the Update does not change the definition of a business segment or the method for determining reportable segments. This update becomes effective for fiscal years beginning after December 15, 2023. The Company does not expect this update to have a material impact on its consolidated financial statements.

In December of 2023 the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This Update requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid and becomes effective for public business entities for fiscal years beginning after December 15, 2024. The Company has yet to determine the impact this Update may have on the Company’s consolidated financial statements.

There were no new accounting pronouncements adopted during the years ended December 31, 2023, 2022 and 2021 that had a significant impact on the Company’s consolidated financial statements.

The following table provides the components of inventories:

Raw materials includes plasma and other materials expected to be used in the production of ASCENIV, BIVIGAM and Nabi-HB. These materials will be consumed in the production of products expected to be available for sale or otherwise have alternative uses that provide a probable future benefit. All other activities and materials associated with the production of inventories used in research and development activities are expensed as incurred.

Work-in-process inventory primarily consistsof the Company’s IVIG products that are manufactured to the bulk drug substance and unlabeled filled vials stage of production.

Finished goods inventory is comprisedof the Company’s immunoglobulin products that have reached the filled, labeled and serialized vial stage of production and related intermediates that are available for commercial sale, as well as plasma collected at the Company’s plasma collection centers which is expected to be sold to third-party customers.

Property and equipment at December 31, 2023 and 2022 is summarized as follows:

The Company recorded depreciation expense on property and equipment of $7.6 million, $6.4 million and $4.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Intangible assets at December 31, 2023 and 2022 consist of the following:

Under the previous contract manufacturing agreement between ADMA and Biotest, intermediate by-products derived from the manufacture of ASCENIV were property of Biotest. As a result of the acquisition of certain assets from Biotest on June 6, 2017, ADMA obtained the right to these intermediate products, which are being amortized over a period ofseven years. The intangible rights to Nabi-HB are also being amortized over a period ofseven years. During the year ended December 31, 2023, the Company implemented an internally developed data intelligence and analytics program at a cost of approximately $0.2 million which is being amortized over a period offour years.

Amortization expense related to the Company’s intangible assets for the years ended December 31, 2023, 2022 and 2021 was $0.7 million. Estimated aggregate future aggregate amortization expense is expected to be as follows (in thousands):

Accrued expenses and other current liabilities at December 31, 2023 and 2022 are as follows:

Senior Notes Payable

A summary of outstanding senior notes payable is as follows:

On December 18, 2023 (the “Ares Closing Date”), the Company and all of its subsidiaries entered into a new senior secured credit facility (the “Ares Credit Agreement”) with Ares Capital Corporation and certain credit funds affiliated with Ares Capital Corporation (collectively, “Ares”). The Ares Credit Agreement provides for a total of $135.0 million in senior secured credit facilities (the “Ares Credit Facility”) consisting of (i) a term loan in the aggregate principal amount of $62.5 million and (ii) a revolving credit facility in the aggregate principal amount of $72.5 million (collectively, the “Ares Loans”), both of which were fully drawn on the Ares Closing Date. The Ares Credit Facility has a maturity date of December 20, 2027 (the “Ares Maturity Date”). On the Ares Closing Date, the Company used the proceeds from the Ares Loans, along with a portion of its existing cash on hand, to terminate and pay in full all of the outstanding obligations under the Company’s previous senior credit facility (the “Hayfin Credit Facility”) with Hayfin Services LLP (“Hayfin”) including the outstanding principal in the amount of $158.6 million, a prepayment penalty in the amount $11.1 million, an exit fee of $1.6 million, all accrued and unpaid interest outstanding on the Hayfin Credit Facility as of the Ares Closing date, as well as certain fees and expenses related thereto. In connection with the payoff and termination of the Hayfin Credit Facility, the Company also wrote off $15.0 million of unamortized debt discount related to the Hayfin Credit Facility. As a result of this transaction, the Company recorded a loss on the extinguishment of the Hayfin Credit Facility in the amount of $26.2 million, which is mainly comprised of the write-off of unamortized debt discount and the prepayment penalty.

Borrowings under the term loan initially bear interest at the adjusted Term SOFR for athree-month tenor in effect on the day that istwo business days prior to the first day of the applicable calendar quarter plus 6.50% (the “Initial SOFR Term Loan Applicable Margin”). Borrowings under the revolving facility initially bear interest at the adjusted Term SOFR for athree-month tenor in effect on the day that istwo business days prior to the first day of the applicable calendar quarter plus 3.75% (the “SOFR Revolving Facility Applicable Margin”). On the Ares Closing Date, the interest rate on the term loan was 11.87774% and the interest rate on the revolving facility was 9.12774%.

