What changed in this filing

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Item 1. Financial Statements

2021-12-13 compared with 2021-09-13 · 422 added, 454 removed, 453 unchanged (66% of the section changed)

2 unchanged sentences

Condensed Balance Sheets

July 31, 2021

October 31, 2021

April 30, 2021

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shares designated;

nil and 750,000 shares issued and outstanding as of July 31,

2021 and April 30, 2021, respectively

Common stock, $0.0001

300,000,000 shares

and 67,429,525 shares issued

and outstanding as of July 31, 2021 and April 30,

2021, respectively

nil and 750,000 shares issued and outstanding as

of October 31, 2021 and April 30, 2021, respectively

Common stock, $ 0.0001 par value:

300,000,000 shares authorized;

and 67,429,525 shares issued and outstanding as of October 31, 2021 and

April 30, 2021, respectively

Additional paid-in capital

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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

The accompanying

notes are an integral part of these condensed financial statements.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Operations and Comprehensive

For the Three Months Ended July 31,

Condensed Statements of Operations

For the Three Months Ended October 31,

For the Six Months Ended October 31,

OPERATING EXPENSES

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( 1,297,946 )

OTHER INCOME (EXPENSE), NET

( 5,890,173 )

( 2,616,253 )

OTHER EXPENSE, NET

Interest expense

Interest expense - related party

Interest income - related party

Total other income (expense), net

Total other expense, net

$ ( 3,599,929 )

$ ( 1,354,097 )

$ ( 5,919,796 )

$ ( 2,670,849 )

Basic and diluted net loss per common share

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shares outstanding

The accompanying

notes are an integral part of these condensed financial statements.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’

For the Three Months Ended July 31, 2021 and

July 31, 2020

Series A Convertible

Equity (Deficit)

For the Three Months Ended October 31, 2021

A Convertible

Receivable for

Preferred Stock

Related Party

BALANCES, April 30, 2021

BALANCES, July 31, 2021

$ ( 14,883,295 )

$ ( 19,152,304 )

Stock-based compensation to employees and

Proceeds from sale of common stocks & warrants-

related party

Proceeds from stock option exercise

Proceeds from initial public offering, net of

underwriters' discounts and

commissions and issuance

costs of $ 1.46 million

Conversion of Series A convertible stock

Issuance of common

restricted stock awards

Stock-based compensation

employees and consultants

Proceeds from

( 3,599,929 )

BALANCES, July 31, 2021

October 31, 2021

$ ( 14,883,295 )

$ ( 22,752,233 )

Series A Convertible

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’

Equity (Deficit)

For the Three Months Ended October 31, 2020

A Convertible

Receivable for

Preferred Stock

BALANCES, July 31, 2020

$ ( 14,968,300 )

$ ( 13,102,621 )

Stock-based compensation

employees and consultants

Proceeds from

note receivable –

related party for common stock

Fair value of

warrants issued in

connection with convertible notes

Fair value of

warrants issued in

connection with convertible notes

-related party

( 1,354,097 )

BALANCES, October 31, 2020

$ ( 14,883,295 )

$ ( 14,456,718 )

$ ( 666,767 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

ALZAMEND NEURO, INC.

Condensed Statements of Stockholders’

Equity (Deficit)

For the Six Months Ended October 31, 2021

A Convertible

Receivable for

BALANCES, April 30,

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$ ( 16,832,437 )

Stock-based compensation to employees and

Proceeds from note receivable – related party for

Issuance of common

for restricted stock awards

Stock-based compensation

employees and consultants

Proceeds from

sale of common

stocks & warrants-related

Proceeds from

initial public

offering, net of underwriters’

discounts and commissions and

issuance costs of $ 1.5

Conversion of

convertible preferred stock

( 5,919,796 )

BALANCES, July 31, 2020

October 31, 2021

$ ( 14,883,295 )

$ ( 22,752,233 )

The accompanying

notes are an integral part of these condensed financial statements.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

ALZAMEND NEURO, INC.

