Incumbent Board has Destroyed Stockholder Value and Imperiled AIM’s Future through Breaches of Fiduciary Duty and Bad Faith Actions

Stock Price has Declined by More than 99%, Clinical Strategy has Failed and AIM is on the Brink of Insolvency

Act Now to Save AIM Before it is Too Late – The Kellner Group Can Turn AIM Around and Finally Start Creating Value for Stockholders

Vote “FOR” All Four Kellner Group Nominees for Urgently Needed Change

Incumbent Board has Destroyed Stockholder Value and Imperiled AIM’s Future through Breaches of Fiduciary Duty and Bad Faith Actions

Kellner Group Owns 5.04% of Outstanding Shares and is Fully Aligned with Stockholders

NEW YORK, Dec. 13, 2024 (GLOBE NEWSWIRE) --

Dear AIM Stockholders:

Ted Kellner, as the nominating stockholder and a nominee, together with his other nominees, Todd Deutsch, Robert L. Chioini and Paul W. Sweeney (collectively, the “Kellner Group,” “we” or “us” and, as nominees, the “Kellner Group Nominees”), are issuing this open letter to stockholders regarding the 2024 Annual Meeting of Stockholders of AIM ImmunoTech Inc., a Delaware corporation (“AIM” or the “Company”), to solicit your vote to elect each of us to AIM’s Board.

We urge you to carefully read our proxy statement and our subsequent communications because they contain important information. Our proxy statement and our other communications are available at https://okapivote.com/AIM/.

Substantial and Immediate Overhaul of the AIM Board is Critical

The urgent need for drastic, immediate transformation within the AIM Board is indisputable. Each of the three leading independent proxy advisory firms have acknowledged this in recommending for the election of Mr. Kellner. Two of the three firms acknowledged that the incumbent Board cannot remain in control and recommended for the election of both Mr. Kellner and Mr. Sweeney and against Mr. Equels.¹

Incremental change would be wholly inadequate in this situation. This is not a case of competing visions or differing opinions on AIM’s strategic direction. The incumbent Board has no vision for AIM’s future and no coherent strategy to move the company forward. The scale of value destruction under the incumbent Board’s leadership, combined with their blatant breaches of fiduciary duties (as found by the Delaware Supreme Court), unethical actions, and brazen disregard of stockholders and corporate governance norms, is unprecedented. We urge you to take decisive action by voting on the Gold card for all of the Kellner Group Nominees.

The Incumbent Board has Completely Failed and Destroyed Stockholder Value

The incumbent Board has controlled AIM for almost nine years since 2016 and failed epically, and dating back even further, Equels (16 years on the Board), Mitchell (26 years on the Board) and Appelrouth (13 years on the Board and consulting) each played a central role in leading AIM down the path of failure and value destruction.⁴ When given the opportunity to show they could be responsive to stockholders and fulfill their promise to appoint two new independent directors, the incumbent Board failed yet again. Instead, they appointed Bryan – hand-picked by Equels, without an independent search firm, based solely on a pre-existing relationship with AIM and Equels. This appointment was rubber-stamped by Mitchell and Appelrouth, and Bryan has predictably fallen right in line with their failed leadership.⁵ ISS accurately noted that “AIM shareholders did not get an independent voice they were hoping for with Bryan’s appointment.” ⁶ This is just another example of the incumbent Board’s consistent failure to act in the best interest of stockholders.

The following two facts demonstrate beyond question the utter and complete failure of the incumbent Board:

• AIM’s stock price has declined by over 99% since 2016 when Equels became CEO and Equels, Mitchell and Appelrouth took control of the Board.⁷

• AIM’s financial condition has deteriorated to the point of functional insolvency, with substantial doubt about its ability to continue as a going concern, insufficient stockholders’ equity to comply with NYSE American listing standards and a lack of viable financing options.⁸
  

The manner in which the incumbent Board brought AIM to this very dire position is even more troubling:

• They have utterly failed to advance AIM’s clinical program.⁹ They have failed to bring a single trial to completion and failed to achieve any FDA approvals. The incumbent Board has consistently neglected to invest in R&D for Company-sponsored clinical trials, and there is no clear strategy or follow-through. Instead, they shift focus aimlessly, chasing fleeting publicity with press releases that are empty of substance, while neglecting to drive trials to completion, secure approvals, or pursue commercialization with any sense of urgency. They delivered zero material process on any of the key clinical indications of Ampligen, failing to advance even a single company-sponsored study to completion. The incumbent Board attempts to hide their failures behind a veil of opacity, but the truth is unmistakable: a stalled program with no direction or visibility or timeline to approvals or revenues. This lack of transparency is, in effect, the only “strategy” the incumbent Board has for its clinical program – and it is failing.
  

