What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-12-13 compared with 2021-09-13 · 387 added, 243 removed, 227 unchanged (74% of the section changed)

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

read the following management’s discussion and analysis of financial condition and results of operations in conjunction with our

unaudited condensed financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our

audited financial statements and related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results

of Operations included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or the SEC, on July 29, 2021.

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following management’s

discussion and analysis of financial condition and results of operations in conjunction with our unaudited condensed financial statements

and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related

notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report

on Form 10-K, filed with the Securities and Exchange Commission, or the SEC, on July 29, 2021.

NOTE ABOUT FORWARD-LOOKING STATEMENTS

19 unchanged sentences

and “us” refer to Alzamend Neuro, Inc., a Delaware corporation.

We were incorporated on February

26, 2016 as Alzamend Neuro, Inc.

We were incorporated on

February 26, 2016 as Alzamend Neuro, Inc.

under the laws of the State of Delaware.

We were formed to acquire and commercialize patented intellectual

property and know-how to prevent, treat and cure the crippling and deadly Alzheimer’s.

Existing Alzheimer’s treatments only

temporarily relieve symptoms but do not slow or halt the underlying worsening of the disease.

We have developed a novel approach in an

attempt to combat Alzheimer’s through immunotherapy.

We were formed to acquire and commercialize

patented intellectual property and know-how to prevent, treat and potentially cure the crippling and deadly Alzheimer’s.

Existing Alzheimer’s treatments only temporarily relieve symptoms but do not slow or halt the underlying worsening of the

We have developed a novel approach in an attempt to combat Alzheimer’s through immunotherapy.

Critical Accounting Policies and Estimates

22 unchanged sentences

· Fair Value of Common Stock.

See the subsection titled “– Common Stock Valuations” below.

See the subsection titled “Common Stock Valuations”

· Risk-Free Interest Rate.

The risk-free interest rate is based on the U.S.

Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.

zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.

· Expected Volatility.

Because we do not have an extensive trading history for our common stock, the expected volatility was estimated based on the average volatility for comparable publicly traded life sciences companies over a period equal to the expected term of the stock option grants.

The comparable companies were chosen based on the similar size, stage in life cycle or area of specialty.

We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available.

Because we do not have an extensive trading history for our Common

Stock, the expected volatility was estimated based on the average volatility for comparable publicly traded life sciences companies over

a period equal to the expected term of the stock option grants.

The comparable companies were chosen based on the similar size, stage

in life cycle or area of specialty.

We will continue to apply this process until a sufficient amount of historical information regarding

the volatility of our own stock price becomes available.

· Expected Term.

The expected term represents the period that the stock-based awards 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), as we do not have sufficient historical data to use any other method to estimate expected term.

The expected term represents the period that the stock-based awards

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), as we do not have sufficient historical data to use any other method to estimate expected term.

· Expected Dividend Yield.

We have never paid dividends on our common stock and have no plans to pay dividends on our common stock.

We have never paid dividends on our Common Stock and have no plans

to pay dividends on our Common Stock.

Therefore, we used an expected dividend yield of zero.

4 unchanged sentences

Common Stock Valuations.

to our IPO in June 2021, there was no public market for our common stock, and, as a result, the fair value of the shares of common stock

underlying our share-based awards was estimated on each grant date by our Board of Directors.

To determine the fair value of our common

stock underlying option grants, our Board of Directors considered, among other things, input from management, and our Board of Directors’

assessment of additional objective and subjective factors that it believed were relevant, and factors that may have changed from the date

of the most recent valuation through the date of the grant.

These factors included, but were not limited to:

Prior to our IPO in June 2021, there was no public market for our Common

Stock, and, as a result, the fair value of the shares of Common Stock underlying our share-based awards was estimated on each grant date

by our Board.

To determine the fair value of our Common Stock underlying option grants, our Board considered, among other things, input

from management, and our Board’s assessment of additional objective and subjective factors that it believed were relevant, and factors

that may have changed from the date of the most recent valuation through the date of the grant.

