Alzamend Neuro, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS Alzamend Neuro, Inc. Condensed Balance Sheets (Unaudited) July 31, 2021 April 30, 2021 ASSETS CURRENT ASSETS Cash $ 15,618,162 $ 1,929,270 Prepaid expenses and other current assets 1,199,489 983,320 TOTAL CURRENT ASSETS 16,817,651 2,912,590 TOTAL ASSETS $ 16,817,651 $ 2,912,590 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 1,072,548 $ 503,593 Related party payable 60,749 60,749 Convertible notes, net 340,098 335,303 TOTAL CURRENT LIABILITIES 1,473,395 899,645 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY Convertible Preferred stock, $ 0.0001 par value: 10,000,000 shares authorized; Series A Convertible Preferred Stock, $ 0.0001 stated value per share, 1,360,000 shares designated; nil and 750,000 shares issued and outstanding as of July 31, 2021 and April 30, 2021, respectively - 75 Common stock, $0.0001 par value: 300,000,000 shares authorized; 86,887,858 and 67,429,525 shares issued and outstanding as of July 31, 2021 and April 30, 2021, respectively 8,689 6,743 Additional paid-in capital 49,371,166 33,721,859 Note receivable for common stock – related party ( 14,883,295 ) ( 14,883,295 ) Accumulated deficit ( 19,152,304 ) ( 16,832,437 ) TOTAL STOCKHOLDERS’ EQUITY 15,344,256 2,012,945 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 16,817,651 $ 2,912,590 The accompanying notes are an integral part of these condensed financial statements. 3 Alzamend Neuro, Inc. Condensed Statements of Operations and Comprehensive Loss (Unaudited) For the Three Months Ended July 31, 2021 2020 OPERATING EXPENSES Research and development $ 916,408 $ 308,846 General and administrative 1,389,831 1,009,461 Total operating expenses 2,306,239 1,318,307 Loss from operations ( 2,306,239 ) ( 1,318,307 ) OTHER INCOME (EXPENSE), NET Interest expense ( 13,628 ) ( 151 ) Interest income - related party - 1,706 Total other income (expense), net ( 13,628 ) 1,555 NET LOSS $ ( 2,319,867 ) $ ( 1,316,752 ) Basic and diluted net loss per common share $ ( 0.03 ) $ ( 0.02 ) Basic and diluted weighted average common shares outstanding 84,588,492 72,262,858 The accompanying notes are an integral part of these condensed financial statements. 4 Alzamend Neuro, Inc. Condensed Statements of Stockholders’ Equity For the Three Months Ended July 31, 2021 and July 31, 2020 (Unaudited) Series A Convertible Additional Note Receivable for Preferred Stock Common Stock Paid-In Common Stock Accumulated Shares Amount Shares Amount Capital Related Party Deficit Total BALANCES, April 30, 2021 750,000 $ 75 67,429,525 $ 6,743 $ 33,721,859 $ ( 14,883,295 ) $ ( 16,832,437 ) $ 2,012,945 Stock-based compensation to employees and consultants - - - - 739,622 - - 739,622 Proceeds from sale of common stocks & warrants- related party - - 1,333,333 133 1,999,867 - - 2,000,000 Proceeds from stock option exercise - - 250,000 25 75 - - 100 Proceeds from initial public offering, net of underwriters' discounts and commissions and issuance costs of $ 1.46 million - - 2,875,000 288 12,911,168 - - 12,911,456 Conversion of Series A convertible stock ( 750,000 ) ( 75 ) 15,000,000 1,500 ( 1,425 ) - - - Net loss - - - - - - ( 2,319,867 ) ( 2,319,867 ) BALANCES, July 31, 2021 - $ - 86,887,858 $ 8,689 $ 49,371,166 $ ( 14,883,295 ) $ ( 19,152,304 ) $ 15,344,256 Series A Convertible Additional Note Receivable for Preferred Stock Common Stock Paid-In Common Stock Accumulated Shares Amount Shares Amount Capital Related Party Deficit Total BALANCES, April 30, 2020 750,000 $ 75 64,762,858 $ 6,476 $ 27,584,227 $ ( 14,983,200 ) $ ( 11,785,869 ) $ 821,709 Stock-based compensation to employees and consultants - - - - 506,011 - - 506,011 Proceeds from note receivable – related party for common stock - - - - 14,900 - 14,900 Net loss - - - - - - ( 1,316,752 ) ( 1,316,752 ) BALANCES, July 31, 2020 750,000 $ 75 64,762,858 $ 6,476 $ 28,090,238 $ ( 14,968,300 ) $ ( 13,102,621 ) $ 25,868 The accompanying notes are an integral part of these condensed financial statements. 5 Alzamend Neuro, Inc. Condensed Statements of Cash Flows (Unaudited) For the Three Months Ended July 31, 2021 2020 Cash flows from operating activities: Net loss $ ( 2,319,867 ) $ ( 1,316,752 ) Adjustments to reconcile net loss to net cash used in operating activities: Interest expense - debt discount 4,795 - Non-cash consulting expense from issuance of common stock - 85,422 Stock-based compensation to employees and consultants 739,622 506,011 Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 216,169 ) 346,529 Accounts payable and accrued expenses 568,955 173,694 Net cash used in operating activities ( 1,222,664 ) ( 205,096 ) Cash flows from investing activities: Proceeds from repayments of notes receivable - related party - 100,915 Net cash provided by investing activities - 100,915 Cash flows from financing activities: Proceeds from the issuance of common stock and warrants - related party, net 2,000,000 - Proceeds from stock option exercise 100 - Proceeds from notes payable - 62,110 Proceeds from convertible note payable, related party - 14,900 Proceeds from initial public offering, net of underwriters' discounts and commissions and issuance costs 12,911,456 - Net cash provided by financing activities 14,911,556 77,010 Net increase (decrease) in cash 13,688,892 ( 27,171 ) Cash at beginning of period 1,929,270 90,285 Cash at end of period $ 15,618,162 $ 63,114 Supplemental disclosures of cash flow information: Non-cash financing activities: Fair value of warrants issued in connection with IPO $ 461,877 $ - Fair value of warrants issued in connection with March 2021 securities purchase agreement, related party $ 4,799,742 $ - The accompanying notes are an integral part of these condensed financial statements. 