Condensed Statements of Stockholders’

Equity (Deficit)

For the Six Months Ended October 31, 2020

A Convertible

Receivable for

April 30, 2020

$ ( 14,983,200 )

$ ( 11,785,869 )

compensation to

employees and consultants

Proceeds from

note receivable –

related party for common stock

Fair value of

warrants issued in

connection with convertible notes

Fair value of

warrants issued in

connection with convertible notes

- related party

( 2,670,849 )

October 31, 2020

$ ( 14,883,295 )

$ ( 14,456,718 )

$ ( 666,767 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Cash Flows

For the Three Months Ended July 31,

For the Six Months Ended October 31,

Cash flows from operating activities:

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Interest expense - debt discount

Non-cash consulting expense from issuance of common stock

Interest expense - debt discount, related party

Stock-based compensation to employees and consultants

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Proceeds from stock option exercise

Proceeds from notes payable

Advances from related party payable

Proceeds from note payable

Proceeds from note receivable for common stock – related party

Proceeds from convertible note payable

Proceeds from convertible note payable, related party

Proceeds from initial public offering, net of underwriters' discounts and

commissions and issuance costs

from initial public offering, net of underwriters' discounts

and commissions and issuance costs

Net cash provided by financing activities

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Non-cash financing activities:

Fair value of warrants issued in connection with IPO

Fair value of warrants issued in connection with March 2021 securities purchase agreement,

Fair value of warrants issued in connection with initial public offering

Fair value of warrants issued in connection with convertible notes payable,

related party

The accompanying

notes are an integral part of these condensed financial statements.

Fair value of warrants issued in connection with convertible notes payable

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

Notes to Condensed Financial Statements

Notes to Unaudited Condensed Financial Statements

DESCRIPTION OF BUSINESS

Alzamend Neuro, Inc.

“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” or “Alzamend”), is an early clinical-stage biopharmaceutical company focused on developing

novel products for the treatment of neurodegenerative diseases and psychiatric disorders.

Company’s primary focus is Alzheimer’s disease (“Alzheimer’s”).

With two current and future product

candidates, Alzamend aims to bring treatments and/or potential 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.

(the “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 with 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

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”).

all its efforts towards research and development of its Technology.

The Company has not generated any product revenue to date.

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”.

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 2,875,000

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, LLC (“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.

of the IPO, all of the Company’s outstanding shares of Series A convertible preferred stock (the “Series A Preferred Shares”)

were converted into 15,000,000 shares of Common Stock.

LIQUIDITY AND GOING CONCERN

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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

As of October 31, 2021, the Company had

cash of $ 13.6 million and an accumulated deficit of $22.8 million.

The Company incurred losses for the three and six months ended October

31, 2021 totaling $ 3.6 million and $ 5.9 million , respectively.

Historically, the Company has financed its operations principally through

issuances of promissory notes and equity securities.

The Company expects

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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.

management believes that the Company’s cash and cash equivalents at October 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

SIGNIFICANT ACCOUNTING POLICIES

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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

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

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highly liquid investments with a remaining maturity of three months or less when purchased to be cash equivalents.

As of July 31, 2021

As of October 31, 2021

and April 30, 2021, the Company had no cash equivalents.

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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:

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:

Quoted prices in

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Company uses significantly different assumptions or estimates, the Company’s stock-based compensation could be materially different.

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.

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

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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.

As described above under the caption “Warrants,” the Company classifies warrants to purchase

Common Stock as either equity instruments, derivative liabilities, or liabilities depending on the specific terms of the warrant agreement.

In circumstances in which

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Beneficial Conversion Feature.

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 amount allocated to the convertible debt results in an effective per share conversion price less than the fair value of the 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 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 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 .

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.

over the expected term of the convertible notes pursuant to ASC 835, Interest .

Loss per Common Share

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260, Earnings per Share .

Basic loss per share is computed by dividing loss available to common shareholders

Basic loss per share is computed by dividing loss available to common stockholders

by the weighted-average number of common shares outstanding.

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in the issuance of Common Stock that then shared in the earnings of the entity.

There are no differences between net loss and comprehensive

Since the effects of outstanding

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been excluded from the computation of loss per common share:

For the Three Months Ended July 31,

Series A convertible preferred stock

For the Six Months Ended October 31,

Series A preferred shares

Stock options (1)

Convertible notes

(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.

(1) The Company has excluded 5,500,000 stock options, with an exercise price of $0.0004, from

its anti-dilutive securities as these shares have been included in the 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

Recent Accounting

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of this standard had no material impact on its financial statements and related disclosures.

In June 2018, the FASB issued

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

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for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

Company adopted ASU 2018-13 as of July 31, 2021.

Adoption of this standard had no material impact on its financial statements and related

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

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.

Company adopted ASU 2018-13 as of May 1, 2021.

Adoption of this standard had no material impact on the Company’s 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.

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

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financial statements.

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.

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 .

NOTE RECEIVABLE FOR COMMON STOCK, RELATED PARTY

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.

