UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended March 31, 2024
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
               For the transition period from ________ to ________
Commission file number 001-36728
ADMA BIOLOGICS, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
 
56-2590442
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)

465 State Route 17, Ramsey, New Jersey
 
07446
(Address of Principal Executive Offices)
 
(Zip Code)

(201) 478-5552
(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
ADMA
Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 
Large accelerated filer    ☒
Accelerated filer    ☐
 
Non-accelerated filer   
Smaller reporting company   
   
Emerging growth company   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No ☒

As of May 3, 2024, there were 231,809,197 shares of the issuer’s common stock outstanding.



ADMA BIOLOGICS, INC. AND SUBSIDIARIES
 
INDEX
 
PART I FINANCIAL INFORMATION
 
 
Item 1.
Financial Statements
 
       
   
1
       
 
2
       
   
3
       
   
4
       
   
5
       
 
Item 2.
19
       
 
Item 3.
30
       
 
Item 4.
30
       
32
   
 
Item 1.
32
       
 
Item 1A.
32
       
 
Item 2.
61
       
 
Item 3.
61
       
 
Item 4.
61
       
 
Item 5.
62
       
 
Item 6.
62
       
62

This Quarterly Report on Form 10-Q includes our trademarks, trade names and service marks, such as “ASCENIV,” “Nabi-HB®” and “BIVIGAM®,” which are protected under applicable intellectual property laws and are the property of ADMA Biologics, Inc., or its subsidiaries. Solely for convenience, trademarks, trade names and service marks referred to in this report may appear without the ®, or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

i

Special Note Regarding Forward-Looking Statements

Some of the information in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These statements include, among others, statements about:


our ability to manufacture ASCENIV and BIVIGAM on a commercial scale and further commercialize these products as a result of their approval by the U.S. Food and Drug Administration (the “FDA”) in 2019;


our plans to develop, manufacture, market, launch and expand our commercial infrastructure and commercialize our current and future products and the success of such efforts;


the safety, efficacy and expected timing of and our ability to obtain and maintain regulatory approvals for our current products and product candidates, and the labeling or nature of any such approvals;


the achievement of or expected timing, progress and results of clinical development, clinical trials and potential regulatory approvals for our product candidates;


our dependence upon our third-party customers and vendors and their compliance with applicable regulatory requirements;


our belief that we have addressed the delays experienced with final drug product current Good Manufacturing Practices (“cGMP”) release testing by our third-party vendors by adding additional release testing laboratories to our FDA-approved consortium listed in our drug approval documents;


our ability to obtain adequate quantities of FDA-approved plasma with proper specifications;


our plans to increase our supplies of source plasma, our ability to obtain and maintain regulatory compliance and reliance on third-party supply agreements as well as any extensions to such agreements;


the potential indications for our products and product candidates;


potential investigational new product applications;


the acceptability of any of our products, including ASCENIV, BIVIGAM and Nabi-HB, for any purpose, including FDA-approved indications, by physicians, patients or payers;


our plans to evaluate the clinical and regulatory paths to grow the ASCENIV franchise through expanded FDA-approved uses;


Federal, state and local regulatory and business review processes and timing by such governmental and regulatory agencies of our business and regulatory submissions;


concurrence by the FDA with our conclusions concerning our products and product candidates;


the comparability of results of our hyperimmune and immune globulin (“IG”) products to other comparably run hyperimmune and immune globulin clinical trials;


the potential for ASCENIV and BIVIGAM to provide meaningful clinical improvement for patients living with Primary Humoral Immunodeficiency (“PI”), also known as Primary Immunodeficiency Disease (“PIDD”) or Inborn Errors of Immunity, or other immune deficiencies or any other condition for which the products may be prescribed or evaluated;


our ability to market and promote Nabi-HB in a highly competitive environment with increasing competition from other antiviral therapies and to generate meaningful revenues from this product;

ii


our intellectual property position and the defense thereof, including our expectations regarding the scope of patent protection with respect to ASCENIV or other future pipeline product candidates;


our ability to develop, manufacture, receive regulatory approval and commercialize our potential pipeline of any new hyperimmune globulins;


our manufacturing capabilities, third-party contractor capabilities and vertical integration strategy;


our plans related to the expansion and efficiencies of our manufacturing capacity, yield improvements, supply-chain robustness, in-house fill-finish capabilities, distribution and other collaborative agreements and the success of such endeavors;


our estimates regarding revenues, expenses, capital requirements, timing to profitability and positive cash flows and the potential need for and availability of additional financing;


possible or likely reimbursement levels for our currently marketed products;


estimates regarding market size, projected growth and sales of our existing products as well as our expectations of market acceptance of ASCENIV and BIVIGAM;


pandemics, or a resurgence of a pandemic, may adversely affect our business, financial condition, liquidity or results of operations; and


future domestic and global economic conditions including, but not limited to, supply chain constraints, inflationary pressures or performance or geopolitical conditions, including the continuing conflict in Europe or the evolving conflict in the Middle East and surrounding areas.