6 Alzamend Neuro, Inc. Notes to Condensed Financial Statements 1. DESCRIPTION OF BUSINESS Organization Alzamend Neuro, Inc. (the “Company” or “Alzamend”), is an early clinical-stage biopharmaceutical company focused on developing novel products for the treatment of neurodegenerative diseases and psychiatric disorders. The Company’s primary focus is Alzheimer’s disease (“Alzheimer’s” or “AD”). With two current and future product candidates, Alzamend aims to bring treatments or cures to market as quickly as possible. The Company’s current pipeline consists of two novel therapeutic drug candidates (collectively, the “Technology”): (i) a patented ionic cocrystal technology delivering a therapeutic combination of lithium, proline and salicylate, known as AL001 or LiProSal, through two royalty-bearing exclusive worldwide licenses from the University of South Florida Research Foundation, Inc., as licensor, and (ii) a patented method using a mutant peptide sensitized cell as a cell-based therapeutic vaccine that seeks to restore the ability of a patient’s immunological system to combat Alzheimer’s, known as AL002 or CA022W, through a royalty-bearing exclusive worldwide license from the same licensor. The Company is devoting substantially all its efforts towards research and development of its Technology and raising capital. The Company has not generated any product revenue to date. The Company has financed its operations to date primarily through debt financings and through the sale of its common stock, par value $ 0.0001 per share (the “Common Stock”). The Company expects to continue to incur net losses in the foreseeable future. Initial Public Offering On June 14, 2021, the Company’s registration statement on Form S-1 (File No. 333-255955) for its initial public offering of common stock (“IPO”) was declared effective by the Securities and Exchange Commission (“SEC”). On June 15, 2021, the Company issued and sold 2,500,000 shares of common stock and full exercise of the underwriter’s over-allotment option to purchase 375,000 additional shares of common stock in the IPO at a public offering price of $ 5.00 per share, resulting in net proceeds of $ 12.9 million after deducting underwriting discounts and commissions and offering expenses paid by the Company. Digital Power Lending (“DPL”), a California limited liability company and a related party, purchased 2,000,000 of the Company’s IPO shares on June 15, 2021. The Company’s common stock is listed on The Nasdaq Capital Market under the ticker symbol “ALZN”. In connection with the closing of the IPO, all of the Company’s outstanding shares of Series A Convertible Preferred Stock were converted into 15,000,000 shares of Common Stock. 2. LIQUIDITY AND GOING CONCERN The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern. As of July 31, 2021, the Company had cash of $ 15.6 million and an accumulated deficit of $ 19.2 million . The Company has incurred losses for the three months ended July 31, 2021 totaling $ 2.3 million . Historically, the Company has financed its operations principally through issuances of promissory notes and equity securities. The Company expects to continue to incur losses for the foreseeable future and needs to raise additional capital until it is able to generate revenues from operations sufficient to fund its development and commercial operations. However, based on the Company’s current business plan, management believes that the Company’s cash and cash equivalents at July 31, 2021, are sufficient to meet the Company’s anticipated cash requirements during the twelve-month period subsequent to the issuance of the financial statements included in this Quarterly Report. 7 3. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the Securities and Exchange Commission applicable to interim reports of companies filing as a smaller reporting company. These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Report on Form 10-K for the year ended April 30, 2021, filed with the SEC on July 29, 2021. In the opinion of management, the accompanying condensed interim financial statements include all adjustments necessary in order to make the financial statements not misleading. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year or any other future period. Certain notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Company’s Report on Form 10-K have been omitted. The accompanying condensed balance sheet at April 30, 2021 has been derived from the audited balance sheet at April 30, 2021 contained in such Form 10-K. Accounting Estimates The preparation of financial statements, in conformity with U.S. GAAP, 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. The Company’s critical accounting policies that involve significant judgment and estimates include share-based compensation, warrant valuation, and valuation of deferred income taxes. Actual results could differ from those estimates Cash and Cash Equivalents The Company considers all highly liquid investments with a remaining maturity of three months or less when purchased to be cash equivalents. As of July 31, 2021 and April 30, 2021, the Company had no cash equivalents. Fair Value of Financial Instruments The Company’s financial instruments are accounts payable, related party payable and convertible notes. The recorded values of accounts payable approximate their fair values based on their short-term nature. The recorded values of related party payable and convertible notes party are recorded at their carrying value, net of any unamortized debt discount, which approximates their fair value based on their short-term nature and as interest rates approximate market rates. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement , defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last is considered unobservable: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 assumptions: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including liabilities resulting from imbedded derivatives associated with certain warrants to purchase Common Stock. The fair values of warrants are determined using the Black-Scholes valuation model, a “Level 3” fair value measurement, based on the estimated fair value of Common Stock, volatility based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities, the expected life based on the remaining contractual term of the conversion option and warrants and the risk free interest rate based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the warrants’ contractual life. 8 Research and Development Expenses Research and development costs are expensed as incurred. Research and development costs consist of scientific consulting fees and lab supplies, as well as fees paid to other entities that conduct certain research and development activities on behalf of the Company. The Company has acquired and may continue to acquire the rights to develop and commercialize new product candidates from third parties. The upfront payments to acquire license, product or rights, as well as any future milestone payments, are immediately recognized as research and development expense provided that there is no alternative future use of the rights in other research and development projects. Stock-Based Compensation The Company recognizes stock-based compensation expense for stock options on a straight-line basis over the requisite service period and account for forfeitures as they occur. The Company’s stock-based compensation costs are based upon the grant date fair value of options estimated using the Black-Scholes option pricing model. To the extent any stock option grants are made subject to the achievement of a performance-based milestone, management evaluates when the achievement of any such performance-based