• They have wasted funds on compensation and unethical litigation to entrench themselves and overseen massive, and increasing, losses.¹¹ Net losses have totaled over $120 million since 2016 and have accelerated. This is driven by increased G&A, increasing by 2.5x from 2021 to 2023, to support excessive compensation and unethical entrenchment efforts. G&A has been approximately double R&D in recent periods, a totally inappropriate and irresponsible ratio for a clinical stage biotech firm. The incumbent Board, with an average tenure of over 10 years, has not only violated their fiduciary duties but has also shamelessly paid themselves excessive compensation while the stock price has plummeted to less than a quarter. Their failure to act in the best interests of stockholders has directly contributed to the destruction of value, enriching themselves at the expense of AIM’s future.
  

• Their corporate governance practices have been abysmal, demonstrating a complete failure of leadership and accountability.¹³ These practices include (1) ignoring the will of stockholders by completely disregarding three consecutive failed “say-on-pay” votes, with no meaningful action taken to address the overwhelming disapproval of their compensation practices, (2) making hollow promises to add two new independent directors and review executive compensation, only to betray stockholders by appointing a pre-selected, hand-picked director with deep ties to AIM and Equels, bypassing any independent search process, then engaged the same compensation consultant that had previously recommended excessive pay to conduct a shallow, self-serving review, (3) maintaining a non-stockholder approved poison pill for over 25 years, a blatant disregard for stockholder rights that continues to entrench their control and harm AIM’s long-term value; and (4) launching an aggressive and harmful campaign against stockholders, relentlessly attacking those who seek change and severely damaged the Company financially and strategically and disenfranchised its stockholders.

• They have violated their fiduciary duties and conducted an egregious self-interested entrenchment campaign that has results in massive waste and destroyed virtually all stockholder value.¹⁶ The Delaware Supreme Court ruled in 2024 that the incumbent Board breached its fiduciary duties. In describing the Board’s adoption of amended bylaws, the court stated that the “primary purpose was to interfere with Kellner’s nomination notice, reject his nominees, and maintain control” and that the bylaws were “product of an improper motive and purpose, which constitutes a breach of the duty of loyalty.”¹⁷ (emphasis added)
  

This illegal behavior by the AIM Board was not an isolated incident. A federal district court in Florida sanctioned AIM and its counsel in 2024 in its Section 13(d) claims against members of the Kellner Group and others – claims that have been dismissed multiple times – for pursuing arguments that were “factually and legally frivolous and advanced for an improper purpose.”¹⁸

The cost of these bad faith actions has been staggering and directly and severely harmed the Company. We estimate the incumbent Board spent between $15 to $20 million in the past two-plus years in pursuit of its self-interested entrenchment campaign.¹⁹ The purpose of this waste was to prevent a meaningful stockholder vote – to deprive stockholders of their basic right to have a say in who represents them on the Board. Now that the incumbent Board has exhausted litigation options to prevent a vote, they have attempted to pad the vote by awarding fully vested shares to executives before the record date, as an advance on future pay – something there is no rational justification for and is a clear continuation of their bad faith and improper purpose.

This is shocking and unconscionable behavior – blatantly putting their own self-interest ahead of the Company and its stockholders – to a degree that we have never seen before.

The Kellner Group Nominees are the Only Viable Path to Rescue, Rebuild and Revive AIM

Collectively, the Kellner Group Nominees will bring a wealth of business, financial, clinical trial, life science and corporate governance experience and much needed credibility to the Board.

The incumbent Board does not have the skill set that the Kellner Group does and has no plan to change course. Against all reason, despite overwhelming evidence of their incompetence, and unethical and self-serving actions, they simply ask stockholders to place blind trust in them and their same empty promises that progress is right around the corner. But after nearly nine years of treating AIM like their personal piggy bank, the incumbent Board’s complete and total failure is indisputable. Faced with this harsh reality, they have resorted to attacking us with misleading narratives and outright lies to divert attention from their own disastrous and self-serving record.

Here is the undeniable truth:

• Mr. Kellner and Mr. Deutsch are two of AIM’s largest and long-standing stockholders. We have invested a significant amount in AIM and our sole motivation is to improve performance and create value for all stockholders. We are fully aligned with stockholders and committed to their success.

