Company: AEMD
Filing Date: 2025-06-26
Form Type: 10-K
Source: 0001683168-25-004780
Chunk: 224

Company: AETHLON MEDICAL INC
Filing Date: 2025-06-26
Form: 10-K
Item: Item 1A
Chunk 224
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 agencies have special contracting
requirements, including a right to audit us, which create additional risks; a negative audit would be detrimental to
us.

Our business plan to utilize
the Aethlon Hemopurifier technology may seek to involve contracts with the U.S. Government. Many government contracts, typically contain
unfavorable termination provisions and are subject to audit and modification by the government at its sole discretion, which would subject
us to additional risks should we obtain contracts with the U.S. Government in the future. These risks include the ability of the U.S.
Government to unilaterally:

    ·
    suspend or prevent us for a period of time from receiving new contracts or extending existing contracts based on violations or suspected violations of laws or regulations;

    ·
    audit and object to our contract-related costs and fees, including allocated indirect costs;

    ·
    control and potentially prohibit the export of our products; and

    ·
    change certain terms and conditions in our contracts.

 39 

As a former and potential
future U.S. Government contractor, we are required to comply with applicable laws, regulations and standards relating to our accounting
practices and would be subject to periodic audits and reviews. As part of any such audit or review, the U.S. Government may review the
adequacy of, and our compliance with, our internal control systems and policies, including those relating to our purchasing, property,
estimating, compensation and management information systems. Based on the results of its audits, the U.S. Government may adjust our contract-related
costs and fees, including allocated indirect costs. In addition, if an audit or review uncovers any improper or illegal activity, we would
possibly be subject to civil and criminal penalties and administrative sanctions, including termination of our contracts, forfeiture of
profits, suspension of payments, fines and suspension or prohibition from doing business with the U.S. Government. We could also suffer
serious harm to our reputation if allegations of impropriety were made against us. Although we have not had any government audits and
reviews to date, future audits and reviews could cause adverse effects. In addition, under U.S. Government purchasing regulations, some
of our costs, including most financing costs, amortization of intangible assets, portions of our research and development costs, and some
marketing expenses, would possibly not be reimbursable or allowed under such contracts. Further, as a former and potential future U.S.
Government contractor, we would be subject to an