milestone is probable based on the relative satisfaction of the performance conditions as of the reporting date. The Black-Scholes option pricing model utilizes inputs which are highly subjective assumptions and generally require significant judgment. Certain of such assumptions involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and the Company uses significantly different assumptions or estimates, the Company’s stock-based compensation could be materially different. Warrants The Company accounts for stock warrants as either equity instruments, derivative liabilities, or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”) , depending on the specific terms of the warrant agreement. Debt Issued with Warrants The Company considers guidance within ASC 470-20, Debt (“Subtopic 470-20”), ASC 480, and ASC 815 when accounting for the issuance of convertible debt with detachable warrants. As described above under the caption “Warrants,” the Company classifies stock warrants as either equity instruments, derivative liabilities, or liabilities depending on the specific terms of the warrant agreement. In circumstances in which debt is issued with equity-classified warrants, the proceeds from the issuance of convertible debt are allocated to the warrants and convertible debt based on their relative estimated fair value. The fair value of equity warrants is recorded as a discount to the convertible debt with a corresponding increase to additional paid-in capital. The debt discount is amortized as interest expense using the effective interest method. Embedded Derivatives. The Company considers whether there are any embedded features in debt instruments that require bifurcation and separate accounting as derivative financial instruments pursuant to ASC 815. Beneficial Conversion Feature. If the amount allocated to the convertible debt results in an effective per share conversion price less than the fair value of the Company’s common stock on the commitment date, the intrinsic value of this beneficial conversion feature is recorded as a discount to the convertible debt with a corresponding increase to additional paid-in capital. The beneficial conversion feature discount is equal to the difference between the effective conversion price and the fair value of the Company’s common stock at the commitment date, unless limited by the remaining proceeds allocated to the debt. At issuance, the effective conversion price of the Company’s convertible notes payable were not deemed to be below the estimated fair value of the Company’s common stock, and, as a result, no beneficial conversion feature was recorded. The Company accounts for debt as liabilities measured at amortized cost and amortizes the resulting debt discount to interest expense using the effective interest method over the expected term of the Notes pursuant to ASC 835, Interest . 9 Comprehensive Loss Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. There have been no items qualifying as other comprehensive loss, and, therefore, comprehensive loss for the periods reported was comprised solely of the Company’s net loss. Loss per Common Share The Company utilizes FASB ASC Topic No. 260, Earnings per Share . Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted loss per common share reflects the potential dilution that could occur if convertible preferred stock, options and warrants were to be exercised or converted or otherwise resulted in the issuance of Common Stock that then shared in the earnings of the entity. There are no differences between net loss and comprehensive loss. Since the effects of outstanding options, warrants and convertible preferred stock are anti-dilutive in the periods presented, shares of Common Stock underlying these instruments have been excluded from the computation of loss per common share. The following sets forth the number of shares of Common Stock underlying outstanding convertible preferred stock, options, warrants, and convertible notes that have been excluded from the computation of loss per common share: For the Three Months Ended July 31, 2021 2020 Series A convertible preferred stock - 15,000,000 Stock options (1) 17,950,000 16,175,000 Warrants 8,830,785 6,652,035 Convertible notes 232,049 - 27,012,834 37,827,035 (1) The Company has excluded 7,250,000 stock options, with an exercise price of $ 0.0004 , from its anti-dilutive securities as these shares have been included in our determination of basic loss per share as they represent shares issuable for little or no cash consideration upon the satisfaction of certain conditions pursuant to ASC 260-10-45-14 Reclassifications Certain prior period amounts have been reclassified for comparative purposes to conform to the current period financial statement presentation. These reclassifications had no effect on previously reported results of operations. Recent Accounting Standards From time to time, new accounting pronouncements are issued by the FASB and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective are not expected to have a material impact on the Company’s financial position or results of operations upon adoption. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, (“ASU 2018-13”). The amendments modify the disclosure requirements in Topic 820 to add disclosures regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty. Certain disclosure requirements in Topic 820 are also removed or modified. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Certain of the amendments are to be applied prospectively while others are to be applied retrospectively. The Company adopted ASU 2018-13 as of May 1, 2020. Adoption of this standard had no material impact on its financial statements and related disclosures. 10 In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting , (“ASU 2018-07”). ASU 2018-07 simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under ASU 2018-07, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The changes take effect for public companies for fiscal years starting after Dec. 15, 2018, including interim periods within that fiscal year. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations. In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted ASU 2018-13 as of July 31, 2021. Adoption of this standard had no material impact on its financial statements and related disclosures. In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) . This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock. As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods therein. Adoption is either a modified retrospective method or a fully retrospective method of transition. The adoption of this standard on May 1, 2021 did not have a material impact on the Company’s financial position or results of operations. The Company has considered all other recently issued accounting standards and does not believe the adoption of such standards will have a material impact on its financial statements. 