• The false narrative being pushed by the incumbent Board – suggesting Mr. Kellner is motivated by personal financial gain to seek reimbursement or will exploit company resources – could not be further from the truth. These claims are completely divorced from reality. Mr. Kellner has spent decades building his business reputation as a trusted investment fiduciary, and this reputation is a testament to his integrity and commitment to the best interests of the investors. All of the Kellner Group Nominees are committed to acting as responsible fiduciaries, focused on financially stabilizing AIM and creating value for all stockholders. This stands in stark contrast to the incumbent Board members, who have egregiously violated their fiduciary duties by prioritizing their own self-interest, resulting in gross waste and destructive value erosion. Similarly, the incumbent Board’s deceitful misrepresentations of settlement discussions is nothing more than bad faith, deliberate attempt to mislead and distort facts. These discussions are a direct result of the incumbent Board’s unlawful entrenchment efforts and involve numerous lawsuits and people unrelated to the Kellner Group. Mr. Kellner remains fully committed to AIM and to using his resources and network to create value if the Kellner Group Nominees are elected.

• Mr. Kellner and Mr. Sweeney have been transparent about their business relationship – it was disclosed in detail in our proxy statement and Mr. Kellner’s notice.²¹ They have long and proven track records of successful investing and running businesses, earning them the trust of their respective investors through exceptional performance and responsible stewardship over many years. Their demonstrated success is a significant strength of our slate and exactly the kind of leadership AIM desperately needs to address its desperate financial situation and secure its successful future.

• There are absolutely no third parties involved in our efforts that have not been publicly disclosed. None of the participants in our solicitation have any criminal history whatsoever. The incumbent Board’s claims that criminals are involved in the Kellner Group are completely baseless, desperate and outright false. But the incumbent Board needs to look in the mirror – AIM continues to utilize and pay a CRO that was co-founded by a convicted felon, recently convicted of securities fraud related deceiving investors about FDA submissions. This individual was quoted in several AIM press releases in recent years, including promoting clinical progress that did not occur. The parallels are extremely troubling. AIM also resorted to seeking usurious financing from an individual whom the SEC labeled a “recidivist violator of the federal securities laws.”

• AIM also grossly mischaracterizes Mr. Chioini’s history at Rockwell Medical. Mr. Chioini founded Rockwell and served as CEO for 23 years, and under his leadership became the 2nd largest dialysate supplier in the US with four manufacturing facilities and 330 employees, executed multiple large clinical trials that resulted in multiple FDA approvals, commercialized products, obtained funding through multi-million dollar licensing deals with large pharmaceutical firms and built a business that had a market cap of almost $1.0 billion at its peak. Since Mr. Chioini left Rockwell in 2018, the stock price has declined significantly, losing approximately 95% of its value (Nasdaq: RMTI). AIM also continues to willfully and falsely insist that Mr. Chioini was fired, despite a public record that clearly disproves this claim, including the incumbent Board sitting through a trial that directly dispelled this claim. The truth is that he reached a settlement agreement that resulted in a significant payment to him after a dispute with conflicted board members involving whistleblower retaliation claims made by both him and Rockwell’s former CFO. The incumbent Board’s deliberate misrepresentation of these facts is an outright distortion of the truth, further reflecting their pattern of dishonesty. None of the successes Mr. Chioini achieved at Rockwell have materialized at AIM under the incumbent Board’s leadership, so his proven ability to drive growth, secure FDA approvals, and create value is exactly what AIM urgently needs to turn things around and deliver meaningful results for stockholders.
  

The degree of dishonesty that we have seen from the incumbent Board is staggering. As just one example, they shamelessly attempted to deceive stockholders that the AIM stock price did not decline by over 99% by displaying a 2016 document referencing an unadjusted stock price that did not account for subsequent 1-for-528 reverse stock splits. When we pointed out this blatant misrepresentation, they had the audacity to call us liars. This kind of behavior is not only bizarre, but it shows you can’t believe anything these say – it is like the pot calling the kettle black, and then claiming the sky is not blue. This is their consistent approach – their entire campaign against us revolves around attacking our qualifications, characters, motivations and relationships. But none of it is based in reality whatsoever and it is an intentional, brazen attempt to mislead stockholders and distract from the incumbent Board’s catastrophic failures. The reality is simple: Nothing from the incumbent Board should be trusted.

Our Plan will Create Value for Stockholders

The Kellner Group is committed to implementing a bold, focused, responsible plan to reverse AIM’s downward trajectory by stabilizing its financial situation, revitalizing its clinical program and restoring real value to stockholders.