On the Ares Maturity Date, the Company is required to pay Ares the entire outstanding principal amount underlying the Ares Loans and any accrued and unpaid interest thereon. Prior to the Ares Maturity Date, there areno scheduled principal payments on the Ares Credit Facilities, and the Company is required to make quarterly interest payments to Ares of approximately $3.7 million. The Company may prepay the outstanding principal under the revolving facility, together with any accrued but unpaid interest on the prepaid principal amount, at any time and from time to time upon three business days’ prior written notice withno prepayment premium. However, in the event the Company prepays an amount under the Revolving Facility that is greater than 50% of the current $72.5 million outstanding balance, the Company will still be required to pay interest on 50% of this balance, or $36.3 million, through the term of Ares Credit Facility. The Company may prepay the outstanding principal on the term loan, together with any accrued but unpaid interest on the prepaid principal amount, at any time and from time to time upon three business days’ prior written notice, subject to the payment to Ares of a prepayment premium equal to (i) the present value as of such date of all remaining required interest payments on the principal amount being repaid plus 1.5% of the prepaid principal amount, if prepaid on or prior to the first anniversary of the Ares Closing Date, (ii)1.5% of the prepaid principal amount, if prepaid after the first anniversary of the Ares Closing Date and on or prior to the second anniversary of the Ares Closing Date, or (iii)1.0% of the prepaid principal amount, if prepaid on or prior to the third anniversary of the Ares Closing Date.

In connection with the closing of the Ares Credit Facility, the Company incurred fees and expenses related to the transaction of $2.8 million, including a $1.7 million original discount payable to Ares, all of which was deducted from the Ares loan proceeds. In addition, the Company is also required to pay Ares an exit fee of $1.7 million upon the earlier of any prepayment date or the Ares Maturity Date, and this amount has been accrued as a separate liability in the Company’s consolidated balance sheet as of December 31, 2023. As a result, the Company recognized an aggregate debt discount of $4.4 million as of the Ares Closing Date, and the weighted-average effective interest rate on the Ares Loans as of December 31, 2023 was 11.39%. This debt discount was recorded as a reduction to the face amount of the debt and is being amortized as interest expense over the term of the debt using the interest method.

All of the Company’s obligations under the Ares Credit Agreement are secured by a first-priority lien and security interest in substantially all of the Company’s tangible and intangible assets, including intellectual property and all of the equity interests in the Company’s subsidiaries. The Ares Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar debt financings. The negative covenants include certain financial covenants, including maximum total leverage ratios and a $15,000,000 minimum liquidity covenant, and also restrict or limit the Company’s ability and the ability of the Company’s subsidiaries to, among other things and subject to certain exceptions contained in the Ares Credit Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes, such as mergers or acquisitions, or changes to the Company’s or the Company’s subsidiaries’ business activities; make certain Investments or Restricted Payments (each as defined in the Ares Credit Agreement); engage in certain affiliate transactions; or enter into, amend or terminate any other agreements that have the impact of restricting the Company’s ability to make loan repayments under the Ares Credit Agreement. As of December 31, 2023 the Company was in compliance with all of the covenants contained in the Ares Credit Agreement.

Events of Default on the Ares Loans include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross-defaults to material contracts and events constituting a change of control. If there is an event of default, the Company will incur an increase in the rate of interest on the Ares Loans of 2% per annum.

On March 23, 2022 (the “Hayfin Closing Date”), the Company and all of its subsidiaries entered into the Hayfin Credit Agreement with Hayfin. The Hayfin Credit Agreement provided for a senior secured term loan facility in a principal amount of up to $175.0 million (the “Hayfin Credit Facility”), composed of (i) a term loan made on the Hayfin Closing Date in the principal amount of $150.0 million (the “Hayfin Closing Date Loan”), and (ii) a delayed draw term loan in the principal amount of$25.0 million (the “Hayfin Delayed Draw Loan”and, together with the Hayfin Closing Date Loan, the “Hayfin Loans”). The Hayfin Delayed Draw Loan was not drawn prior to the Ares Closing Date. The Hayfin Credit Facility had a maturity date of March 23, 2027 (the “Hayfin Maturity Date”), subject to acceleration pursuant to the Hayfin Credit Agreement, including upon an Event of Default (as defined in the Hayfin Credit Agreement).

On the Hayfin Closing Date, the Company used $100.0 million of the Hayfin Closing Date Loan to terminate and pay in full all of the outstanding obligations under the Company’s previously existing credit facility (the “Perceptive Credit Facility”) with Perceptive Credit Holdings II, LP (“Perceptive”). The Company also used $2.0 million of the Hayfin Closing Date Loan proceeds to pay a redemption premium to Perceptive and used approximately $1.0 million of the Hayfin Closing Date Loan proceeds to pay certain fees and expenses incurred in connection with this transaction. In addition, a $1.8 million upfront fee payable to Hayfin was paid “in kind” and was added to the outstanding principal balance in accordance with the terms of the Hayfin Credit Agreement. In connection with the retirement of the Perceptive Credit Facility and all of the obligations thereunder, the Company recorded a loss on extinguishment of debt in the amount of $6.7 million, consisting of the write-off of unamortized discount related to the Perceptive indebtedness and the redemption premium paid to Perceptive.

Borrowings under the Hayfin Credit Agreement bore interest, at the Company’s election, at the adjusted Term SOFR for aone-month tenor, subject to a floor of 1.25%, plus an applicable margin of 9.5% (the “Applicable Margin”); provided, however, that upon, and during the continuance of, an Event of Default, the Applicable Margin would increase by an additional 3% per annum. On May 1, 2023 the Hayfin Credit Agreement was amended to reduce the Applicable Margin from 9.5% to 8.5%. On the last day of each calendar month prior to the Ares Closing Date, the Company paid accrued interest to Hayfin. The rate of interest in effect as of the Hayfin Closing Date, December 31, 2022 and the Ares Closing Date was 10.75%, approximately 13.7% and approximately 13.9%, respectively. The Company was also permitted to pay “in kind” a portion of the interest on the Hayfin Loans for each monthly interest period in an amount equal to 2.5% per annum, which was added to the principal amount of the outstanding debt under the Hayfin Credit Facility. From the Hayfin Closing Date through December 31, 2022, $3.0 million of interest was paid in kind and added to the balance of the outstanding Hayfin Loans. For the year ended December 31, 2023, $3.8 million of interest was paid in kind and added to the balance of the outstanding Hayfin Loans.