These factors included, but were not limited

· our results of operations and financial position, including our levels of available capital resources;

2 unchanged sentences

· our business conditions and projections;

the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as recently completed mergers and acquisitions of peer companies;

· the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as

recently completed mergers and acquisitions of peer companies;

· the lack of marketability of our Common Stock as a private company;

· the prices at which we sold shares of our Common Stock to outside investors in arms-length transactions;

the likelihood of achieving a liquidity event for our security holders, such as an IPO or a sale of our company, given prevailing market conditions;

· the likelihood of achieving a liquidity event for our security holders, such as an IPO or a sale of our

company, given prevailing market conditions;

· trends and developments in our industry;

· external market conditions affecting the life sciences and biotechnology industry sectors.

Following the closing of our IPO, our Board of Directors determined

the fair market value of our common stock based on the closing price of our common stock as reported on the date of grant.

Following the closing of our IPO, our Board determined the fair market

value of our Common Stock based on the closing price of our Common Stock as reported on the date of grant.

Plan of Operations

plan of operations is currently focused on the development of both our therapeutic candidates which are at different stages of development.

We submitted an IND application for AL001 to the FDA on June 30, 2021.

On July 28, 2021, we announced receipt of FDA study may proceed

letter for a Phase I study under our Investigational New Drug application for AL001, a lithium-based ionic cocrystal oral therapy for

patients with dementia related to mild, moderate, and severe cognitive impairment associated with Alzheimer’s disease.

Our plan of operations is currently focused on the development of both

our therapeutic candidates which are at different stages of development.

We submitted an Investigational New Drug (“IND”)

application for AL001 to the FDA on June 30, 2021.

On July 28, 2021, we announced receipt of FDA “Study May Proceed” letter

for a Phase I study under our IND application for AL001, a lithium-based ionic cocrystal oral therapy for patients with dementia related

to mild, moderate, and severe cognitive impairment associated with Alzheimer’s.

On August 17, 2021, we

announced that we have contracted Altasciences to conduct a six-month Phase I relative bioavailability study for AL001 for dementia related

to Alzheimer’s beginning in September 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.

The Phase I study will investigate the pharmacokinetics (the movement of drug

through the body) of lithium following a single dose of AL001 (the “study drug”) compared to a typical single dose of a marketed

300 mg immediate-release lithium carbonate capsule (the “comparator” – currently indicated to treat mood disorders)

in healthy male and female subjects.

The lithium and salicylate components of AL001 will be given within the amounts already approved

for use in patients.

The purpose of the research study is to test the safety, tolerability, and bioavailability (how much and when drug

gets in the body) of the study drug, AL001, compared to the currently marketed formulation of the comparator, lithium carbonate.

is expected to ascertain what AL001 doses should be given, and how often, in subsequent Phase 2 safety and efficacy trials involving Alzheimer’s

At least 24 healthy male and female human subjects will complete the Phase I trial.

On September 13, 2021, we announced that the first group of healthy

participants have been dosed in a six-month Phase I relative bioavailability study for AL001 for dementia related to Alzheimer’s.

We recently announced that we anticipate receiving topline data from this study in mid to late December 2021.

At this time, we will receive

a summary of demographic data, the data for the primary endpoint and a summary of safety data.

A full report of the Phase I first-in-human

study will be completed in March 2022.

The Phase 1 study is for the purpose of determining potential clinically safe and appropriate dosing

for AL001 in a planned Phase 2 multiple ascending dose study.

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.

We have an additional preclinical

5 unchanged sentences

an immunoglobulin analysis and biodistribution study.

On July 30, 2021, we announced

that we submitted a pre-IND meeting request for AL002 and supporting briefing documents to the Center for Biological Evaluation and Research

Food and Drug Administration.

AL002 is 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.

In November 2018, we adopted

a Charter for our Scientific Advisory Board and have appointed two members, Dr.

Thomas Wisniewski (Director of the NYU Pearl I.

Center for Memory Evaluation and Treatment) and Dr.

Eric McDade (Associate Director of the Dominantly Inherited Alzheimer Network Trials

Unit (“DIAN-TU”)).

The Scientific Advisory Board members have clinical specializations, including extensive experience with

Alzheimer’s and other neurological diseases.