First and foremost, the Kellner Group will stabilize AIM and ensure it has the financial resources required to continue operations. It is imperative that AIM raise substantial funding in a sustainable way given the catastrophic damage the incumbent Board has inflicted on the Company’s financial health. The Kellner Group Nominees have each successfully raised significant capital, and collectively, have raised over $1.0 billion in investment capital over the years. We have the resources, networks, and credibility to successfully raise the necessary funds and provide the essential runway to finally create value for stockholders and invest in the future of Ampligen.

In stark contrast, the incumbent Board simply does not have the credibility, expertise, networks and resources to secure the capital that AIM desperately needs.

The incumbent Board’s financing efforts have been disastrous – extremely dilutive and reliant on ATMs, equity lines and excessive warrant coverage.²² They have failed to secure long-term financing, leaving AIM burdened with massive overhang that has only driven down the stock price. When they have raised capital, they squandered it on self-serving entrenchment efforts, and wasteful G&A and compensation, rather than on meaningful and strategic clinical efforts.²³

The Kellner Group Nominees will draw on their decades of collective experience in generating value for investors, and the trust, credibility and relationships they have built over the years, to attract long-term investment to AIM. We will direct that funding into a sharply focused clinical program. By being transparent with stockholders about AIM’s clinical program and setting clear, achievable goals and timelines, we are confident we can rebuild investor trust of investors and continue to attract capital. The contrast with the incumbent Board could not be more glaring.

Once AIM’s financial condition stabilized, the Kellner Group Nominees will take decisive action and implement their plan to revitalize AIM’s clinical program. We will conduct a comprehensive review of the available data on Ampligen, as well as the status of the various ongoing and past trials. This work will begin immediately and will proceed with the urgency it deserves. We will collaborate with AIM’s existing personnel, but will also bring in outside experts in oncology and other relevant fields to ensure AIM’s success. We bring a vast and powerful network of scientific and industry expertise, forged through Mr. Chioini’s extensive career in biotech and pharmaceuticals and Mr. Kellner’s leadership on numerous boards, including the Wisconsin Medical College Board. This network will be instrumental in driving AIM’s turnaround and ensuring its success.

Even more compelling, in the past week, we announced the full support of the co-inventor of Ampligen and former CEO of AIM, Dr. Carter, and another former AIM executive, Mr. Springate. Both of these individuals reached out to us due to their deep experience with AIM and Ampligen and their desire to help us deliver the fundamental change AIM so urgently needs. These powerful endorsements underscore the credibility and trust that our team has within the industry and further validates our plan to turn AIM around. This is clear indication that our group has the proven ability to attract the right people, with the right expertise, to collaboratively and effectively work toward turning AIM around and generating meaningful, long-term value for stockholders.

The pillars of our clinical program will be as follows:

Lastly, but by no means least, we will implement governance reforms and investor outreach that have been completely absent under the incumbent Board. The incumbent Board has not only utterly failed to establish an effective governance structure, but has fostered a toxic, dysfunctional environment marked by unethical conduct, disloyalty to the Company, a constant financial crisis, missed opportunities, and gross mismanagement. Their actions have created a culture of neglect and self-interest that has left AIM in a state of perpetual instability and underperformance. We are committed to making the necessary changes, starting immediately:

• Board Composition and Independence. We will identify and appoint an additional independent director, with a focus on finding a candidate with no prior history with AIM, with scientific or other relevant expertise, and with a diverse background that reflects a forward-thinking perspective.

• Compensation Overhaul. We will engage a new, independent compensation consultant to completely restructure AIM’s compensation practices. Our focus will be on slashing guaranteed compensation, reducing executive and director fixed and cash pay, and implementing a performance-driven incentive-based compensation structure with objective performance measures.

• Poison Pill Review. Review AIM’s poison pill, which has been in effect for almost 25 years without stockholder approval, with consideration of putting it to a stockholder vote if it will be maintained long-term.

• Investor Communications. Initiate outreach in a transparent manner to stockholders and new investors to tell our story and keep them informed.

Unlike the incumbent Board, we will not make empty promises – we will deliver on these critical commitments overhaul the governance structure at AIM to ensure transparency, accountability and long-term stockholder value.

The incumbent Board has destroyed stockholder value and imperiled AIM’s future through breaches of its fiduciary duties and bad faith conduct. Stockholders must act now to save AIM before it is too late.

We urge stockholders to vote “FOR” all four Kellner Group Nominees for urgently needed change.

We believe that if the Kellner Group Nominees are elected, AIM’s future will be bright and we stand ready and able to lead a turn around and create value for all stockholders. But if the Kellner Group Nominees do not control the Board, stockholders can expect more of the same value destruction and self-dealing from the incumbent Board and we fear that AIM will have no future at all.