On the Ares Closing Date, the Company paid Hayfin the entire outstanding principal amount underlying the Hayfin Loans and all accrued and unpaid interest thereon, as well as the exit fee of 1.0% of the outstanding principal amount paid. This exit fee had been recorded separately as a non-current liability on the accompanying consolidated balance sheet as of December 31, 2022. In accordance with the terms of the Hayfin Credit Agreement, the Company also paid Hayfin the early prepayment fee in the amount equal 7.0% of the prepaid principal amount of $158.6 million, or $11.1 million.

All of the Company’s obligations under the Hayfin Credit Agreement were secured by a first-priority lien and security interest in substantially all of the Company’s tangible and intangible assets, including intellectual property, and all of the equity interests in the Company’s subsidiaries. The Hayfin Credit Agreement contained certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar debt financings. The negative covenants restricted or limited the ability of the Company and its subsidiaries to, among other things and subject to certain exceptions contained in the Hayfin Credit Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes, such as mergers or acquisitions, or changes to the Company’s or its subsidiaries’ business activities; make certain Investments or Restricted Payments (each as defined in the Hayfin Credit Agreement); change its fiscal year; pay dividends; repay certain other indebtedness; engage in certain affiliate transactions; or enter into, amend or terminate any other agreements that have the impact of restricting the Company’s ability to make loan repayments under the Hayfin Credit Agreement. In addition, the Company was required (i) at all times prior to the Hayfin Maturity Date to maintain a minimum cash balance of $6.0 million; and (ii) as of the last day of each fiscal quarter, report IVIG product and related revenues for the trailing 12-month period that exceed the amounts set forth in the Hayfin Credit Agreement, which ranged from $75.0 million for the fiscal quarter ended June 30, 2022 to $110.0 million for the fiscal quarter ended September 30, 2023. As of the Ares Closing Date and December 31, 2022, the Company was in compliance with all of the covenants contained in the Hayfin Credit Agreement.

As consideration for the Hayfin Credit Agreement, on the Hayfin Closing Date the Company issued to various entities affiliated with Hayfin warrants to purchase an aggregate of 9,103,047 shares of the Company’s common stock (the “Hayfin Warrants”). The Hayfin Warrants have an exercise price equal to $1.6478 per share, which is equal to the trailing 30-day Volume Weighted-average Price of the Company’s common stock on the business day immediately prior to the Hayfin Closing Date. The Hayfin Warrants were valued by the Company at approximately $9.6 million as of the Hayfin Closing Date and have an expiration date of March 23, 2029 (see Note 8). As consideration for the foregoing amendment to the Hayfin Credit Agreement on May 1, 2023, the Company issued additional warrants to the lenders to purchase 2,391,244 shares of the Company’s common stock at an exercise price of $3.2619 per share (the “Hayfin Second Amendment Warrants”). The Hayfin Second Amendment Warrants were valued at approximately $5.6 million and have an expiration date of May 1, 2030.

As a result of the upfront fee and exit fee paid or payable to Hayfin, the expenses incurred by the Company in connection with this transaction and the value of the Hayfin Warrants and Hayfin Second Amendment Warrants, the Company recognized a discount on the Hayfin Loans in the amount of $13.9 million for the year ended December 31, 2022 and an additional debt discount in the year ended December 31, 2023 in the amount of $5.7 million. The Company records debt discount as a reduction to the face amount of the debt, and the debt discount is amortized as interest expense over the life of the debt using the interest method. As of the Ares Closing Date, $15.0 million of the aggregate debt discount associated with the Hayfin Credit Facility was unamortized, and this amount is reflected in the loss on extinguishment of debt for the year ended December 31, 2023. Based on the fair value of the Hayfin Warrants and the aggregate amount of fees and expenses associated with obtaining the Hayfin Credit Facility, the effective interest rate on the Hayfin Loans as of the Hayfin Closing Date and as of December 31, 2022 was approximately 13.0% and 16.1%, respectively.

Preferred Stock

The Company is currently authorized to issue up to 10 million shares of preferred stock, $0.0001 par value per share. There wereno shares of preferred stock outstanding at December 31, 2023 and 2022.

Common Stock

As of December 31, 2023 and 2022, the Company was authorized to issue 300,000,000 shares of its common stock, $0.0001 par value per share, and 226,063,032 and 221,816,930 shares of common stock were outstanding as of December 31, 2023 and 2022, respectively. On May 27, 2021, the Company amended its Second Amended and Restated Certificate of Incorporation to increase the number of shares of common stock that the Company is authorized to issue from 150,000,000 to 300,000,000. After giving effect to shares reserved for the issuance of warrants and for awards issued under the Company’s equity incentive plans,31,033,333 shares of common stock were available for issuance as of December 31, 2023.