We intend to rely on this advisory group of experts to help guide our therapies through

the related scientific and manufacturing initiatives.

On September 30, 2021, we

announced that we have received a written response to our meeting request relating to our Type B Pre- IND application from the FDA providing

a path for our planned clinical development of AL002.

AL002 is 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.

work supports AL002 being associated with a positive anti-inflammatory response and a decrease in brain amyloid contents.

Based on AL002’s

positive toxicology results, the biologic nature of this product and the urgent need to deliver treatments for Alzheimer’s to patients,

we proposed, and the FDA agreed, to conduct a combined Phase 1/2 study.

We recently announced

that the FDA’s agreement to us conducting a combined Phase 1/2 study, together with our process to identify the right manufacturing

partner to provide our study drug materials for the Phase 1/2 study, has extended the timeline for when we anticipate filing the IND,

which is now expected to be done in the second quarter of 2022, and we plan to initiate the clinical trial of AL002 as soon as possible

after the approval of the IND by the FDA.

The continuation of our current

7 unchanged sentences

Results of Operations

Three Months Ended July 31, 2021 Compared to Three Months Ended

July 31, 2020

Results of Operations for the Three Months Ended October 31,

2021 and 2020

The following table summarizes

the results of our operations for the three months ended July 31, 2021 and July 31, 2020.

For the Three Months Ended July 31,

the results of our operations for the three months ended October 31, 2021 and 2020.

For the Three Months Ended October 31,

OPERATING EXPENSES

3 unchanged sentences

Loss from operations

OTHER INCOME (EXPENSE), NET

OTHER EXPENSE, NET

Interest expense

Interest income - related party

Total other income (expense), net

Interest expense - related party

Total other expense, net

$ (3,599,929 )

2 unchanged sentences

Basic and diluted net loss per common share

Basic and diluted weighted average

common shares outstanding

Basic and diluted weighted average common shares outstanding

*Not meaningful

We were formed on February

26, 2016 to acquire and commercialize patented intellectual property and know-how to prevent, treat and cure the crippling and deadly

disease, Alzheimer’s.

We currently have only two product candidates, AL001 and AL002.

These products are in the preclinical stage

of development and will require extensive clinical study, review and evaluation, regulatory review and approval, significant marketing

efforts and substantial investment before either or both of them, and any respective successors, will provide us with any revenue.

did not generate any revenues during the three months ended July 31, 2021 and July 31, 2020, respectively, and we do not anticipate that

we will generate revenue for the foreseeable future.

We were formed on February 26, 2016 to acquire and commercialize patented

intellectual property and know-how to prevent, treat and cure the crippling and deadly disease, Alzheimer’s.

We currently have only

two product candidates, AL001 and AL002.

These products are in the preclinical stage of development and will require extensive clinical

study, review and evaluation, regulatory review and approval, significant marketing efforts and substantial investment before either or

both of them, and any respective successors, will provide us with any revenue.

We did not generate any revenues during the three months

ended October 31, 2021 and 2020, and we do not anticipate that we will generate revenue for the foreseeable future.

General and Administrative Expenses

General and administrative

expenses for the three months ended July 31, 2021 and July 31, 2020 were $1.4 million and $1.0 million, respectively.

As reflected in

the table below, general and administrative expenses primarily consisted of the following expense categories:

stock compensation expense,

professional fees, as well as salaries and benefits.

The remaining general and administrative expenses of $303,000 and $148,000, respectively,

primarily consisted of payments for advertising and promotion, transfer agent fees, travel, and other office expenses, none of which is

significant individually.

For the Three Months Ended July 31,

expenses for the three months ended October 31, 2021 and 2020 were $1.8 million and $823,000, respectively.

As reflected in the table

below, general and administrative expenses primarily consisted of the following expense categories:

stock compensation expense, professional

fees, insurance, as well as salaries and benefits.

For the three months ended October 31, 2021 and 2020, the remaining general and administrative

expenses of $64,000 and ($1,000), respectively, primarily consisted of payments for advertising and promotion, transfer agent fees, license

fees, travel, and other office expenses, none of which is significant individually.

For the Three Months Ended October 31,

Stock compensation expense

3 unchanged sentences

Total general and administrative expenses

*Not meaningful

Stock Compensation Expense

During the three months ended

July 31, 2021 and July 31, 2020, we incurred general and administrative stock compensation expense of $598,000 and $570,000, respectively,

related to stock option grants to executives, employees and consultants as well as shares issued for services to Spartan Capital.

option grants are granted at the per share fair value on the grant date.

During the three months ended October 31, 2021 and 2020, we incurred

general and administrative stock compensation expense of $1.2 million and $547,000, respectively, related to stock option grants to executives,

employees and consultants as well as shares issued for services to Spartan Capital.

All option grants are granted at the per share fair

value on the grant date.

Vesting of options differs based on the terms of each option.

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

We valued the shares issued for services

at their intrinsic value on the date of issuance.

Stock-based compensation is a non-cash expense because we settle these obligations by

issuing shares of our common stock from authorized shares instead of settling such obligations with cash payments.

We valued the options at their date of grant utilizing

the Black Scholes option pricing model.

We valued the shares issued for services at their intrinsic value on the date of issuance.

compensation is a non-cash expense because we settle these obligations by issuing shares of Common Stock from authorized shares instead

of settling such obligations with cash payments.

Professional Fees

1 unchanged sentence

of our general and administrative expenses is professional fees.

During the three months ended July 31, 2021 and July 31, 2020, we reported

professional fees of $300,000 and $178,000, respectively, which are principally comprised of the following items:

Three Months Ended July 31, 2021

In June 2017, we entered into a five-year consulting agreement with Spartan Capital pursuant to which Spartan Capital has agreed to provide consulting services with respect to general corporate matters, including, but not limited to, advice and input with respect to raising capital, potential merger and acquisition transactions, identifying suitable personnel for management, developing corporate structure and finance strategies, assisting us with strategic introductions, assisting management with enhancing corporate and shareholder value and introducing us to potential investors.

In December 2017, since the maximum amount was raised in the prior private placement, we paid to Spartan Capital a consulting fee of $1.4 million for the services to be rendered over the 60-month term of this consulting agreement.

During the three months ended July 31, 2021, we recorded an expense of $70,000 as a result of this consulting agreement.

In June 2019, we entered into an uplisting agreement with Spartan Capital pursuant to which Spartan Capital has agreed to provide consulting services with respect to an IPO, merger, acquisition or sale of stock or assets, joint venture, strategic alliance or other similar transaction.

We paid to Spartan Capital a consulting fee of $475,000 and issued Spartan 500,000 shares of our common stock for the services to be rendered over the 24-month term of the uplisting agreement.

Expenses were fully amortized at year ended April 30, 2021.

The uplisting agreement was terminated on March 3, 2021.

During the three months ended July 31, 2021, we incurred $114,000 in regulatory filing services, $79,000 in audit fees and $29,000 in legal fees.

Three Months Ended July 31, 2020

In June 2017, we entered into a five-year consulting agreement with Spartan Capital pursuant to which Spartan Capital agreed to provide consulting services with respect to general corporate matters, including, but not limited to, advice and input with respect to raising capital, potential merger and acquisition transactions, identifying suitable personnel for management, developing corporate structure and finance strategies, assisting us with strategic introductions, assisting management with enhancing corporate and shareholder value and introducing us to potential investors.

In December 2017, since the maximum amount was raised in a prior private placement, we paid to Spartan Capital a consulting fee of $1.4 million for the services to be rendered over the five-year term of this consulting agreement.

During the three months ended July 31, 2020, we recorded an expense of $70,000 in connection with this consulting agreement.

In June 2019, we entered into a two-year uplisting agreement with Spartan Capital pursuant to which Spartan Capital agreed to provide consulting services with respect to a potential public offering.

Compensation under this agreement consisted of a cash payment in the amount of $475,000 and the issuance of 500,000 shares of our common stock.

During the three months ended October 31, 2021 and 2020, we reported

professional fees of $232,000 and $166,000, respectively, which were principally comprised of the following items:

Three Months Ended October 31, 2021

· In June 2017, we entered into a five-year consulting agreement with Spartan Capital pursuant to

which Spartan Capital agreed to provide consulting services with respect to general corporate matters.