These statements may be found under the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this Quarterly Report on Form 10-Q. Forward-looking statements  may be identified by the use of terms such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” or “should” or the negative thereof or other variations thereof or comparable terminology. Our actual results could differ materially from those contained in the forward-looking statements due to the factors described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. Any forward-looking statement included or incorporated by reference in this Quarterly Report on Form 10-Q reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions related to our operations, industry and future growth. These forward-looking statements speak only as of the dates such statements are made and we undertake no obligation to publicly update any forward-looking statements or to publicly announce revisions to any of the forward-looking statements, unless otherwise required by the federal securities laws.

iii

PART I
FINANCIAL INFORMATION

Item 1.
Financial Statements.

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

    March 31,     December 31,  
   
2024
   
2023
 
    (Unaudited)        
    (In thousands, except share data)  
ASSETS  

       
Current assets:
           
Cash and cash equivalents
 
$
45,325
   
$
51,352
 
Accounts receivable, net
   
49,621
     
27,421
 
Inventories
   
177,732
     
172,906
 
Prepaid expenses and other current assets
   
3,741
     
5,334
 
Total current assets
   
276,419
     
257,013
 
Property and equipment, net
   
55,317
     
53,835
 
Intangible assets, net
   
321
     
499
 
Goodwill
   
3,530
     
3,530
 
Right-to-use assets
   
9,397
     
9,635
 
Deposits and other assets
   
5,891
     
4,670
 
TOTAL ASSETS
 
$
350,875
   
$
329,182
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
             
Current liabilities:
               
Accounts payable
 
$
17,186
   
$
15,660
 
Accrued expenses and other current liabilities
   
33,691
     
32,919
 
Current portion of deferred revenue
   
1,118
     
182
 
Current portion of lease obligations
   
1,093
     
1,045
 
Total current liabilities
   
53,088
     
49,806
 
Senior notes payable, net of discount
   
130,847
     
130,594
 
Deferred revenue, net of current portion
   
1,654
     
1,690
 
End of term fee
    1,688       1,688  
Lease obligations, net of current portion
   
9,487
     
9,779
 
Other non-current liabilities
   
405
     
419
 
TOTAL LIABILITIES
   
197,169
     
193,976
 
                 
COMMITMENTS AND CONTINGENCIES
           
                 
STOCKHOLDERS’ EQUITY
               
Preferred Stock, $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding
   
-
     
-
 
Common Stock - voting, $0.0001 par value, 300,000,000 shares authorized, 231,769,765 and 226,063,032 shares issued and outstanding at March 31, 2024 and December 31, 2023
   
23
     
23
 
Additional paid-in capital
   
642,133
     
641,439
 
Accumulated deficit
   
(488,450
)
   
(506,256
)
TOTAL STOCKHOLDERS’ EQUITY
   
153,706
     
135,206
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
350,875
   
$
329,182
 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

   
Three Months ended March 31,
 
   
2024
   
2023
 
    (In thousands, except share and per share data)  
             
REVENUES   $ 81,875     $ 56,914  
Cost of product revenue     42,767       40,401  
Gross profit
    39,108       16,513  
                 
OPERATING EXPENSES:
               
Research and development
   
450
     
855
 
Plasma center operating expenses
   
1,005
     
1,780
 
Amortization of intangible assets
   
193
     
179
 
Selling, general and administrative
   
15,639
     
14,512
 
Total operating expenses
   
17,287
     
17,326
 
                 
INCOME (LOSS) FROM OPERATIONS
   
21,821
     
(813
)
                 
OTHER INCOME (EXPENSE):
               
Interest income
   
384
     
166
 
Interest expense
   
(3,769
)
   
(6,115
)
Other expense
   
(35
)
   
(27
)
Other expense, net
   
(3,420
)
   
(5,976
)

               
INCOME (LOSS) BEFORE INCOME TAXES
    18,401       (6,789 )