On December 9, 2022, the Company completed an underwritten public offering whereby the Company issued 24,125,873 shares of its common stock. Net proceeds after underwriting discounts and expenses associated with the offering were approximately $64.6 million and were used to accelerate commercialization and production activities, complete plasma center buildouts and obtain FDA approvals, to conclude post‑FDA marketing approval research and development projects, and for working capital, capital expenditures and general corporate purposes.

During the year ended December 31, 2022, outstanding stock options aggregating to 68,679 shares of common stock were exercised, and the Company received net proceeds from the exercises of approximately $0.2 million.

On October 25, 2021, the Company completed an underwritten public offering whereby the Company issued 57.5 million shares of common stock and received gross proceeds of $57.5 million. Net proceeds after underwriting discounts and expenses associated with the offering were approximately $53.8 million, and were used to advance the commercial sales of the Company’s FDA approved products through the procurement of raw materials for the manufacturing of BIVIGAM and ASCENIV, to expand the Company’s plasma collection facility network, to scale up the manufacturing capacity of the Boca Facility and make continuous improvements in order to adhere to cGMP compliance, to explore business development opportunities and for general corporate purposes and other capital expenditures.

On September 3, 2021, the Company entered into a distribution agreement with Raymond James & Associates, Inc., as agent (“Agent”), pursuant to which the Company may offer and sell, from time to time, at its option, through or to the Agent, up to an aggregate of $50 million of shares of the Company’s common stock (the “Distribution Agreement”). The Company currently intends to use any net proceeds from the sale of its common stock under the Distribution Agreement for general corporate purposes, including procurement of source plasma and other raw materials, supply chain initiatives and production expenditures, working capital, capital expenditures, expansion and resources for commercialization activities, and other potential research and development and business opportunities. The Company currently has approximately $42.8 million of shares available to sell under the Distribution Agreement. There wereno sales under the Distribution Agreement during the year ended December 31, 2022. During the year ended December 31, 2021, the Company issued 5,540,831 shares of its common stock under the Distribution Agreement and received net proceeds of $6.9 million.

On August 5, 2020, the Company entered into an open market sale agreement (as amended from time to time, the “Sale Agreement”) with Jefferies LLC (“Jefferies”), pursuant to which the Company could offer and sell, from time to time, at its option, through or to Jefferies, up to an aggregate of $50 million of shares of the Company’s common stock. On November 5, 2020 and February 3, 2021, the Company and Jefferies amended the Sale Agreement to provide for increases in the aggregate offering amount under the Sale Agreement such that the Company could sell shares having an aggregate offering price of up to $105.4 million under the Sale Agreement, as amended. The Sale Agreement was terminated on August 31, 2021. For the year ended December 31, 2021, the Company issued and sold 27,805,198 shares of common stock under the 2020 Sale Agreement and received net proceeds of $60.4 million.

Warrants

On June 16, 2023, various entities affiliated with Hayfin exercised 3,388,686 Hayfin Warrants in a cashless exercise transaction resulting in the Company issuing 1,967,847 shares of its common stock to such entities. On May 1, 2023 the Company issued the Hayfin Second Amendment Warrants (see Note 7), which were valued at $5.6 million using the Black-Scholes option-pricing model assuming an expected term ofseven years, a volatility of 67.8%, a dividend yield of 0% and a risk-free rate of interest of 3.62%.

On March 23, 2022, the Company issued the Hayfin Warrants, whereby affiliates of Hayfin may purchase an aggregate of 9,103,047 shares of common stock at an exercise price of $1.6478 per share (see Note 7). The Hayfin Warrants were valued at $9.6 million, using the Black-Scholes option pricing model assuming an expected term of 7 years, a volatility of 68.1%, a dividend yield of 0% and a risk-free interest rate of 2.36%.

During the year ended December 31, 2022, warrants to purchase 106,059 shares of common stock that had been issued to former noteholders of the Company expired. At December 31, 2023 and 2022, the Company had outstanding warrants to purchase an aggregate of 12,502,906 and 13,525,148 shares, respectively, of common stock, with a weighted average exercise price of $2.32 and $1.99 per share, respectively, and expiration dates ranging between May 2023 and December 2030. The following table summarizes information about warrants outstanding as of December 31, 2023, 2022 and 2021:

Equity Incentive Plans

From time to time the Company granted stock options or other equity-based awards under the Company’s Amended and Restated 2014 Omnibus Incentive Compensation Plan (the “2014 Plan”).

The 2014 Plan, as amended, was approved by the Company’s Board of Directors (the “Board”) on March 15, 2017 and by the Company’s stockholders on May 25, 2017. The maximum number of shares that were reserved for grant under the 2014 Plan was: (a)2,334,940 shares; plus (b) an annual increase as of the first day of the Company’s fiscal year, beginning in 2018 and occurring each year thereafter through 2022, equal to 4% of the outstanding shares of common stock as of the end of the Company’s immediately preceding fiscal year, or any lesser number of shares determined by the Board; provided, however, that no more than an aggregate of 10 million shares of common stock may be issued pursuant to incentive stock options intended to qualify under Section 422 of the Internal Revenue Code. As of December 31, 2021, an aggregate of 69,090 shares were available for issuance under the 2014 Plan. In accordance with the foregoing, on January 1, 2022 the aggregate number of shares available for issuance increased to 7,901,643.

During the years ended December 31, 2022 and 2021, the Company granted options to purchase an aggregate of 1,194,032 and 1,895,550 shares of common stock, respectively, to its directors and employees under the 2014 Plan.

On June 21, 2022, the Company’s stockholders approved the ADMA Biologics, Inc. 2022 Compensation Plan (the “2022 Equity Plan”). Approval of the 2022 Equity Plan resulted in approximately 18 million additional shares of the Company’s common stock being reserved for future awards. The 2022 Equity Plan provides for the Board or a Committee of the Board (the “Committee”) to grant awards to optionees and to determine the exercise price, vesting term, expiration date and all other terms and conditions of the awards, including acceleration of the vesting of an award at any time. Any options granted under the 2022 Equity Plan are intended to be Incentive Stock Options (“ISOs”), unless specified by the Committee to be Non-Qualified Options (“NQOs”) as defined by the Internal Revenue Code. ISOs and NQOs may be granted to employees, consultants or Board members at an option price not less than the fair market value of the common stock subject to the stock option agreement.

For the year ended December 31, 2023, the Company granted options to purchase an aggregate of 1,826,380 shares of common stock to employees and directors under the 2022 Equity Plan. Also during the year ended December 31, 2023, options to purchase 3,814,122 shares of common stock were exercised, for which 2,109,722 shares were withheld to cover the aggregate exercise prices and 259,867 shares were withheld to cover payroll taxes, and the Company received aggregate net exercise proceeds of $1.1 million.

The fair value of stock options granted was determined on the date of grant using the Black-Scholes model. The Black-Scholes option pricing model was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different from those of traded options, and changes in the underlying Black-Scholes assumptions can materially affect the fair value estimate. To determine the risk-free interest rate, the Company utilized the U.S. Treasury yield curve in effect at the time of the grant with a term consistent with the term of the awards granted by the Company. The expected term of the options granted is in accordance with Staff Accounting Bulletins 107 and 110, which is based on the average between vesting terms and contractual terms. The expected dividend yield reflects the Company’s current and expected future policy for dividends on the Company’s common stock. For the years ended December 31, 2023, 2022 and 2021, the expected stock price volatility for the Company’s stock options was calculated by examining the historical volatility of the Company’s common stock since the stock became publicly traded in the fourth quarter of 2013.

The grant date fair values of stock options awarded during the years ended December 31, 2023, 2022 and 2021 were determined using the Black-Scholes option pricing model with the following assumptions:

The following table summarizes information about stock options outstanding as of December 31,**2023, **2022 and 2021:

As of December 31, 2023, the Company had $3.8 million of unrecognized compensation expense related to stock options granted under the Company’s equity incentive plans, which is expected to be recognized over a weighted-average period of 2.6 years. The weighted average remaining contractual term of stock options outstanding and expected to vest at December 31, 2023 is 6.6 years. The weighted average remaining contractual term of stock options exercisable at December 31, 2023 is 5.2 years. The following table summarizes additional information regarding outstanding and exercisable options under the stock option plans at December 31, 2023:

During the years ended December 31, 2023, 2022 and 2021, the Company granted RSUs representing an aggregate of 3,389,760,1,174,266 and 4,384,744 shares, respectively, to certain employees of the Company and to members of the Board. Except for the RSUs granted under the Company’s retention incentive program discussed below, the RSUs generally vest annually over a period offour years for employees and semi-annually over a period ofone year for directors. The RSUs granted during the year ended December 31, 2021 include 3,832,500 shares granted under a retention incentive program implemented by the Company for its executive management and certain employees (see Note 10), whereby the Company issued an aggregate of 2,685,000 time-based RSUs and 1,147,500 milestone-based RSUs. Fifty percent of the time-based RSUs granted under the retention incentive program vested on December 31, 2022, with the remainder vesting in quarterly installments through December 31, 2024. The milestone-based RSUs vested upon achievement of the applicable milestone, and all of the milestone-based RSUs vested during the year ended December 31, 2022. The milestones required to be achieved in order for the milestone-based RSUs to vest were determined by the Board and were consistent with the 2022 operating plan approved by the Board.

During the years ended December 31, 2023, 2022 and 2021,1,199,445,2,727,412 and 92,750 shares, respectively, vested in connection with grants of RSUs. With respect to RSUs vested during the year ended December 31, 2023,365,722 shares valued at approximately $1.3 million were withheld by the Company to cover employees’ tax liabilities. With respect to the RSUs vested during the year ended December 31, 2022,918,851 shares valued at approximately $2.9 million were withheld by the Company to cover employees’ tax liabilities. For the RSUs vested during the year ended December 31, 2021,27,850 shares valued at approximately $62,000 were withheld by the Company to cover employees’ tax liabilities. All of these shares have been retired by the Company or were otherwise no longer outstanding as of December 31, 2023. A summary of the Company’s unvested RSU activity and related information is as follows:

As of December 31, 2023, the Company had $10.4 million of unrecognized compensation expense related to unvested RSUs granted under the Company’s equity incentive plans, which is expected to be recognized over a weighted-average period of 2.9 years.

Total stock-based compensation expense for all awards granted under the Company’s equity incentive plans for the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands):

The Company leases an office building and equipment from Areth, LLC (“Areth”) pursuant to an agreement for services effective as of January 1, 2016, as amended from time to time, and pays monthly rent on this facility in the amount of $10,000. On October 18, 2022, the Company amended the agreement to extend its term to December 31, 2026, with automatic successiveone-year renewals thereafter. Either party may terminate the agreement by providing the other party with one year’s prior written notice. Rent expense for the years ended December 31, 2023, 2022 and 2021 amounted to $0.1 million. Areth is a company controlled by Dr. Jerrold B. Grossman, the Vice Chairman of the Board, and Adam S. Grossman, the Company’s President and Chief Executive Officer. The Company also reimburses Areth for office, warehousing and building related (common area) expenses, equipment and certain other operational expenses, which were not material to the consolidated financial statements for the years ended December 31, 2023, 2022 and 2021.

During the years ended December 31, 2023, 2022 and 2021, the Company purchased certain specialized medical equipment and services related to the Company’s plasma collection centers, as well as personal protective equipment, from GenesisBPS and its affiliates (“Genesis”) in the amount of $0.4 million, $0.2 million and $0.2 million, respectively. Genesis is owned by Dr. Grossman and Adam Grossman.

On August 15, 2023, two of the Company’s executive officers exercised options to purchase 2,909,721 shares of the Company’s common stock on a cashless basis, and 688,657 shares of common stock were issued to these executive officers, net of 257,867 shares of common stock to cover a portion of their tax liabilities (see Note 8).

See Note 7 for a discussion of the Company’s prior credit facility and related transactions with Perceptive, a holder of more than 5% of the Company’s common stock during the year ended December 31, 2022.In connection with the 2022 public offering of the Company’s common stock (see Note 8) on December 9, 2022: (i) Mr. Grossman purchased 14,983 shares of common stock directly and 14,982 shares of common stock indirectly through an entity he controls, and (ii) Brian Lenz, the Company’s Executive Vice President and Chief Financial Officer, purchased 6,993 shares of common stock, all at the public offering price of $2.86 per share.

During the year ended December 31, 2021, in connection with the resignation of Dr. James Mond, the Company’s former Chief Scientific and Medical Officer, the Company recognized an expense and corresponding liability in the amount of $0.8 million for payments to be made under a separation and transition agreement with Dr. Mond. These payments were made in scheduled installments over a period of 10 months.

In connection with the 2021 public offering of the Company’s common stock (see Note 8) on October 25, 2021: (i) Mr. Grossman purchased 100,000 shares of common stock directly and 250,000 sharesof common stock indirectly through an entity he controls, (ii) Dr. Grossman purchased 100,000 shares of common stock, (iii)Dr. Young Kwon, a member of the Board, purchased 100,000 shares of common stock, and (iv)Brian Lenz, the Company’s Executive Vice President and Chief Financial Officer, purchased 30,000 shares of common stock, all at the public offering price of $1.00 per share.

General Legal Matters

From time to time the Company is or may become subject to certain legal proceedings and claims arising in connection with the normal course of its business. Management does not expect that the outcome of any such claims or actions will have a material effect on the Company’s liquidity, results of operations or financial condition.

IT Systems Disruption

On June 19, 2023, the Company experienced an IT systems disruption, which rendered certain of the Company’s IT technology systems inaccessible for less thanone week. The Company’s investigation of the disruption has essentially been completed with the assistance of third-party consultants, and no definitive root cause was identified. At the time of the disruption, the Company was in production oftwo batches of BIVIGAM, and after a prolonged hold time, it was deemed to be a prudent GMP quality decision to discard thesetwo in-process production batches as these batches were no longer viable for further production or had any alternative use. As a result, the Company recorded a one-time, non-recurring charge of $2.1 million in the second quarter of 2023 for this inventory, which is reflected in Cost of product revenue in the accompanying consolidated statements of operations for the year ending December 31, 2023. In addition, the Company’s Plasma center operating expenses were adversely impacted by approximately $0.7 million due to the temporary closing of the Company’s plasma collection centers while their IT systems were restored.

The Company carries appropriate insurance for these types of instances, and while there can be no assurances ADMA will be reimbursed for the insurance claims made pertaining to these charges, the Company is actively working with its insurance broker and carriers.

Vendor Commitments

Pursuant to the terms of a plasma purchase agreement dated as of November 17, 2011 (the “2011 Plasma Purchase Agreement”), the Company agreed to purchase from its former contract manufacturer an annual minimum volume of source plasma containing antibodies to RSV to be used in the manufacture of ASCENIV. The Company must purchase a to-be-determined and agreed upon annual minimum volume from the counterparty, and under the original 2011 Plasma Purchase Agreement the Company was permitted to also collect high-titer RSV plasma from up tofive wholly-owned ADMA plasma collection facilities. During 2015, the Company amended the 2011 Plasma Purchase Agreement to (i) allow the Company to collect its raw material RSV high-titer plasma from any number of wholly-owned ADMA plasma collection facilities and (ii) allow the Company to purchase its raw material RSV high-titer plasma from other third-party collection organizations, in each case, provided that the annual minimum volumes from the Company’s former contract manufacturer were met, thus allowing the Company to expand its reach for raw material supply as it executes its commercialization plans for ASCENIV. Unless terminated earlier, the 2011 Plasma Purchase Agreement expires in June 2027, after which it may be renewed fortwo additional five-year periods if agreed to by the parties. On December 10, 2018, the Company’s former contract manufacturer assigned its rights and obligations under the 2011 Plasma Purchase Agreement to Grifols Worldwide Operations Limited (“Grifols”) as its successor-in-interest, effective January 1, 2019.