At October 31, 2021 and April 30, 2021, the outstanding balance of the note receivable was $ 14,883,295 .

PREPAID EXPENSES AND OTHER CURRENT ASSETS

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current assets are as follows:

July 31, 2021

October 31, 2021

April 30, 2021

Prepaid consulting fees

Prepaid insurance

Other prepaid expenses

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Total prepaid expenses and other current assets

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

Prepaid consulting fees of $ 396,000 consisted of payments to Spartan and TAMM Net.

On June 14, 2021, the Company

purchased D&O insurance for 12 months in the amount of $ 855,000 .

Prepaid insurance at October 31, 2021 represents the unamortized

portion of annual premium paid for this policy of $ 584,000 .

At October 31, 2021, prepaid consulting fees of $ 327,000 consisted of payments

to Spartan Capital Securities, LLC (“Spartan Capital”).

STOCK-BASED COMPENSATION

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On April 30, 2016, the Company’s

shareholders approved the Company’s 2016 Stock Incentive Plan (the “Plan”).

stockholders 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,

maximum of 12,500,000 shares of 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

On March 1, 2019 the Company’s stockholders approved an additional 7,500,000 shares to be available for issuance

under the Plan.

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2021 Stock Incentive

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.

In February 2021, the Company’s

board of directors (the “Board”) 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

The maximum number of shares of the Company’s common stock that may be issued under the 2021 Plan is 10,000,000 shares,

The maximum number of shares of 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

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has valued the options at their date of grant utilizing the Black Scholes option pricing model.

As of the issuance of these options,

As of the date of issuance of these options,

there was not an active public market for the Company’s shares.

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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

these obligations by issuing shares of 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:

activity for the six months ended October 31, 2021, is presented below:

Outstanding Options

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Options exercised

( 2,000,000 )

Options cancelled/forfeited

Balance at July 31, 2021

Balance at October 31, 2021

Options vested and expected to vest at April 30, 2021

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their options.

There have been 250,000 options exercised and 300,000 options cancelled, respectively, during the three months ended July

Stock options granted

to employees and consultants

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,

stock options granted to employees and consultants during the six months ended October 31, 2021 and 2020, were calculated using the Black-Scholes

option-pricing model using the following assumptions:

For the Six Months Ended October 31,

Expected term (in years)

65.80 % - 72.35 %

Risk-free interest rate

1.01 % – 1.07 %

1.52 % - 2.36 %

Dividend yield

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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 ,

employees and consultants from stock option grants for the six months ended October 31, 2021 and 2020 were $ 2,020,000 and $ 1,160,000 ,

respectively.

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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

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.

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 of 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

Due to the significant risks and uncertainties associated with FDA approvals, as of October 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 granted 4,250,000

performance- and market-contingent awards to certain key employees and a director.

These grants were made outside of the Plan.

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

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.

the event any of 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

October 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.

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.

On March 23, 2021, the

Company issued performance-based stock options to the certain team members at TAMM Net, Inc.

to purchase an aggregate of 450,000

shares of 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% vest upon completion of Phase I of AL002 by December 31, 2022.

As of October 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

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this milestone.

Due to the significant risks and uncertainties associated with achieving the completion of Phase I for AL002, as of July

Due to the significant risks and uncertainties associated with achieving the completion of Phase I for AL002, as of October

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.

Performance Contingent

Stock Options Granted to Consultants

On October 14, 2021, the Company

issued performance-based stock options to two consultants to purchase an aggregate of 200,000 shares of Common Stock

with an exercise price of $2.42 per share, of which 50,000 vest upon completion of each of the Phase II clinical trials of AL001 for a

Bipolar indication, AL001 for a PTSD indication, AL001 for a depression indication and AL002 for an Alzheimer’s indication.

As of October 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 Phase II of AL001 and AL002.

Stock-Based Compensation

The Company’s results

of operations include expenses relating to stock-based compensation as follows :

For the Three Months Ended July 31,

of operations include expenses relating to stock-based compensation for three and six months ended October 31, 2021 and 2020, was comprised

For the Three Months Ended October 31,

For the Six Months Ended October 31,

Research and development

General and administrative

As of July 31, 2021, total

As of October 31, 2021, total

unamortized stock-based compensation expense related to unvested employee and non-employee awards that are expected to vest was $ 6.0 million.

The weighted-average period over which such stock-based compensation expense will be recognized is approximately 2.1 years.

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

During the six months ended

October 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.

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.