4. NOTE RECEIVABLE, RELATED PARTY, NET On April 10, 2018, Avalanche International Corp., a related party (“Avalanche”), issued a promissory note (the “AVLP Note”) to the Company pursuant to which the Company agreed to provide Avalanche a loan of up to $ 995,500 for the period ending on April 30, 2019, subject to the terms and conditions stated in the AVLP Note. The AVLP Note accrues interest at 10 % per annum and includes a 10 % original issue discount. The balance outstanding on the AVLP Note as of April 30, 2020, was $ 100,915 . During the month of July 2020, the principal and accrued interest on the AVLP Note was paid in full. In accordance with ASC No. 310, Receivables (“ASC 310”), the Company accounted for the AVLP Note at amortized cost, which represented the amount at which the promissory note was acquired, adjusted for accrued interest and accretion of original issue discount. Interest was accreted using the effective interest method. The Company recorded interest on an accrual basis and recognized it as earned in accordance with the contractual terms of the promissory note. The original issue discount of $ 90,500 was amortized as interest income through the maturity date. On April 30, 2019, the Company and Ault Life Sciences Fund, LLC (“ALSF”) entered into a securities purchase agreement for the purchase of 10,000,000 shares of the Company’s common stock for a total purchase price of $ 15,000,000 , or $1.50 per share with 5,000,000 warrants with a 5 -year life and an exercise price of $ 3.00 per share and vesting upon issuance. The total purchase price of $15,000,000 was in the form of a non-interest bearing note receivable with a 12-month term from ALSF, a related party. In November 2019, the term of the note receivable was extended to December 31, 2021, and in May 2021, the term of the note receivable was extended to December 31, 2023. The note is secured by a pledge of the purchased shares. As the note receivable from ALSF is related to the issuance of common stock, it is recorded as an offset to additional paid-in capital. As of July 31, 2021, the outstanding balance of the note receivable was $ 14,883,295 . 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets are as follows: July 31, 2021 April 30, 2021 Prepaid consulting fees $ 396,667 $ 966,260 Other prepaid expenses 786,612 850 Other receivables 16,210 16,210 Total prepaid expenses and other current assets $ 1,199,489 $ 983,320 11 On June 14, 2021, the Company purchased D&O insurance for 12 months in the amount of $ 855,000 . Other prepaid expenses at July 31, 2021 represents the unamortized portion of annual premium paid for this policy. Prepaid consulting fees of $ 396,000 consisted of payments to Spartan and TAMM Net. 6. STOCK-BASED COMPENSATION 2016 Stock Incentive Plan On April 30, 2016, the Company’s shareholders approved the Company’s 2016 Stock Incentive Plan (the “Plan”). The Plan provides for the issuance of a maximum of 12,500,000 shares of the Company’s Common Stock to be offered to the Company’s directors, officers, employees, and consultants. On March 1, 2019 the Company’s shareholders approved an additional 7,500,000 shares to be available for issuance under the Plan. Options granted under the Plan have an exercise price equal to or greater than the fair value of the underlying Common Stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. The options expire between five and 10 years from the date of grant. Restricted stock awards granted under the Plan are subject to a vesting period determined at the date of grant. 2021 Stock Incentive Plan In February 2021, the Board of Directors adopted, and the stockholders approved, the Alzamend Neuro, Inc. 2021 Stock Incentive Plan (the “2021 Plan”). The 2021 Plan authorizes the grant to eligible individuals of (1) stock options (incentive and non-statutory), (2) restricted stock, (3) stock appreciation rights, or SARs, (4) restricted stock units, and (5) other stock-based compensation. Stock Subject to the 2021 Plan. The maximum number of shares of the Company’s common stock that may be issued under the 2021 Plan is 10,000,000 shares, which number will be increased to the extent that compensation granted under the 2021 Plan is forfeited, expires or is settled for cash (except as otherwise provided in the 2021 Plan). Substitute awards (awards made or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company that the Company acquires or any subsidiary of the Company or with which the Company or any subsidiary combines) will not reduce the shares authorized for grant under the 2021 Plan, nor will shares subject to a substitute award be added to the shares available for issuance or transfer under the 2021 Plan. All options that the Company grants are granted at the per share fair value on the grant date. Vesting of options differs based on the terms of each option. The Company has valued the options at their date of grant utilizing the Black Scholes option pricing model. As of the issuance of these options, there was not an active public market for the Company’s shares. Accordingly, the fair value of the underlying options was determined based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options as calculated using the simplified method. The expected life of the options used was based on the contractual life of the option granted. Stock-based compensation is a non-cash expense because the Company settles these obligations by issuing shares of the Company’s Common Stock from its authorized shares instead of settling such obligations with cash payments. A summary of stock option activity for the three months period from May 1, 2021 to July 31, 2021, is presented below: Outstanding Options Weighted Weighted Average Shares Average Remaining Aggregate Available for Number of Exercise Contractual Intrinsic Grant Options Price Life (years) Value Balance at April 30, 2021 10,450,000 19,550,000 $ 0.7195 5.92 $ 35,159,500 Options granted ( 1,500,000 ) 1,500,000 $ 2.9167 Options exercised - ( 250,000 ) $ 0.0004 Options cancelled/forfeited 300,000 ( 300,000 ) $ 1.5000 Balance at July 31, 2021 9,250,000 20,500,000 $ 0.8812 6.03 $ 72,647,100 Options vested and expected to vest at April 30, 2021 18,500 $ 0.8684 6.52 $ 65,797,100 Options exercisable at April 30, 2021 13,460,519 $ 0.5298 5.84 $ 52,431,944 The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e., the difference between the estimated fair value on the respective date and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their options. There have been 250,000 options exercised and 300,000 options cancelled, respectively, during the three months ended July 31, 2021. 12 Stock options granted to employees and consultants The estimated fair value of stock options granted to employees and consultants during the three months ended July 31, 2021 and July 31, 2020, were calculated using the Black-Scholes option-pricing model using the following assumptions : For the Three Months Ended July 31, 2021 2020 Expected term (in years) 2.50 - 5.00 2.50 - 6.25 Volatility 86.31 % 65.80 % - 72.35 % Risk-free interest rate 1.01 % - 1.07 % 1.52 % - 2.36 % Dividend yield 0.0 % 0.0 % Expected Term: The expected term represents the period that the options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term). Expected Volatility: The Company uses an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company does not have trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available. Risk-Free Interest Rate: The Company based the risk-free interest rate over the expected term of the options based on the constant maturity rate of U.S. Treasury securities with similar maturities as of the date of the grant. Expected Dividend: The Company has not paid and does not anticipate paying any dividends in the near future. Therefore, the expected dividend yield was zero. Stock-based compensation to employees and consultants from stock option grants for the three months ended July 31, 2021 and July 31, 2020 were $ 740,000 and $ 591,000 , respectively. Performance-contingent stock options granted to employee In November 2018, the Board of Directors granted 2,000,000 performance-contingent options under the Plan to the Chief Executive Officer. These options have an exercise price of $ 1.00 per share. These options have two separate performance triggers for vesting based upon the therapies achieving certain Food and Drug Administration (“FDA”) approval milestones within a specified timeframe. By definition, the performance condition in these options can only be achieved after the performance condition of FDA approval has been achieved. As such, the requisite service period is based on the estimated period over which the market condition can be achieved. When a performance goal is deemed to be probable of achievement, time-based vesting and recognition of stock-based compensation expense commences. In the event any the milestones are not achieved by the specified timelines, such vesting award will terminate and no longer be exercisable with respect to that portion of the shares. The maximum potential expense associated with the performance-contingent awards is $ 1.2 million of general and administrative expense if all of the performance conditions are achieved as stated in the option agreement. Due to the significant risks and uncertainties associated with FDA approvals, as of July 31, 2021, the Company believes that the achievement of the requisite performance conditions is not probable and, as a result, no compensation cost has been recognized for these awards. On November 26, 2019, the Board of Directors granted 4,250,000 performance- and market-contingent awards to certain key employees and a director. These grants were made outside of the Plan. These awards have an exercise price of $ 1.50 per share. These awards have multiple separate market triggers for vesting based upon either (i) the successful achievement of stepped target closing prices on a national securities exchange for 90 consecutive trading days later than 180 days after the Company’s IPO for its common stock, or (ii) stepped target prices for a change in control transaction. The target prices range from $15 per share to $40 per share. In the event any the stock price milestones are not achieved within three years, the unvested portion of the performance options will be reduced by 25%. Due to the significant risks and uncertainties associated with achieving the market-contingent awards, as of July 31, 2021 , the Company believes that the achievement of the requisite performance conditions is not probable and, as a result, no compensation cost has been recognized for these awards. 13 Performance-contingent stock options granted to TAMM Net On March 23, 2021, the Company issued performance-based stock options to the certain team members at Tamm Net to purchase an aggregate of 450,000 shares of the Company’s common stock at a per share exercise price of $ 1.50 per share, of which 50% vest upon the completion of Phase I of AL001 by March 31, 2022 and the remaining 50% shall vest upon completion of Phase I of AL002 by December 31, 2022. As of July 31, 2021, the Company believes the performance goal of completing Phase I of AL001 will be achieved on or before March 31, 2022. The Company is recognizing stock compensation related to the completion of Phase I of AL001 by March 31, 2022 over the implied service period expected to complete this milestone. Due to the significant risks and uncertainties associated with achieving the completion of Phase I for AL002, as of July 31, 2021 , the Company believes that the achievement of the requisite performance conditions is not probable and, as a result, no compensation cost has been recognized for these awards related to AL002. Stock-based compensation expense The Company’s results of operations include expenses relating to stock-based compensation as follows : For the Three Months Ended July 31, 2021 2020 Research and development $ 141,917 $ 21,813 General and administrative 597,705 569,620 Total $ 739,622 $ 591,433 As of July 31, 2021, total unamortized stock-based compensation expense related to unvested employee and non-employee awards that are expected to vest was $ 6.5 million . The weighted-average period over which such stock-based compensation expense will be recognized is approximately 2.2 years. 