On June 6, 2017, the Company entered into a Plasma Supply Agreement with its former contract manufacturer, pursuant to which the counterparty supplies, on an exclusive basis subject to certain exceptions, to ADMA BioManufacturing an annual minimum volume of hyperimmune plasma that contain antibodies to the Hepatitis B virus for the manufacture of Nabi-HB. The Plasma Supply Agreement has a 10-year term. On July 19, 2018, the Plasma Supply Agreement was amended to provide, among other things, that in the event the counterparty elects not to supply in excess of ADMA BioManufacturing’s specified amount of Hepatitis B plasma and ADMA BioManufacturing is unable to secure Hepatitis B plasma from a third party at a price that is within a low double- digit percentage of the price that ADMA BioManufacturing pays to the counterparty, then the counterparty shall reimburse ADMA BioManufacturing for the difference in price ADMA BioManufacturing incurs. On December 10, 2018, the Company’s former contract manufacturer assigned its rights and obligations under the Plasma Supply Agreement to Grifols, effective January 1, 2019.

Post-Marketing Commitments

In connection with the FDA approval of the BLA for BIVIGAM on December 19, 2012, Biotest committed to perform two additional post-marketing studies, a pediatric study to evaluate the efficacy and safety of BIVIGAM in children and adolescents, and a post-authorization safety study to further assess the potential risk of hypotension and hepatic and renal impairment in BIVIGAM-treated patients with primary humoral immunodeficiency. These studies were required to be completed by June 30, 2023. Both studies have been completed and the study reports have been submitted to the FDA. ADMA had assumed the remaining obligations, and the costs of the studies were expensed as incurred as research and development expenses. For the years ended December 31, 2023, 2022 and 2021, the Company incurred expenses related to these studies of $1.7 million, $2.2 million and $1.7 million, respectively.

In connection with the FDA approval of ASCENIV on April 1, 2019, the Company is required to perform a pediatric study to evaluate the safety and efficacy of ASCENIV in children and adolescents. For the years ended December 31, 2023, 2022 and 2021, the Company incurred expenses related to this study in the amount of $1.0 million, $0.5 million and $0.6 million, respectively. The Company expects to incur expenses of approximately $1.5 million to complete this study, which is required to be completed by June of 2026.

Employment Contracts

The Company has entered into employment agreements with Mr. Grossman and Mr. Lenz.

Other Commitments

On September 28, 2021, following the approval of the Board upon recommendation of the Compensation Committee of the Board, and in consultation with an independent compensation consultant, the Company implemented a retention incentive program, consisting of cash payments and awards of RSUs (see Note 8), to the Company’s management, including Mr. Grossman and Mr. Lenz, and to certain other employees. The purpose of the retention program was to promote and ensure business continuity and provide an incentive to the Company’s executive management and certain other employees, considering the operational challenges presented by the COVID-19 pandemic and the competitive work environment in which the Company operates as an FDA regulated manufacturer of specialized biologic therapies. The retention awards were granted considering the nationwide labor shortages and the increased employee turnover rates that the Company, its pharmaceutical peers and other companies outside of the Company’s industry have reported experiencing.

The cash portion of the retention program consisted oftwo tranches. The first tranche was paid to employees on September 30, 2021 in the amount of $1.3 million, and the second tranche aggregating to approximately $1.3 million was paid on June 15, 2022. Based on the terms of the retention agreements the Company entered into with each applicable executive and employee, approximately $0.8 million of each tranche was recognized over the retention service period, which began on October 1, 2021 and ended on December 31, 2022, with the remainder having been recognized as expense when paid.

In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. Further, the Company indemnifies its directors and officers who are, or were, serving at the Company’s request in such capacities. The Company’s maximum exposure under these arrangements is unknown as of December 31, 2023. The Company does not anticipate recognizing any significant losses relating to these arrangements.

A reconciliation of income taxes at the U.S. federal statutory rate to the benefit for income taxes is as follows:

A summary of the Company’s deferred tax assets is as follows:

As of December 31, 2023, the Company had federal and state (post-apportioned basis) net operating losses (“NOLs”) of $315.6 million and $216.4 million, respectively, as well as federal research and development tax credit carryforwards of approximately $0.1 million. Approximately $35.6 million and $95.1 million of the foregoing Federal and state NOLs, respectively, will expire at various dates from 2028 through 2043, if not limited by triggering events prior to such time. Under the provisions of the Internal Revenue Code, changes in ownership of the Company, in certain circumstances, would limit the amount of federal NOLs that can be utilized annually in the future to offset taxable income. In particular, Section 382 of the Internal Revenue Code (“Section 382”) imposes limitations on an entity’s ability to use NOLs upon certain changes in ownership. If the Company is limited in its ability to use its NOLs in future years in which it has taxable income, then the Company will pay more taxes than if it were otherwise able to fully utilize its NOLs. The Company may experience ownership changes in the future as a result of subsequent shifts in ownership of the Company’s capital stock that the Company cannot predict or control that could result in further limitations being placed on the Company’s ability to utilize its Federal NOLs. As of December 31, 2023, the Company performed a substantive analysis of limitations imposed by Section 382 on historical information and concluded that no ownership changes occurred as of December 31, 2023 and 2022. As part of the substantive analysis, the Company did determine that an additional $14.2 million of state NOLs were not subject to limitation of prior ownership changes and are therefore available to offset future taxable income.