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 Common Stock, require settlement in shares and

would be classified as equity under ASC 815.

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.

Food and Drug Administration a

“Study May Proceed” letter for a Phase Ia study under the Company’s Investigational New Drug application for

Based on the achievement of this milestone, the Company sold an additional 1,333,333

shares of Common Stock to DPL for $ 2

million, or $ 1.50

per share, and issued to DPL warrants to acquire 666,667 shares of Common Stock with an exercise price of $ 3.00

per share (see Note 8).

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 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 :

$ 1.00 - $ 6.25

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,

Common stock price

$ 8.74 - $ 10.09

information about Common Stock warrants outstanding at October 31, 2021:

$ 1.00 - $ 6.25

The estimated fair value of warrants granted during

the six months ended October 31, 2021 and 2020, were calculated using the Black-Scholes option-pricing model using the following assumptions:

For the Six Months Ended October 31,

Expected term (in years)

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0.87 % - 0.90 %

0.27 % - 0.28 %

Dividend yield

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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.

$ 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.

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.

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).

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 prior advances and the surrender for cancellation of a $50,000 convertible promissory

note held by Ault Global Holdings, Inc (“Ault Global“), for an aggregate of 2,666,667 shares of Common Stock.

terms of the securities purchase agreement, DPL (i) purchased an additional 1,333,333 shares of Common Stock upon approval of the

IND for Phase Ia clinical trials for AL001 for a purchase price of $2 million, and (ii) will purchase 2,666,667 shares of Common Stock upon the completion of these Phase Ia clinical trials for AL001 for a purchase price of $4

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 October 31, 2021 .

In May 2021, the Board

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 750,000 shares of the Company’s Series A Preferred

Shares 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

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 Henry Nisser will remain a member of the Company’s Board 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 .

Ault will hold

the position of Founder and Chairman Emeritus and, as such, have the right to nominate an observer to the Board 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

Ault under which he will provide strategic advisory and consulting services to the Company in consideration for annual fees

of $ 50,000 .

COMMITMENTS AND CONTINGENCIES

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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.

entered into a Standard Exclusive License Agreement for AL002 with Sublicensing Terms with Licensor, pursuant to which 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

on net sales of products developed from the licensed technology, the Company is required to pay milestone payments on the due dates to

the licensor for the license of the technology, as follows:

Original AL001 License:

Completed September 2019

Pre-IND meeting

6 months from the June 30, 2021 IND filing date

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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

If the Company fails to meet

a milestone by its specified date, the licensor may terminate the license agreement.

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 Licensor

remains the owner of any equity securities of the Company.

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.

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:

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 Licensor and the University of South Florida.

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.

Additionally, the Company is required to pay milestone payments on the due

dates to Licensor for the license of the technology, as follows:

Additional AL001 Licenses:

Completed September 2019

Pre-IND meeting

December 31, 2022

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First commercial sale

CONVERTIBLE NOTES

In February 2021, the Company

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and original issue discount of $ 46,000 .

As of July 31, 2021, the convertible note is presented net of unamortized debt discount of $ 7,975 .

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.

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.

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.

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).

EQUITY TRANSACTIONS

Company is authorized to issue 10,000,000 shares

of Preferred Stock $ 0.0001 par value.

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.

As of October 31, 2021, the convertible promissory note is presented net of unamortized debt discount

TRANSACTION S

Company is authorized to issue 10,000,000 shares of Preferred Stock $ 0.0001 par value.

The Board has designated 1,360,000 shares as 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 Board 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 Shares

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.

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 .

of the IPO, all of the outstanding Series A Preferred Shares were converted into 15,000,000 shares of Common Stock.

As of October 31,

2021, there were no Series A Preferred Shares and no other shares of Preferred Stock issued or outstanding.

On April 30, 2019, the Company

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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

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.

6 unchanged sentences

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

million in prior advances and the surrender for cancellation of a $ 50,000

convertible promissory note held by Ault Global, 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 .

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.

(i) purchased an additional 1,333,333 shares of Common Stock upon approval by the FDA of the Company’s IND for its Phase Ia

clinical trials for AL001 for a purchase price of $2 million, and (ii) will purchase 2,666,667 shares of Common

Stock upon the completion of these Phase Ia clinical trials for AL001 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 .

Finally, the Company agreed

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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.

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.

The Company has evaluated

subsequent events through the date the financial statements were issued.

The Company has determined that there are no such events that

warrant disclosure or recognition in the condensed consolidated financial statements presented herein

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements