Note 7.    Commitments and Contingencies

Operating Leases

In December 2021, the Company entered into a three-year non-cancellable lease for office space. The lease was extended for an additional five years in March 2024. The lease does not include variable or contingent lease payments. An operating lease asset and liability are recognized based on the present value of the remaining lease payments discounted using the Company’s incremental borrowing rate. Lease expense is recognized on a straight-line basis over the lease term. 

The following table summarizes supplemental balance sheet information related to the operating lease as of December 31, 2025 (in thousands):

​

The following table summarizes supplemental disclosures of operating cost and cash flow information related to operating leases for the years ended December 31, 2025 and 2024 (in thousands):

​

Daewoong License and Supply Agreement

On December 20, 2019, the Company entered the Daewoong Agreement, pursuant to which Daewoong agreed to manufacture and supply ABP-450 and grant the Company an exclusive license for therapeutic indications to import, distribute, promote, market, develop, offer for sale and otherwise commercialize and exploit ABP-450 in the United States, the European Union, the United Kingdom, Canada, Australia, Russia, the Commonwealth of Independent States and South Africa (collectively the “covered territories”).

Pursuant to the terms of the Exchange Agreement, for the full satisfaction of all obligations under the Existing Notes, in January 2026 after approval of the Exchange by stockholders, the Company issued to Daewoong (i) 11,918,380 newly issued shares of common stock and 11,236,631 Daewoong Pre-Funded Warrants to purchase shares of common stock (the “Exchange Shares”), (ii) a new senior secured convertible note in a principal amount of $1.5 million (the “New Convertible Note”), and (iii) warrants to purchase up to 8 million shares of common stock at an exercise price of $1.09392 per share, which resulted in Daewoong becoming a related party. Prior to this transaction, Daewoong’s beneficial ownership was approximately 1%.

In connection with the Exchange, on January 21, 2026, the Company entered into a Fifth Amendment to the License and Supply Agreement (the “License Agreement Amendment”) with Daewoong, which amends the License and Supply Agreement, by and between the Company and Daewoong, dated December 20, 2019, as amended on July 29, 2022, January 8, 2023, April 24, 2023 and March 19, 2024. Pursuant to the terms of the License Agreement Amendment, the definition of “Notes” reflects the Exchange and the Termination Purchase Right (as defined in the License Agreement Amendment) will terminate and expire upon Daewoong’s sale of 50% of its common stock, including common stock held by its affiliates and common stock that would be issued upon conversion of the New Convertible Note.

Daewoong supplies the Company with ABP-450 at an agreed-upon transfer price, with no milestone or royalty payments and no minimum purchase requirements. Daewoong is responsible for all costs related to the manufacturing of ABP-450, including costs related to the operation and upkeep of its manufacturing facility, and the Company is responsible for all costs related to obtaining regulatory approval, including clinical expenses, and commercialization of ABP-450. The Company’s exclusivity is subject to its exercise of commercially reasonable efforts to: (i) achieve all regulatory approvals necessary for ABP-450 to be marketed in the

territory for therapeutic indications and (ii) commercialize ABP-450 in the territory for therapeutic indications. During the term of the Daewoong Agreement, the Company cannot purchase, sell or distribute any competing products in a covered territory or sell ABP-450 outside a covered territory.

The initial term of the Daewoong Agreement is from December 20, 2019 to the later of (i) the fifth anniversary of approval from the relevant governmental authority necessary to market and sell ABP-450 or (ii) December 20, 2029, and automatically renews for unlimited additional three-year terms, provided the Daewoong Agreement is not earlier terminated. The Daewoong Agreement will terminate upon written notice by either the Company or Daewoong upon a continuing default that remains uncured within 90 days (or 30 days for a payment default) by the other party, or without notice upon the bankruptcy or insolvency of the Company.

The Company has recorded $0.4 million and $0.3 million as liabilities in accrued expenses and accounts payable on the consolidated balance sheets as of December 31, 2025 and 2024, respectively, for ABP-450 supplies and analytical testing performed by Daewoong. For the years ended December 31, 2025 and 2024, the Company recorded $0.2 million and $0.3 million, respectively, of research and development expenses on the consolidated statement of operations and comprehensive (loss) income.

Legal Proceedings

The Company, from time to time, is involved in various litigation matters or regulatory encounters arising in the ordinary course of business that could result in unasserted or asserted claims or litigation. Other than as described below, the Company is not subject to any currently pending legal matters or claims that would have a material adverse effect on its accompanying financial position, results of operations or cash flows.

On September 18, 2023, Odeon Capital Group LLC (“Odeon”) filed a lawsuit against the Company in the Supreme Court of the State of New York, alleging that the Company failed to pay Odeon’s deferred underwriting fee of $1.25 million, and seeking monetary damages for the full amount of its claimed underwriting fee, punitive damages, attorneys’ fees and other amounts, totaling approximately $1.7 million, which was recorded in other accrued expenses on the consolidated balance sheets as of December 31, 2024. On October 31, 2025, the Company entered into a settlement agreement with Odeon to settle the lawsuit in exchange for $1.0 million in cash, 267,455 shares of common stock and 125,000 warrants to purchase shares of common stock with an exercise price of $2.00 and a three-year term. The Company recorded a gain on settlement of $0.4 million to selling, general and administrative expenses on the consolidated statement of operations and comprehensive (loss) income for the year ended December 31, 2025.

On November 20, 2025, Aegis Capital Corp. (“Aegis”) filed a lawsuit against the Company in the Supreme Court of the State of New York, alleging that the Company failed to honor a right of first refusal (the “ROFR”) in Aegis’s favor when AEON raised capital through a self-directed private placement in public equity (“PIPE”). In the complaint, Aegis claimed that AEON misappropriated $1.59 million by not engaging Aegis as its underwriter or bookrunner in the PIPE and seeks punitive damages and attorneys' fees. Aegis was unsuccessful in its attempts to obtain both a temporary restraining order and permanent injunction. AEON filed a motion to dismiss in January 2026, relying upon New York precedent that indicates ROFRs are not operative when a company does not engage any banking partner. Oral argument with respect to the motion to dismiss is scheduled for April 2026.

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. See Note 2 Summary of Significant Accounting Policies for additional information.