               
Provision for income taxes
    595       -  

               
NET INCOME (LOSS)
 
$
17,806
   
$
(6,789
)
                 
BASIC EARNINGS (LOSS) PER COMMON SHARE
 
$
0.08
   
$
(0.03
)
DILUTED EARNINGS (LOSS) PER COMMON SHARE   $ 0.08     $ (0.03 )
                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
               
Basic
   
228,874,847
     
221,921,750
 
Diluted
    236,414,374       221,921,750  

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY (Unaudited)
(In thousands, except share data)

For the Three Months Ended March 31, 2024
          Additional           Total  
   
Common Stock
   
Paid-in
   
Accumulated
   
Stockholders’
 
   
Shares
   
Amount
   
Capital
   
Deficit
   
Equity
 
Balance at December 31, 2023
   
226,063,032
   
$
23
   
$
641,439
   
$
(506,256
)
 
$
135,206
 
Stock-based compensation
    -      
-
     
2,141
     
-
     
2,141
 
Cashless exercise of warrants
    4,545,503       -       -       -       -  
Vesting of Restricted Stock Units, net of shares withheld for taxes
   
774,889
     
-
     
(2,476
)
   
-
     
(2,476
)
Exercise of stock options
    386,341       -       1,029       -       1,029  
Net income
    -       -       -       17,806       17,806  
Balance at March 31, 2024
    231,769,765     $ 23     $ 642,133     $ (488,450 )  
$
153,706
 

For the Three Months Ended March 31, 2023
          Additional           Total  
   
Common Stock
   
Paid-in
   
Accumulated
   
Stockholders’
 
   
Shares
   
Amount
   
Capital
   
Deficit
   
Equity
 
Balance at December 31, 2022
   
221,816,930
   
$
22
   
$
629,969
   
$
(478,017
)
 
$
151,974
 
Stock-based compensation
    -      
-
     
1,110
     
-
     
1,110
 
Vesting of Restricted Stock Units, net of shares withheld for taxes
    443,215       -       (640 )     -       (640 )
Exercise of stock options
    2,443       -       -       -       -  
Net loss
    -      
-
     
-
     
(6,789
)
   
(6,789
)
Balance at March 31, 2023
   
222,262,588
   
$
22
   
$
630,439
   
$
(484,806
)
 
$
145,655
 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

   
Three Months Ended March 31,
 
   
2024
   
2023
 
    (In thousands)  
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income (loss)
  $ 17,806    
$
(6,789
)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
               
Depreciation and amortization
   
2,114
     
2,033
 
Loss on disposal of fixed assets
   
23
     
18
 
Interest paid in kind     -       980  
Stock-based compensation
   
2,141
     
1,110
 
Amortization of debt discount
   
253
     
488
 
Amortization of license revenue
   
(36
)
   
(36
)
Changes in operating assets and liabilities:
               
Accounts receivable
   
(22,200
)
   
(11,013
)
Inventories
   
(4,826
)
   
(705
)
Prepaid expenses and other current assets
   
1,593
     
716
 
Deposits and other assets
   
(982
)
   
289
 
Accounts payable
   
447
     
(273
)
Accrued expenses
   
772
     
(1,354
)
Other current and non-current liabilities
   
677
     
(187
)
Net cash used in operating activities
   
(2,218
)
   
(14,723
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchase of property and equipment
   
(2,347
)
   
(1,945
)
Acquisition of intangible assets
    (15 )     -  
Net cash used in investing activities
   
(2,362
)
   
(1,945
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Taxes paid on vested Restricted Stock Units
   
(2,476
)
   
(640
)
Payments on finance lease obligations
   
-
     
(10
)
       Net proceeds from the exercise of stock options     1,029       -  
Net cash used in financing activities
   
(1,447
)
   
(650
)
                 
Net decrease in cash and cash equivalents
   
(6,027
)
   
(17,318
)
Cash and cash equivalents - beginning of period
   
51,352
     
86,522
 
Cash and cash equivalents - end of period
 
$
45,325
   
$
69,204
 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1.
ORGANIZATION AND BUSINESS



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 with ten plasma collection facilities located throughout the United States, all of which hold an approved license with the FDA.



The Company has three 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 March 31, 2024, the Company had working capital of $223.3 million, including $45.3 million of cash and cash equivalents, $49.6 million of accounts receivable and $177.7 million of inventories, partially offset by $53.1 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 second quarter of 2025 and beyond. 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 and 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.



ADMA continues to evaluate a variety of strategic alternatives, and the exploration of value-creating opportunities remains a top corporate priority.

5

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation


The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. 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”).



The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 28, 2024.  The accompanying consolidated balance sheet as of December 31, 2023 was derived from the audited financial statements as of and for the year ended December 31, 2023. These condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 3 of Regulation S-X, and therefore omit or condense certain footnotes and other information normally included in complete consolidated financial statements prepared in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation.  In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of March 31, 2024 and its results of operations, changes in stockholders’ equity and cash flows for the three months ended March 31, 2024 and 2023.


During the three months ended March 31, 2024 and 2023, comprehensive income/loss was equal to the net income/loss amounts presented for the respective periods in the accompanying condensed consolidated statements of operations. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year.

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 estimates related to the valuation allowance for the Company’s deferred tax assets and its effective tax rate.

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 credit facility (see Note 7) approximates fair value due to the variable interest rate on this debt.

Accounts Receivable


Accounts receivable is reported at realizable value, net of allowances for contractual credits and credit losses in the amount of $0.2 million and $0.1 million at March 31, 2024 and December 31, 2023, respectively, 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, payment history 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. At March 31, 2024, three customers accounted for an aggregate of approximately 87% of the Company’s total accounts receivable, and at December 31, 2023, five customers accounted for approximately 98% of the Company’s total accounts receivable.

6

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Inventories


Raw materials inventory consists of various materials purchased from suppliers, including normal source plasma and Respiratory Syncytial Virus (“RSV”) high titer plasma, 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 Boca Facility overhead allocation to inventory is generally based upon the estimated square footage of the Boca Facility that is used in the production of the Company’s FDA-approved 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. 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 conformance or engineering lots that would not qualify as immediately available for commercial sale are charged to cost of product revenue and not capitalized into inventory.

Goodwill


Goodwill represents the excess of purchase price over the fair value of net assets acquired by the Company. Goodwill at March 31, 2024 and December 31, 2023 was $3.5 million. All of the Company’s goodwill is attributable to its ADMA BioManufacturing business segment.


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 did not record any impairment charges related to goodwill for the three months ended March 31, 2024 and 2023.

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 three months ended March 31, 2024 and 2023, the Company did not identify any impairment indicators for its long-lived assets, and as a result no impairment charges were recorded.

7

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Revenue Recognition


Revenues for the three months ended March 31, 2024 and 2023 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 through 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 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 historical experience and certain other assumptions, and while the Company believes that such estimates are reasonable, they are subject to change based on future experience 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.


For the three months ended March 31, 2024, two customers represented an aggregate of approximately 70% of the Company’s consolidated revenues. For the three months ended March 31, 2023, three customers represented an aggregate of 76% of the Company’s consolidated revenues.

Cost of Product Revenue


Cost of product revenue includes costs associated with the manufacture of the Company’s FDA-approved products, intermediates and the sale 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 or processes in development, the expenses are classified as research and development expenses.

Earnings/loss Per Common Share


Basic earnings/loss per common share is computed by dividing net earnings/loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.  Diluted earnings/loss per common share is calculated by dividing net earnings/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, as well as Restricted Stock Units (“RSUs”), using the treasury stock method. Potentially dilutive common stock is excluded from the diluted earnings/loss per common share computation to the extent that it would be anti-dilutive. For the three months ended March 31, 2024, basic and diluted earnings per share is calculated as follows:


Net income available to common stockholders ($000’s) (numerator)
  $ 17,806  
Weighted-average number of common shares (denominator)
    228,874,847  
Basic earnings per common shares
  $ 0.08  
 
       
Weighted-average number of common shares
    228,874,847  
Potential shares of common stock arising from outstanding stock options, warrants and unvested RSUs
   
7,539,527
 
Total shares - diluted (denominator)
    236,414,374  
Diluted earnings per common share
  $ 0.08  


For the three months ended March 31, 2024, there were no shares with an anti-dilutive effect that needed to be excluded from the earnings per share computation. For the three months ended March 31, 2023 no potentially dilutive securities are included in the computation of diluted loss per share in the accompanying condensed consolidated financial statements as the Company reported a net loss for this period. For the three months ended March 31, 2023, the following securities were excluded from the calculation of diluted loss per common share because of their anti-dilutive effects:

Stock Options
    9,945,703  
Restricted Stock Units
    4,875,464  
Warrants
    13,525,148  
      28,346,315  

8

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Stock-Based Compensation


The Company follows recognized accounting guidance which requires all equity-based payments, including grants of stock options and 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 generally 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 under the Company’s equity incentive plans generally have a four-year vesting period and a term of 10 years. RSUs granted to employees generally have a four-year vesting period. 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. The Company is subject to income tax examinations by major taxing authorities for all tax years since 2020 and for previous periods as it relates to the Company’s net operating loss carryforwards.


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. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of March 31, 2024 and December 31, 2023, and during the three months ended March 31, 2024 and 2023 the Company recognized no adjustments for uncertain tax positions.


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 ASU 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 an operating segment or the method for determining reportable segments. This update becomes effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

3.
INVENTORIES


The following table provides the components of inventories:

   
March 31,
2024
   
December 31,
2023
 

  (In thousands)
 
Raw materials
 
$
59,459
   
$
52,999
 
Work-in-process
   
49,279
     
49,621
 
Finished goods
   
68,994
     
70,286
 
Total inventories
 
$
177,732
   
$
172,906
 


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 goods expected to be available for sale or otherwise have alternative uses that provide a probable future benefit.


Work-in-process inventory primarily consists of bulk drug substance and unlabeled filled vials of the Company’s immunoglobulin products.


Finished goods inventory is comprised of immunoglobulin product inventory and related intermediates that are available for commercial sale, as well as plasma collected at the Company’s plasma collection centers that is expected to be sold to third-party customers.

9

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
4.
INTANGIBLE ASSETS


Intangible assets at March 31, 2024 and December 31, 2023 consist of the following:

   
March 31, 2024
   
December 31, 2023
 
    (In thousands)  
           Accumulated                  Accumulated        
   
Cost
   
Amortization
   
Net
   
Cost
   
Amortization
   
Net
 
Trademark and other intangible rights related to Nabi-HB
 
$
4,100
   
$
4,002
   
$
98
   
$
4,100
   
$
3,856
   
$
244
 
Internally developed software
    225       23       202       210       9       201  
Rights to intermediates
   
907
     
886
     
21
     
907
     
853
     
54
 
   
$
5,232
   
$
4,911
   
$
321
   
$
5,217
   
$
4,718
   
$
499
 


Amortization expense related to the Company’s intangible assets was $0.2 million for the three months ended March 31, 2024 and 2023. Estimated future aggregate amortization expense is expected to be as follows (in thousands):

2024
 
$
162
 
2025
   
56
 
2026
    56  
2027
    47  

10

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
5.
PROPERTY AND EQUIPMENT


Property and equipment and related accumulated depreciation are summarized as follows:

   
March 31, 2024
   
December 31, 2023
 
    (In thousands)  
Manufacturing and laboratory equipment
 
$
21,232
   
$
21,093
 
Office equipment and computer software
   
6,432
     
6,062
 
Furniture and fixtures
   
5,776
     
5,776
 
Construction in process
   
4,447
     
2,273
 
Leasehold improvements
   
21,026
     
20,811
 
Land
   
4,339
     
4,339
 
Buildings and building improvements
   
20,712
     
20,218
 
     
83,964
     
80,572
 
Less: Accumulated depreciation
   
(28,647
)
   
(26,737
)
Total property, plant and equipment, net
 
$
55,317
   
$
53,835
 


Property and equipment 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 were assigned a useful life of 30 years. Property and equipment other than land and buildings have useful lives ranging from three to 10 years. Leasehold improvements are amortized over the lesser of the lease term or their estimated useful lives.


The Company recorded depreciation expense on property and equipment for the three months ended March 31, 2024 and 2023 of $1.9 million.

6.
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES


Accrued expenses and other current liabilities at March 31, 2024 and December 31, 2023 are as follows:

   
March 31, 2024
   
December 31, 2023
 
    (In thousands)  
Accrued rebates
 
$
17,330
   
$
16,608
 
Accrued distribution fees
   
7,100
     
5,954
 
Accrued incentives
   
1,220
     
4,961
 
Accrued interest     3,478       546  
Accrued testing
   
329
     
282
 
Accrued payroll and other compensation
   
1,853
     
2,203
 
Other
   
2,381
     
2,365
 
Total accrued expenses and other current liabilities
 
$
33,691
   
$
32,919
 

7.
DEBT


A summary of outstanding senior notes payable is as follows:

   
March 31, 2024
   
December 31, 2023
 
    (In thousands)  
Term loan
 
$
62,500
   
$
62,500
 
Revolving credit facility     72,500       72,500  
Less:
               
Debt discount
   
(4,153
)
   
(4,406
)
Senior notes payable
 
$
130,847
   
$
130,594
 

11

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

On December 18, 2023 (the “Ares Closing Date”), the Company and all of its subsidiaries entered into a credit agreement (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.



Borrowings under the term loan bear interest at the adjusted Term SOFR for a three-month tenor in effect on the day that is two 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 bear interest at the adjusted Term SOFR for a three-month tenor in effect on the day that is two business days prior to the first day of the applicable calendar quarter plus 3.75% (the “SOFR Revolving Facility Applicable Margin”). As of March 31, 2024 and December 31, 2023, the interest rate on the term loan was approximately 11.83% and 11.88%, respectively, and the interest rate on the revolving facility was approximately 9.08% and 9.13%, respectively.


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 are no scheduled principal payments on the Ares Credit Facilities, and the Company is required to make quarterly interest payments to Ares of approximately $3.6 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 with no 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 sheets as of March 31, 2024 and 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 March 31, 2024 and December 31, 2023 was 11.36% and 11.39%, respectively. 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 $15.0 million 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 March 31, 2024 the Company was in compliance with all of the covenants contained in the Ares Credit Agreement.


12

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

8.
STOCKHOLDERS’ EQUITY
 
Preferred Stock
 

The Company is currently authorized to issue up to 10 million shares of preferred stock, $0.0001, par value per share. There were no shares of preferred stock outstanding at March 31, 2024 and December 31, 2023.
 
Common Stock


As of March 31, 2024 and December 31, 2023, the Company was authorized to issue 300,000,000 shares of its common stock, $0.0001 par value per share, and 231,769,765 and 226,063,032 shares of common stock were outstanding as of March 31, 2024 and December 31, 2023, respectively. After giving effect to the 33,596,877 shares reserved for outstanding warrants and awards issued or reserved for future issuance under the Company’s equity incentive plans, as of March 31, 2024 there were 34,633,358 shares of common stock available for issuance.

Warrants
 

On January 10, 2024, a former noteholder of the Company exercised a warrant to purchase 4 million shares of the Company’s common stock on a cashless basis and the Company issued 1,977,514 shares of common stock to this noteholder. On March 8, 2024 Hayfin and its affiliates exercised warrants to purchase an aggregate of 3,388,681 shares of the Company’s common stock on a cashless basis and the Company issued 2,482,205 shares of common stock to Hayfin and its affiliates. On March 14, 2024 an entity associated with another former noteholder of the Company exercised a warrant to purchase 169,651 shares of the Company’s common stock on a cashless basis and the Company issued 85,784 shares of common stock to this entity.



On February 24, 2024, a warrant to purchase 34,800 shares of the Company’s common stock held by a former noteholder of the Company expired in accordance with its terms. At March 31, 2024 and December 31, 2023, the Company had outstanding warrants to purchase an aggregate of 4,909,774 and 12,502,906 shares, respectively, of common stock, with weighted-average exercise prices of $2.51 and $2.32 per share, respectively, with expiration dates ranging between October 2024 and May 2030. The following table summarizes information about warrants outstanding for the three months ended March 31, 2024:


   
Shares
   
Weighted Average Exercise Price
 
Warrants outstanding at December 31, 2023
   
12,502,906
   
$
2.32
 
Expired
   
(34,800
)
 
$
7.50
 
Granted
   
-
   
$
-
 
Exercised
   
(7,558,332
)
 
$
2.16
 
Warrants outstanding at March 31, 2024
   
4,909,774
   
$
2.51
 
   
Equity Incentive Plans
 

The fair value of stock options granted under the Company’s equity incentive plans was determined on the date of grant using the Black-Scholes option valuation model. The Black-Scholes model was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of certain subjective assumptions including the expected stock price volatility. The stock options granted to employees and directors have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimate. The following assumptions were used to determine the fair value of options granted during the three months ended March 31, 2024 and 2023:
   
   
Three Months Ended March 31,
 
   
2024
   
2023
 
Expected term
 
5.5 - 6.3 years
   
5.5 - 6.3 years
 
Volatility
  66%

  68%

Dividend yield
  0.0
    0.0
 
Risk-free interest rate
 
4.29%

 
4.20-4.24%

  

During the three months ended March 31, 2024 and 2023, the Company granted options to purchase an aggregate of 1,096,196 and 1,727,510 shares of common stock, respectively, to its directors and employees.  The weighted average remaining contractual life of stock options outstanding and expected to vest at March 31, 2024 is 7.4 years. The weighted average remaining contractual life of stock options exercisable at March 31, 2024 is 6.0 years. During the three months ended March 31, 2024, options to purchase an aggregate of 393,993 shares of common stock were exercised, which included one exercise transaction for which 7,652 shares were withheld to cover the exercise price, and the Company received aggregate net exercise proceeds of $1.0 million.
    