In December 2017, we paid to

Spartan Capital a consulting fee of $1.4 million for the services to be rendered over the 60-month term of this consulting

During the three months ended October 31, 2021, we recorded an expense of $70,000 as a result of this consulting

· During the three months ended October 31, 2021, we incurred $45,000 in audit fees, $39,000 in legal fees,

$24,000 in Board fees, and $19,000 in related party consulting.

Three Months Ended October 31, 2020

· During the three months ended October 31, 2020, we recorded an expense of $70,000 in connection with the

five-year consulting agreement with Spartan Capital.

· In June 2019, we entered into a two-year uplisting agreement (the “Uplisting

Agreement”) with Spartan Capital pursuant to which Spartan Capital agreed to provide consulting services with respect to a potential

public offering.

Compensation under this agreement consisted of a cash payment in the amount of $475,000 and the issuance of 500,000 shares

of Common Stock.

We are amortizing the cost of these services over the two-year term of the uplisting agreement.

During the three months ended July 31, 2020, we recorded an expense of $59,000 in connection with the uplisting agreement.

The uplisting agreement was terminated on March 3, 2021.

three months ended July 31, 2020, we incurred $14,000 in legal fees and $35,000 in audit fees.

During the three months

ended October 31, 2020, we recorded an expense of $59,000 in connection with the uplisting agreement.

The Uplisting Agreement was terminated

on March 3, 2021.

· During the three months ended October 31, 2020, we incurred $27,000 in audit fees and $11,000 in legal

Salaries and Benefits

During the three months ended

July 31, 2021 and July 31, 2020, we incurred $189,000 and $114,000, respectively, in employee-related expenses.

As of July 31, 2021, we

have two full-time and four part-time employees.

We appointed Stephan Jackman, who is a full-time employee, as Chief Executive Officer

as of November 30, 2018, and Lien Escalona as Chief Financial Officer in June 2021.

October 31, 2021 and 2020, we incurred $154,000 and $111,000, respectively, in employee-related expenses.

As of October 31, 2021, we had

three full-time and four part-time employees.

We appointed Stephan Jackman, who is a full-time employee, as Chief Executive Officer as

of November 30, 2018, and Lien Escalona as Chief Financial Officer in June 2021.

Nisser, our Executive Vice President and General Counsel, Kenneth S.

4 unchanged sentences

Cragun spends no less than an average of 10 hours per week on our company’s business.

In addition, Milton C.

(Todd) Ault III, our Founder and Chairman Emeritus, serves as a consultant.

Research and Development Expenses

Research and development expenses

for the three months ended July 31, 2021 and July 31, 2020, were $916,000 and $309,000, respectively.

As reflected in the table below,

research and development expenses primarily consisted of professional fees, licenses and fees, as well as stock compensation expense

for the three months ended October 31, 2021 and 2020, were $1.7 million and $475,000, respectively.

As reflected in the table below, research

and development expenses primarily consisted of professional fees, licenses and fees, as well as stock compensation expense.

For the Three Months Ended October 31,

Professional fees

6 unchanged sentences

During the three months ended

July 31, 2021 and July 31, 2020, we reported professional fees of $705,000 and $257,000, respectively, which are principally comprised

October 31, 2021 and 2020, we reported professional fees of $1.4 million and $453,000, respectively, which were principally comprised

of professional fees attributed to various types of scientific services, including FDA consulting services.

The increase relates to professional

fees incurred related to AL001 chemistry, manufacturing and controls.

fees incurred related to Phase I relative bioavailability study for AL001 for dementia related to Alzheimer’s.

Licenses and Fees

There are certain initial

license fees and milestone payments required to be paid to the University of South Florida and the USF Research Foundation, for the licenses

of the technologies, pursuant to the terms of the License Agreement with Sublicensing Terms (the “License Agreement”) with

the Licensor and a direct support organization of the University.

During the three months ended

July 31, 2021, we accrued $65,000 in license fees as we have submitted our IND application on June 30, 2021, and payment is due six (6)

months from filing date.