7. WARRANTS During the three months ended July 31, 2021, the Company issued warrants to purchase an aggregate of 727,917 shares of Common Stock at exercise prices ranging from $ 3.00 to $ 6.25 per share. (i) On June 17 2021, the Company issued a warrant to purchase an aggregate of 61,250 shares of Common Stock at an exercise price equal to $ 6.25 per share of Common Stock in connection with the IPO. Based on the terms of the Company’s warrant agreement, the Company accounted for the warrant as an equity instrument as the warrant is indexed to the Company’s Common Stock, require settlement in shares and would be classified as equity under ASC 815. (ii) On July 28, 2021 the Company received from the U.S. Food and Drug Administration a “Study May Proceed” letter for a Phase Ia study under the Company’s Investigational New Drug application for AL001. Based on the achievement of this milestone, the Company sold an additional 1,333,333 shares of its common stock to DPL for $ 2 million , or $ 1.50 per share, and issued to DPL warrants to acquire 666,667 shares of the Company’s common stock with an exercise price of $ 3.00 per share. Based on the terms of the Company’s warrant agreement, the Company accounted for the warrant as equity instrument as the warrant is indexed to the Company’s Common Stock, require settlement in shares and would be classified as equity under ASC 815. The following table summarizes information about Common Stock warrants outstanding at July 31, 2021 : Outstanding Exercisable Weighted Average Weighted Weighted Remaining Average Average Exercise Number Contractual Exercise Number Exercise Price Outstanding Life (years) Price Exercisable Price $ 1.00 500,000 2.6 $ 1.00 500,000 $ 1.00 $ 1.75 175,672 3.3 $ 1.75 175,672 $ 1.75 $ 3.00 8,093,863 3.4 $ 3.00 8,093,863 $ 3.00 $ 6.25 61,250 4.9 $ 6.25 61,250 $ 6.25 $ 1.00 - $ 6.25 8,830,785 3.3 $ 2.88 8,830,785 $ 2.88 14 The estimated fair value of warrants granted during the three months ended July 31, 2021 and July 31, 2020, were calculated using the Black-Scholes option-pricing model using the following assumptions : For the Three Months Ended July 31, 2021 2020 Common stock price $ 8.74 - $ 10.09 $ 1.00 - $ 1.50 Expected term (in years) 5.00 2.50 Volatility 86.31 % 69.35 % Risk-free interest rate 0.87 % - 0.90 % 2.53 % Dividend yield 0.0 % 0.0 % Expected Term: The expected term represents the period that the warrants granted are expected to be outstanding. Expected Volatility: The Company uses an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company does not have trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available. Risk-Free Interest Rate: The Company based the risk-free interest rate over the expected term of the warrants based on the constant maturity rate of U.S. Treasury securities with similar maturities as of the date of the grant. Expected Dividend: The Company has not paid and does not anticipate paying any dividends in the near future. Therefore, the expected dividend yield was zero. 8. OTHER RELATED PARTY TRANSACTIONS In August 2020, the Company entered into a securities purchase agreement with Ault Global to sell a convertible promissory note in the principal amount of $ 50,000 and issue a five-year warrant to purchase 16,667 shares of the Company’s Common Stock. The convertible promissory note bears interest at 8 % per annum, which principal and all accrued and unpaid interest are due six months after the date of issuance. The principal and interest earned on the convertible promissory note may be converted into shares of Common Stock at $ 1.50 per share. The exercise price of the warrant is $ 3.00 per share. The convertible note was cancelled for shares of Common Stock received pursuant to the March 2021 securities purchase agreement with DPL described below. In December 2020 and February 2021, Ault Global provided $ 800,000 and $ 1,000,000 , respectively, in short-term advances to the Company for working capital needs. The $ 1.8 million obligation related to the short-term advances was satisfied with shares of Common Stock received pursuant to the March 2021 securities purchase agreement with DPL described below In March 2021, the Company entered into a securities purchase agreement with DPL pursuant to which the Company agreed to sell an aggregate of 6,666,667 shares of Common Stock for an aggregate of $ 10 million , or $1.50 per share, which sales will be made in tranches. On March 9, 2021, DPL paid $4 million, less the $1.8 million in advances and the surrender for cancellation of a $50,000 convertible promissory note held by Ault Global, each as described below, for an aggregate of 2,666,667 shares of Common Stock. Under the terms of the securities purchase agreement, DPL purchased an additional (i) 1,333,333 shares of Common Stock upon approval of the IND for Phase Ia clinical trials for a purchase price of $2 million, and (ii) will purchase 2,666,667 shares of the Company’s Common Stock upon the completion of these Phase Ia clinical trials for a purchase price of $4 million. As of the date this Quarterly Report, the first milestones related to FDA approval of IND for Phase Ia clinical trial. The Company further agreed to issue to DPL warrants to purchase a number of shares of Common Stock equal to 50% of the shares of Common Stock purchased under the securities purchase agreement at an exercise price of $3.00 per share. Finally, the Company agreed that for a period of 18 months following the date of the payment of the final tranche of $4 million, DPL will have the right to invest an additional $10 million on the same terms, except that no specific milestones have been determined with respect to the additional $10 million as of July 31, 2021 . In May 2021, the Board of Directors of the Company and Mr. Milton C. Ault, the Company’s current Founder and Chairman Emeritus, agreed to certain arrangements with regard to Board composition and other matters. Contemporaneously with the effectiveness of the IPO, and in consideration for (i) the conversion of 750 shares of the Company’s series A convertible preferred stock beneficially owned by Mr. Ault through Ault Life Sciences, Inc. into 15,000,000 shares of Common Stock, (ii) the extension of the maturity date of the note in the original principal amount of $15,000,000 issued to the Company by Ault Life Sciences Fund, LLC, an entity controlled by Mr. Ault, to December 31, 2023, and (iii) the resignation by Mr. Ault as a director and executive officer of the Company , the Board agreed that William B. Horne will become Chairman of the Board and remain in that position for so long as Mr. Ault beneficially owns no less than 5 % of the outstanding shares of Common Stock (for which Mr. Horne will be paid $ 50,000 per year for his services), and Mr. Henry Nisser will remain a member of our Board of Directors for so long as Mr. Ault beneficially owns no less than 5% of the outstanding shares of Common Stock (for no additional remuneration). Additionally, Mr. Ault will hold the position of Founder and Chairman Emeritus and, as such, have the right to nominate an observer to the Board of Directors for a period of five years after the closing date of the IPO. Following the closing of the IPO, the Company entered into a five-year consulting agreement with Mr. Ault under which he will provide strategic advisory and consulting services to the Company in consideration for annual fees of $ 50,000 . 