A summary of the Company’s option activity under the Company’s equity incentive plans and related information is as follows:
 
13

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
          Weighted  
          Average  
   
Shares
   
Exercise Price
 
Options outstanding, vested and expected to vest at December 31, 2023
   
5,906,184
   
$
3.38
 
Forfeited
   
(13,202
)
 
$
2.00
 
Expired
   
(176,434
)
 
$
8.48
 
Granted
   
1,096,196
   
$
5.40
 
Exercised     (393,993 )   $
2.73  
Options outstanding, vested and expected to vest at March 31, 2024
   
6,418,751
   
$
3.63
 
                 
Options exercisable
   
3,476,976
   
$
3.55
 
   

As of March 31, 2024, the Company had $6.9 million of unrecognized compensation expense related to options granted under the Company’s equity incentive plans, which is expected to be recognized over a weighted-average period of 2.9 years.

   

During the three months ended March 31, 2024 and 2023, the Company granted RSUs representing an aggregate of 2,484,968 and 2,666,260 shares, respectively, to certain employees of the Company and to members of its Board of Directors. These RSUs generally vest annually over a period of four years for employees and semi-annually over a period of one year for directors. During the three months ended March 31, 2024, an aggregate of 1,145,292 shares of common stock vested in connection with grants of RSUs. With respect to these vested RSUs, 370,403 shares valued at approximately $2.5 million were withheld by the Company to cover employees’ tax liabilities. These shares were no longer outstanding as of March 31, 2024. A summary of the Company’s unvested RSU activity and related information is as follows:

           Weighted  
           Average Grant  
   
Shares
   
Date Fair Value
 
Balance at December 31, 2023
   
4,657,297
   
$
2.81
 
Granted
   
2,484,968
   
$
5.40
 
Vested
   
(1,145,292
)
 
$
2.64
 
Forfeited
   
(102,250
)
 
$
2.82
 
Balance at March 31, 2024
   
5,894,723
   
$
3.94
 
   

As of March 31, 2024, the Company had $22.1 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 3.3 years.
    

Total stock-based compensation expense for all awards granted under the Company’s equity incentive plans for the three months ended March 31, 2024 and 2023 is as follows:
   
   
Three Months Ended March 31,
 
   
2024
   
2023
 
Research and development
 
$
17
   
$
5
 
Plasma center operating expenses
   
39
     
23
 
Selling, general and administrative
   
1,841
     
978
 
Cost of product revenue
   
244
     
104
 
Total stock-based compensation expense
 
$
2,141
   
$
1,110
 
  
9.
RELATED PARTY TRANSACTIONS


The Company leases office space 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 through December 31, 2026. Rent expense for the three months ended March 31, 2024 and 2023 amounted to $30,000. Areth is a company controlled by Dr. Jerrold B. Grossman, the Vice Chairman of the Company’s Board of Directors, and Adam S. Grossman, the Company’s President, Chief Executive Officer and Interim Chief Financial Officer. The Company also reimburses Areth for office and building-related (common area) expenses, equipment and certain other operational expenses, which were not material to the condensed consolidated financial statements for the three months ended March 31, 2024 and 2023.



During the three months ended March 31, 2024 and 2023, the Company purchased certain specialized medical equipment and services primarily related to the Company’s plasma collection centers, as well as personal protective equipment, from GenesisBPS and its affiliates (“Genesis”), aggregating to $0.1 million. Genesis is owned by Dr. Grossman and Mr. Grossman.

10.
COMMITMENTS AND CONTINGENCIES

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.

14

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 to five 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 for two 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’s 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 three months ended March 31, 2024 and 2023, the Company incurred expenses related to this study in the amount of $0.3 million and $0.2 million, respectively. The Company expects to incur expenses of approximately $1.2 million to complete this study, which is required to be completed by June of 2026.


Employment Contracts


The Company previously entered into employment agreements with Mr. Grossman and with Brian Lenz, the Company’s former Executive Vice President, Chief Financial Officer and General Manager, ADMA BioCenters. Effective as of April 1, 2024, Mr. Lenz transitioned to a non-employee consulting role and entered into a consulting agreement with the Company. On April 1, 2024, the Company entered into an employment agreement with Kaitlin Kestenberg, who was promoted to Chief Operating Officer and Senior Vice President, Compliance.

Other Commitments


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 March 31, 2024. The Company does not anticipate recognizing any significant losses relating to these arrangements.

15

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
11.
SEGMENTS


The Company is engaged in the manufacture, marketing and development of specialty plasma-derived biologics.  The Company’s ADMA BioManufacturing operating segment reflects the Company’s immunoglobulin manufacturing, commercial and development operations in Boca Raton, FL.  The Plasma Collection Centers operating segment consists of ten plasma collection facilities located throughout the United States, all of which are operational, collecting plasma and currently hold FDA licenses. The Company defines its operating segments as those business units whose operating results are regularly reviewed by the chief operating decision maker (“CODM”) to analyze performance and allocate resources. While not considered an operating segment, the Corporate information included in the tables below consists of certain unallocated general and administrative overhead expenses and interest expense on the Company’s senior debt (see Note 7). The Company’s CODM is its President and Chief Executive Officer. For the Company’s two operating segments, the CODM uses income/loss before taxes as the measure of segment profit to determine the allocation of resources for each segment. Summarized financial information concerning reportable segments is shown in the following tables:


Three Months Ended March 31, 2024
 
(in thousands)
 
ADMA BioManufacturing
   
Plasma Collection
Centers
   
Corporate
   
Consolidated
 
                         
Revenues
 
$
80,113
   
$
1,726
   
$
36
   
$
81,875
 
                                 
Cost of product revenue
   
40,991
     
1,776
     
-
     
42,767
 
                                 
Income (loss) from operations
    28,696       (1,055 )     (5,820 )     21,821  
                                 
Interest and other expense, net
   
(30
)
   
(1
)
   
(3,389
)
   
(3,420
)
                                 
Income (loss) before taxes
   
28,666
     
(1,056
)
   
(9,209
)
   
18,401
 
                                 
Capital expenditures
   
2,330
     
17
     
-
     
2,347
 
Depreciation expense
   
1,307
     
807
     
-
     
2,114
 
Total assets
   
278,331
     
33,990
     
38,554
     
350,875
 


Three Months Ended March 31, 2023
 
(in thousands)
 
ADMA BioManufacturing
   
Plasma Collection
Centers
   
Corporate
   
Consolidated
 
                         
Revenues
 
$
49,577
   
$
7,301
   
$
36
   
$
56,914
 
                                 
Cost of product revenue
   
33,934
     
6,467
     
-
     
40,401
 
                                 
Income (loss) from operations
    5,476       (947 )     (5,342 )     (813 )
                                 
Interest and other expense, net
   
(23
)
   
-
     
(5,953
)
   
(5,976
)
                                 
Income (loss) before taxes
   
5,453
     
(947
)
   
(11,295
)
   
(6,789
)
                                 
Capital expenditures
   
452
     
1,493
     
-
     
1,945
 
Depreciation expense
   
1,293
     
740
     
-
     
2,033
 
Total assets
   
234,895
     
38,854
     
67,039
     
340,788
 

16

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Net revenues according to geographic area, based on the location of where the product is shipped, is as follows:

   
Three Months Ended March 31,
 
(in thousands)  
2024
   
2023
 
United States
 
$
77,991
   
$
52,695
 
International
   
3,884
     
4,219
 
Total revenues
 
$
81,875
   
$
56,914
 
  
12.
LEASE OBLIGATIONS


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.

17

ADMA BIOLOGICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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. 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. The Company’s 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. Aggregate lease expense for the Company’s leases for the three months ended March 31, 2024 and 2023 was approximately $0.6 million . Cash paid for the Company’s leases for the three months ended March 31, 2024 and 2023 was also approximately $0.6 million.


The Company has aggregate lease liabilities of $10.6 million and $10.8 million as of March 31, 2024 and December 31, 2023, respectively, which are comprised primarily of the leases for the Company’s plasma collection centers and a warehouse lease for raw material storage related to the Company’s immunoglobulin manufacturing operations.  The Company’s operating leases have a weighted average remaining term of 7.4 years. Scheduled payments under the Company’s lease obligations are as follows (in thousands):

Remainder of 2024
   
$
1,802
 
  Year ended December 31, 2025