The next milestone we will incur license fees will be 12 months from IND filing date, upon first dosing of patient

in clinical trial.

During the three months ended

July 31, 2020, we incurred $30,000 in license fees related to achieving the milestone of conducting pre-IND discussions with the FDA regarding

There are certain initial license fees and milestone payments required

to be paid to the University of South Florida and the Licensor, for the licenses of the technologies, pursuant to the terms of the License

Agreement with Sublicensing Terms .

During the three months

ended October 31, 2021, we accrued $190,000 in license fees as a result of our first dosage of patients during the quarter ended

October 31, 2021 for the Phase I relative bioavailability study for AL001 for dementia related to Alzheimer’s.

Stock Compensation Expense

During the three months ended July 31, 2021 and July 31, 2020, we incurred

During the three months ended October 31, 2021 and 2020, we incurred

$111,000 and $22,000, respectively, in research and development stock compensation expense related to stock option grants to consultants.

3 unchanged sentences

Stock-based compensation is a non-cash

expense because we settle these obligations by issuing shares of our common stock from authorized shares instead of settling such obligations

expense because we settle these obligations by issuing shares of Common Stock from authorized shares instead of settling such obligations

with cash payments.

Other income (expense), net

Other Expense, net

Interest Expense

Interest expense was $14,000

for the three months ended July 31, 2021 related to the convertible promissory note issued in August 2020 including non-cash interest

expense of $5,000 recorded from the amortization of debt discount.

Interest expense was $16,000 for the three months ended October 31,

2021, primarily related to the convertible promissory note issued in February 2021 including non-cash interest expense of $5,000 recorded

from the amortization of debt discount.

Results of Operations for the Six Months Ended October 31,

2021 and 2020

The following table summarizes

the results of our operations for the six months ended October 31, 2021 and 2020.

For the Six Months Ended October 31,

OPERATING EXPENSES

Research and development

General and administrative

Total operating expenses

Loss from operations

OTHER EXPENSE, NET

Interest expense

Interest expense - related party

Interest expense – related

party was nil for the three months ended July 31, 2021 related to the convertible promissory note – related party issued in August

2020 as a result of the convertible promissory note was cancelled in March 2021 pursuant to a securities purchase agreement with DPL (see

Interest income - related party

During the three months ended

July 30, 2021, we did not report interest income as the principal and accrued interest on the AVLP Note was paid in full.

During the three

months ended July 30, 2020, we reported interest income, related party of $2,000 relating to a promissory note from Avalanche.

Total other expense, net

$ (5,919,796 )

$ (2,670,849 )

$ (3,248,947 )

Basic and diluted net loss per common share

Basic and diluted weighted average common shares outstanding

*Not meaningful

We were formed on February 26, 2016 to acquire and commercialize patented

intellectual property and know-how to prevent, treat and cure the crippling and deadly disease, Alzheimer’s.

We currently have only

two product candidates, AL001 and AL002.

These products are in the preclinical stage of development and will require extensive clinical

study, review and evaluation, regulatory review and approval, significant marketing efforts and substantial investment before either or

both of them, and any respective successors, will provide us with any revenue.

We did not generate any revenues during the six months

ended October 31, 2021 and 2020 and we do not anticipate that we will generate revenue for the foreseeable future.

General and Administrative Expenses

General and administrative

expenses for the six months ended October 31, 2021 and 2020 were $3.2 million and $1.8 million, respectively.

As reflected in the table

below, general and administrative expenses primarily consisted of the following expense categories:

stock compensation expense, professional

fees, insurance, as well as salaries and benefits.

For the six months ended October 31, 2021 and 2020, the remaining general and administrative

expenses of $295,000 and $147,000, respectively, primarily consisted of payments for advertising and promotion, transfer agent fees, license

fees, travel, and other office expenses, none of which is significant individually.

For the Six Months Ended October 31,

Stock compensation expense

Professional fees

Salary and benefits

Other general and administrative expenses

Total general and administrative expenses

*Not meaningful

Stock Compensation Expense

During the six months ended October 31, 2021 and 2020, we incurred

general and administrative stock compensation expense of $1.8 million and $1.1 million, respectively, related to stock option grants to

executives, employees and consultants as well as shares issued for services to Spartan Capital.