15 9. COMMITMENTS AND CONTINGENCIES Contractual Obligations On May 1, 2016, the Company entered into a Standard Exclusive License Agreement for AL002 with Sublicensing Terms with the University of South Florida Research Foundation, Inc., as licensor, pursuant to which the licensor granted the Company a royalty bearing exclusive worldwide license limited to the field of Alzheimer’s Immunotherapy and Diagnostics, under United States Patent No. 8,188,046, entitled “Amyloid Beta Peptides and Methods of Use,” filed April 7, 2009 and granted May 29, 2012. In addition to royalty payments of 4 % on net sales of products developed from the licensed technology, the Company was required to pay a license fee of $ 100,000 on June 25, 2016, and December 31, 2016. As an additional licensing fee for the license of the AL001 technologies, the licensor received 2,227,923 shares of the Common Stock. Additionally, the Company is required to pay milestone payments on the due dates to the licensor for the license of the technology, as follows: Schedule of payment and due date to the licensor for the license Original AL001 License: Payment Due Date Event $ 50,000 Completed September 2019 Pre-IND meeting $ 65,000 6 months from the June 30, 2021 IND filing date IND application filing $ 190,000 12 months from the June 30, 2021 IND filing date Upon first dosing of patient in a clinical trial $ 500,000 12 months from first patient dosing Upon Completion of first clinical trial $ 1,250,000 12 months from completion of the first Phase II clinical trial Upon first patient treated in a Phase III clinical trial $ 10,000,000 8 years from the effective date of the agreement Upon FDA approval AL002 License: Payment Due Date Event $ 50,000 Upon IND application filing Upon IND application filing $ 50,000 12 months from IND application filing date Upon first dosing of patient in first Phase I clinical trial $ 175,000 12 months from first patient dosed in Phase I Upon completion of first Phase I clinical trial $ 500,000 24 months from completion of first Phase I clinical trial Upon completion of first Phase II clinical trial $ 1,000,000 12 months from completion of the first Phase II clinical trial Upon first patient treated in a Phase III clinical trial $ 10,000,000 7 years from the effective date of the agreement Upon FDA BLA approval The Company has met the Pre-IND meeting and IND application filing milestones encompassing AL001. If the Company fails to meet a milestone by its specified date, the licensor may terminate the license agreement. The licensor was also granted a preemptive right to acquire such shares or other equity securities that may be issued from time to time by the Company while the licensor remains the owner of any equity securities of the company. 16 There are certain license fees and milestone payments required to be paid pursuant to the terms of the Standard Exclusive license agreements with Sublicensing Terms, both effective July 2, 2018, (the “AL001 license agreements”) with the licensor and the University of South Florida. In addition, a royalty payment of 3% is required pursuant to License #18110 while License #1811 requires a royalty payment of 1.5% on net sales of products developed from the licensed technology. For the two AL001 licenses, in the aggregate, the Company was required to pay initial license fees of $50,000 no later than July 31, 2018, and $150,000 no later than October 31, 2018. As an additional licensing fee, the licensor is entitled to receive that number of shares of the Company’s common stock equal to 3% of the sum of the total number of issued and outstanding shares. Additionally, the Company is required to pay milestone payments on the due dates to the licensor for the license of the technology, as follows: Additional AL001 Licenses: Payment Due Date Event $ 30,000 Completed September 2019 Pre-IND meeting $ 50,000 December 31, 2022 IND application filing $ 150,000 12 months from IND filing date Upon first dosing of patient in a clinical trial $ 400,000 12 months from first patient dosing Upon Completion of first clinical trial $ 1,000,000 36 months from completion of the first Phase II clinical trial Upon first patient treated in a Phase III clinical trial $ 8,000,000 8 years from the effective date of the agreement First commercial sale 10. CONVERTIBLE NOTES In February 2021, the Company entered into a securities purchase agreement with an institutional investor to sell a Convertible Promissory Note in the aggregate principal amount of $ 348,073 for a purchase price of $ 331,498 . The purchase price of the February 2021 Convertible Promissory Note satisfies the principal and accrued interest of the August 2020 and December 2020 Convertible Promissory Notes with the same institutional investor. Since the terms of the February 2021 Convertible Promissory Note were not substantially different from the August 2020 and December 2020 Convertible Promissory Notes, no gain or loss was recognized as a result of this debt issuance. The Convertible Promissory Note bears interest at 10 % per annum, which principal and all accrued and unpaid interest are due on December 31, 2021. The principal and interest earned on the Convertible Promissory Note may be converted into shares of Common Stock at $ 1.50 per share. The fair value of equity warrants was recorded as a discount to the convertible promissory note with a corresponding increase to additional paid-in capital. The Company computed the estimated fair value of the warrants using the Black-Scholes option pricing model and, as a result of this calculation, recorded debt discount in the amount of $ 16,575 based on the estimated fair value of the warrants. The risk-free rate of 0.27 % was derived from the U.S. Treasury yield curve, matching the term of the warrant, in effect at the measurement date. The volatility factor of 103.7 % was determined based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities. In aggregate, the Company recorded debt discount in the amount of $ 136,816 based on the fair values of the warrants and original issue discount of $ 45,575 . As of July 31, 2021, the convertible note is presented net of unamortized debt discount of $ 7,975 . 