A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, the Company assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income, exclusive of reversing taxable temporary differences, to outweigh objective negative evidence of recent financial reporting losses. Based on these criteria and the relative weighting of both the positive and negative evidence available, management continues to maintain a full valuation allowance against its net deferred tax assets.

In accordance with U.S. GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Derecognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce net assets. The amount of the liability for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. Components of the liability are classified as either a current or a long-term liability in the accompanying consolidated balance sheets based on when the Company expects each of the items to be settled. The Company doesnot have any unrecognized tax benefits as of December 31, 2023 and 2022 and does not anticipate a significant change in unrecognized tax benefits during the next 12 months.

The Company leases certain properties and equipment for its ADMA BioCenters and ADMA BioManufacturing subsidiaries, which leases provide the right to use the underlying assets and require lease payments through the respective lease terms which expire at various dates through 2033. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company determines if an arrangement is an operating lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for such leases are recognized on a straight-line basis over the lease term. All other leases are recorded on the balance sheet with assets representing the right to use the underlying asset for the lease term and lease liabilities representing the obligation to make lease payments arising from the lease. Right-to-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of the lease payments is determined using the Company’s incremental borrowing rate as of the lease commencement date. For the lease liabilities recognized during the years ended December 31, 2023 and 2022, the Company used discount rates of 13% to 16% to determine the present value of its lease obligations. The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is reflected in Plasma center operating expenses and Selling, general and administrative expenses in the accompanying consolidated statements of operations. Aggregate lease expense for the Company’s operating leases for the years ended December 31, 2023, 2022 and 2021 was $2.4 million, $2.1 million and$1.4 million, respectively. Aggregate cash paid on these leases for the years ended December 31, 2023, 2022 and 2021 was $2.4 million, $1.8 million and $1.4 million, respectively.

During the year ended December 31, 2023, the Company recognizedone additional right-to-use asset and corresponding lease liability in the amount of $0.1 million for office equipment leased for the Boca Facility. During the year ended December 31, 2022, the Company recognized additional right-to-use assets and corresponding lease liabilities aggregating to approximately $4.0 million in connection withtwo new property leases where the Company has opened additional plasma collection facilities, a property lease for the storage of raw materials inventory and a property lease for the building that the Company utilizes as its corporate headquarters (see Note 9). Including a finance lease the Company entered into in June 2018, the Company has aggregate lease liabilities of $10.8 million and $11.6 million as of December 31, 2023 and 2022, respectively, which are comprised primarily of the leases for the Company’s plasma collection centers. The Company’s operating leases have a weighted average remaining term of 7.6 years. Scheduled payments under the Company’s lease obligations are as follows (in thousands):

The Company is dedicated to manufacturing, marketing and developing specialty plasma-derived biologics. The Company’s ADMA BioManufacturing segment reflects the Company’s immune globulin manufacturing and development operations in Florida, acquired on June 6, 2017. The Plasma Collection Centers segment consists often plasma collection facilities as of December 31, 2023, all of which were operational,collecting plasma, and hold an approved license with the FDA (and of which three facilities have received approvals from the Korean Ministry of Food and Drug Safety as well as FDA approval to implement a Hepatitis B immunization program). The Corporate segment includes general and administrative overhead expenses. The Company defines its segments as those business units whose operating results are regularly reviewed by the chief operating decision maker (“CODM”) to analyze performance and allocate resources. The Company’s CODM is its President and Chief Executive Officer. Summarized financial information concerning reportable segments is shown in the following tables:

The Company sponsors a 401(k) savings plan. Under the plan, employees may make contributions which are eligible for a Company discretionary percentage contribution as defined in the plan and determined by the Board. The Company recognized $1.3 million, $1.3 million and $1.1 million of related compensation expense for the years ended December 31, 2023, 2022 and 2021, respectively.

Supplemental cash flow information for the years ended December 31, 2023, 2022 and 2021 is as follows:

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. At December 31, 2023, five customers accounted for approximately 98% of the Company’s consolidated accounts receivable. At December 31, 2022, two customers accounted for approximately 92% of the Company’s consolidated accounts receivable.

For the year ended December 31, 2023, two customers accounted for approximately 72% of the Company’s consolidated revenues. For the year ended December 31, 2022, two customers accounted for approximately 74% of the Company’s consolidated revenues. For the year ended December 31, 2021, four customers accounted for approximately 81% of the Company’s consolidated revenues.

During the years ended December 31, 2023 and 2022, plasma purchases from Grifols totaled approximately $9.5 million and $47.7 million, respectively, orapproximately 21% and 65%, respectively, of the Company’s total inventory purchases.

Net revenues according to geographic area, based on the location of where the product is shipped, is as follows:

Schedule II – Valuation and Qualifying Accounts

Years ended December 31, 2023, 2022 and 2021