Thank you for your support and consideration.

The Kellner Group

THE KELLNER GROUP URGES ALL STOCKHOLDERS TO VOTE ON THE GOLD PROXY CARD
TODAY TO ELECT
TED D. KELLNER, TODD DEUTSCH, ROBERT L. CHIOINI AND PAUL SWEENEY

If you have any questions, require assistance in voting your GOLD proxy card, or need additional copies of the Kellner Group’s proxy materials, please contact Okapi Partners at the phone numbers or email address listed below. Please also visit https://okapivote.com/AIM/ for additional information.

Contact:

Okapi Partners LLC
1212 Avenue of the Americas, 17th Floor,
New York, New York 10036
Stockholders may call toll-free: (844) 343-2621
Banks and brokers call: (212) 297-0720
Email: info@okapipartners.com

Important Information and Participants in the Solicitation

The Kellner Group has filed a definitive proxy statement and associated GOLD proxy card with the Securities and Exchange Commission (“SEC”) to be used to solicit votes for the election of its slate of highly-qualified director nominees at the upcoming annual meeting of stockholders of AIM. Details regarding the Kellner Group nominees are included in its proxy statement.

THE KELLNER GROUP STRONGLY ADVISES ALL STOCKHOLDERS OF AIM TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

Information regarding the identity of participants in the Kellner Group’s solicitation, and their direct or indirect interests, by security holdings or otherwise, is set forth in the Kellner Group’s proxy statement and additional proxy materials filed with the SEC. Stockholders can obtain a copy of the proxy statement, and any amendments or supplements thereto and other documents filed by the Kellner Group with the SEC for no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge at the following website: https://www.okapivote.com/AIM. Investors can also contact Okapi Partners LLC at the telephone number or email address set for the above.

_____________________________________________
¹ The third proxy firm, Glass Lewis, did not meet with us.
² Permission to use quotations from ISS was neither sought nor obtained.
³ Permission to use quotations from Egan-Jones was neither sought nor obtained.
⁴ See the definitive proxy statement filed by the Kellner Group with the Securities and Exchange Commission (the “SEC”) on November 6, 2024 (the “Proxy Statement”), pg. 17.
⁵ See the Proxy Statement, pg. 17.
⁶ Permission to use quotations from ISS was neither sought nor obtained.
⁷ See the Proxy Statement, pg. 13.
⁸ See the Condensed Consolidated Balance Sheets included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 filed with the SEC on November 14, 2024 (the “2024 Third Quarter 10-Q”).
⁹ See the Proxy Statement, pg. 16; see also Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 31, 2022; the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 31, 2023; and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on April 1, 2024.
¹⁰ Permission to use quotations from ISS was neither sought nor obtained.
¹¹ See the Proxy Statement, pg. 17; see also the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the SEC on August 14, 2024; and the Condensed Consolidated Balance Sheets included in the 2024 Third Quarter 10-Q.
¹² Permission to use quotations from ISS was neither sought nor obtained.
¹³ See the Proxy Statement, pgs. 17-18.
¹⁴ Permission to use quotations from ISS was neither sought nor obtained.
¹⁵ Permission to use quotations from Egan-Jones was neither sought nor obtained.
¹⁶ See Proxy Statement, pgs. 8-11.
¹⁷ Emphasis added.
¹⁸ Emphasis added.
¹⁹ Represents Kellner Group estimate based on increase in Company’s G&A expense from 2021 to 2023 and explanations provided as disclosed in AIM’s Annual Reports on Form 10-K for past two years, together with continued elevated G&A expenses in 2024 to date as disclosed AIM’s most recent Quarterly Report on Form 10-Q.
²⁰ Permission to use quotations from Egan-Jones was neither sought nor obtained.
²¹ See Proxy Statement, pg. 11 and Schedule 13D/A filed by the Kellner Group on September 11, 2024, Exhibit 99.1. With no basis whatsoever, the incumbent Board has tried to claim that this relationship was not fully disclosed. Once proxy advisory firms began recommending for the election of Mr. Kellner and Mr. Sweeney, the incumbent Board leaned into this allegation that was fabricated out of whole cloth in an attempt to question their characters and deceive stockholders. Rather than honestly explain to stockholders why they believe this successful investing relationship would not be beneficial, which they could have done when it was fully disclosed in detail in the notice months ago, the incumbent Board resorts to craven dishonesty and spins false narratives. It is their modus operandi and they have done it throughout this proxy contest and their self-interested entrenchment campaign.
²² See the Proxy Statement, pgs. 15-16.
²³ See the Proxy Statement, pgs. 16-18.