11. NOTE PAYABLE In May 2020, the Company received loan proceeds in the amount of $ 62,110 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after the earlier of (i) 24 weeks after the loan disbursement date and (ii) December 31, 2020 as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels . In December 2020, the Company met the conditions and received forgiveness of the $ 62,110 principal amount of the loan and $ 308 of accrued interest payable. The company derecognized the debt under ASC 470, in accordance with the guidance in ASC 405-20, Liabilities: Extinguishments of Liabilities , recognized in the income statement as a gain on extinguishment of debt. 17 12. CONVERTIBLE NOTE – RELATED PARTY In August 2020, the Company entered into a securities purchase agreement with Ault Global to sell a convertible promissory note in the aggregate principal amount of $ 50,000 and issue a 5 -year warrant to purchase 16,667 shares of Common Stock. The convertible promissory note bears interest at 8 % per annum, which principal and all accrued and unpaid interest are due six months from the date of issuance. The principal and interest earned on the convertible promissory note may be converted into shares of the Company’s Common Stock at $ 1.50 per share any time on or after the maturity date. The exercise price of the warrant is $ 3.00 per share. The fair value of the equity warrant was recorded as a discount to the convertible promissory note with a corresponding increase to additional paid-in capital. The Company computed the estimated fair value of the warrants using the Black-Scholes option pricing model and, as a result of this calculation, recorded debt discount in the amount of $ 14,300 based on the estimated fair value of the warrants. The risk-free rate of 0.28 % was derived from the U.S. Treasury yield curve, matching the term of the warrant, in effect at the measurement date. The volatility factor of 103.7 % was determined based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities. The convertible promissory note was cancelled in March 2021 pursuant to a securities purchase agreement with DPL (see Note 8). 13. EQUITY TRANSACTIONS The Company is authorized to issue 10,000,000 shares of Preferred Stock $ 0.0001 par value. The Board of Directors has designated 1,360,000 shares as Series A Convertible Preferred Stock (the “Series A Preferred Shares”). The rights, preferences, privileges and restrictions on the remaining authorized 8,640,000 shares of Preferred Stock have not been determined. The Company’s Board of Directors is authorized to create a new series of preferred shares and determine the number of shares, as well as the rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred shares. Series A Preferred Stock The Series A Preferred Shares convey no dividend rights except as may be declared by the Board in its sole and absolute discretion, out of funds legally available for that purpose . Holders of Series A Preferred Shares are entitled to fifty (50) non-cumulative votes per share on all matters presented to the Company’s stockholders for action . Holders of Series A Preferred Shares have the right to convert their shares into shares of Common Stock at any time at a conversion rate equal to twenty (20) shares of Common Stock for every one (1) Series A Preferred Share . The conversion rate is not subject to anti-dilution adjustments. In connection with the closing of the IPO, all of the Company’s outstanding shares of Series A Convertible Preferred Stock were converted into 15,000,000 shares of common stock. As of July 31, 2021, there were no shares of Series A Preferred Shares and no other shares of Preferred Stock issued or outstanding. Common Stock On May 27, 2016, the Company’s Board of Directors approved a Certificate of Amendment to the Company’s Certificate of Incorporation increasing its authorized shares of Common Stock from 150,000,000 to 300,000,000 . On April 30, 2019, the Company and ALSF entered into a SPA for the purchase of 10,000,000 shares of Common Stock for a total purchase price of $ 15,000,000 , or $ 1.50 per share with 5,000,000 warrants with a 5 -year life and an exercise price of $ 3.00 per share and vesting upon issuance. The total purchase price of $ 15,000,000 was in the form of a non-interest bearing note receivable with a 12-month term from ALSF, a related party. The note is secured by a pledge of the purchased shares. Pursuant to the SPA, ALSF is entitled to full ratchet anti-dilution protection, most-favored nation status, denying the Company the right to enter into a variable rate transaction absent its consent, a right to participate in any future financing the Company may consummate and to have all the shares of Common Stock to which it is entitled under the SPA registered under the Securities Act within 180 days of the final closing of an initial public offering. In May 2021, the term of the note receivable was extended to December 31, 2023. The note is secured by a pledge of the purchased shares. In March 2021, the Company entered into a securities purchase agreement with DPL pursuant to which the Company agreed to sell an aggregate of 6,666,667 shares of Common Stock for an aggregate of $ 10 million , or $ 1.50 per share, which sales will be made in tranches. On March 9, 2021, DPL paid $ 4 million , less the $ 1.8 million in advances and the surrender for cancellation of a $ 50,000 convertible promissory note held by Ault Global, each as described below, for an aggregate of 2,666,667 shares of Common Stock. Under the terms of the securities purchase agreement, DPL purchased an additional (i) 1,333,333 shares of Common Stock upon approval by the FDA of our IND for our Phase Ia clinical trials for a purchase price of $2 million, and (ii) will purchase 2,666,667 shares of the Company’s Common Stock upon the completion of these Phase Ia clinical trials for a purchase price of $4 million. The Company further agreed to issue to DPL warrants to purchase a number of shares of Common Stock equal to 50% of the shares of Common Stock purchased under the securities purchase agreement at an exercise price of $3.00 per share . 18 On July 28, 2021 the Company received from the U.S. Food and Drug Administration a “Study May Proceed” letter for a Phase Ia study under the Company’s Investigational New Drug application for AL001. Based on the achievement of this milestone, the Company sold an additional 1,333,333 shares of its common stock to DPL for $ 2 million , or $ 1.50 per share, and issued to DPL warrants to acquire 666,667 shares of the Company’s common stock with an exercise price of $3.00 per share. Finally, the Company agreed that for a period of 18 months following the date of the payment of the final tranche of $ 4 million , DPL will have the right to invest an additional $ 10 million on the same terms, except that no specific milestones have been determined with respect to the additional $ 10 million as of the date of this Quarterly Report. 14. SUBSEQUENT EVENTS The Company contracted Altasciences to conduct a six-month Phase I relative bioavailability study for AL001 for dementia related to Alzheimer’s disease that started on September 10, 2021. The Phase I first-in-human study is for the purpose of determining potential clinically safe and appropriate dosing for AL001 in future studies. AL001 is a lithium-delivering ionic cocrystal under development as an oral treatment for patients with dementia related to mild, moderate and severe cognitive impairment associated with Alzheimer’s disease. 19