AETHLON MEDICAL INC Commitments Disclosure

8. COMMITMENTS AND CONTINGENCIES

 

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

 

We have had the following material changes to our contractual obligations and commitments outside the ordinary course of business during the fiscal year ended March 31, 2025:

 

LEASE COMMITMENTS

 

Office, Lab and Manufacturing Space Leases

 

In December 2020, we entered into an agreement to lease approximately 2,823 square feet of office space and 1,807 square feet of laboratory space located at 11555 Sorrento Valley Road, Suite 203, San Diego, California 92121 and 11575 Sorrento Valley Road, Suite 200, San Diego, California 92121, respectively. The agreement carries a term of 63 months and we took possession of the office space effective October 1, 2021. We took possession of the laboratory space effective January 1, 2022. In October 2021, we entered into another lease for approximately 2,655 square feet of space to house our manufacturing operations located at 11588 Sorrento Valley Road, San Diego, California 92121. The term is for 55 months and we took possession of the manufacturing space in August 2022. The current monthly base rent under the office and laboratory component of the lease is $14,590. The current monthly base rent under the manufacturing component of the lease is $12,824.

 

The office, lab and manufacturing leases are coterminous with a remaining term of 24 months. The weighted average discount rate is 4.25%.

 

As of March 31, 2025, we have right-of-use lease assets of $601,846.

 

The following table presents a maturity analysis of expected undiscounted cash flows for operating leases on an annual basis for the next two fiscal years. All of our leases conterminously expire during the fiscal year ending March 31, 2027.

Schedule of lease maturity
Fiscal Years Ended March 31,
2026		$	333,462
2027			343,353
Total minimum lease payments			676,815
Less amount representing imputed interest			(27,064	)
Present value of minimum lease payments		$	649,751

 

Overall, our rent expense, which is included in general and administrative expenses, approximated $421,789 and $420,353 for the fiscal years ended March 31, 2025 and 2024, respectively.

 

Premium Financing Agreement

 

In January 2025, the Company entered into a short-term premium financing agreement with FIRST Insurance Funding, a division of Lake Forest Bank & Trust Company, N.A., to finance a portion of its Directors & Officers (D&O) and other insurance premiums. The total amount financed under the agreement was approximately $220,984, with an associated finance charge of approximately $9,995, resulting in a total repayment obligation of approximately $230,979.30. The annual percentage rate is 9.75%, and the loan is payable in 10 monthly installments of approximately $23,097.93 beginning February 28, 2025.

 

As collateral for the financing, the Company granted the lender a first priority security interest in the financed insurance policies, including all unearned premiums, dividends, credits, and certain loss payments. In the event of default, cancellation, or early termination of the policies, the lender has the right to collect any unearned premiums and apply them against the remaining loan balance.

 

This arrangement is classified as a short-term liability within other liabilities on the balance sheet (See Note 6) and is recorded net of any prepaid portions of the insurance policies.

 

LEGAL MATTERS

 

From time to time, claims are made against us in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting us from selling one or more products or engaging in other activities.

 

The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on our results of operations for that period or future periods. We are not presently a party to any pending or threatened legal proceedings.