All option grants are granted at the per

share fair value on the grant date.

Vesting of options differs based on the terms of each option.

We valued the options at their date

of grant utilizing the Black Scholes option pricing model.

We valued the shares issued for services at their intrinsic value on the date

Stock-based compensation is a non-cash expense because we settle these obligations by issuing shares of Common Stock from

authorized shares instead of settling such obligations with cash payments.

Professional Fees

The second largest component

of our general and administrative expenses is professional fees.

During the six months ended October 31, 2021 and 2020, we reported professional

fees of $532,000 and $344,000, respectively, which were principally comprised of the following items:

Six Months Ended October 31, 2021

· During the six months ended October 31, 2021, we recorded an expense of $140,000 as a result of the five-year

consulting agreement with Spartan Capital.

· During the six months ended October 31, 2021, we incurred $129,000 in investor relations, $124,000 in

audit fees, $68,000 in legal fees, $24,000 in Board fees and $19,000 in related party consulting.

Six Months Ended October 31, 2020

· During the six months ended October 31, 2020, we recorded an expense of $140,000 in connection with the

five-year consulting agreement with Spartan Capital.

· During the six months ended October 31, 2020, we recorded an expense of $118,000 in connection with the

Uplisting Agreement.

The Uplisting Agreement was terminated on March 3, 2021.

· During the six months ended October 31, 2020, we incurred $61,000 in audit fees and $25,000 in legal fees.

Salaries and Benefits

During the six months ended

October 31, 2021 and 2020, we incurred $343,000 and $225,000, respectively, in employee-related expenses.

As of October 31, 2021, we had

three full-time and four part-time employees.

We appointed Stephan Jackman, who is a full-time employee, as Chief Executive Officer as

of November 30, 2018, and Lien Escalona as Chief Financial Officer in June 2021.

Nisser, our Executive Vice President and General Counsel, Kenneth S.

Cragun, our Senior Vice President of Finance, and David Katzoff,

our Chief Operating Officer, work for us on a part-time basis.

Nisser and Katzoff spend no less than an average of 8 hours per

week on our company’s business and Mr.

Cragun spends no less than an average of 10 hours per week on our company’s business.

Research and Development Expenses

Research and development expenses

for the six months ended October 31, 2021 and 2020, were $2.7 million and $784,000, respectively.

As reflected in the table below, research

and development expenses primarily consisted of professional fees, licenses and fees, as well as stock compensation expense.

For the Six Months Ended October 31,

Professional fees

Licenses and fees

Stock compensation expense

Other research and development expenses

Total research and development expenses

*Not meaningful

Professional Fees

During the six months ended

October 31, 2021 and 2020, we reported professional fees of $2.1 million and $710,000, respectively, which were principally comprised

of professional fees attributed to various types of scientific services, including FDA consulting services.

The increase relates to professional

fees incurred related to Phase I relative bioavailability study for AL001 for dementia related to Alzheimer’s.

Licenses and Fees

There are certain initial license fees and milestone payments required

to be paid to the University of South Florida and the Licensor, for the licenses of the technologies, pursuant to the terms of the License

Agreement with Sublicensing Terms.

During the six months ended

October 31, 2021, we accrued $65,000 in license fees as we have submitted our IND application on June 30, 2021.

We also accrued $190,000

in license fees as a result of our first dosage of patients for the Phase I relative bioavailability study for AL001 for dementia related

to Alzheimer’s.

Stock Compensation Expense

During the six months ended October 31, 2021 and 2020, we incurred

$253,000 and $44,000, respectively, in research and development stock compensation expense related to stock option grants to consultants.

All option grants are granted at the per share fair value on the grant date.

Vesting of options differs based on the terms of each option.

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

Stock-based compensation is a non-cash

expense because we settle these obligations by issuing shares of Common Stock from authorized shares instead of settling such obligations

with cash payments.

Other Expense, net

Interest Expense

Interest expense was $30,000 for the six months ended October 31, 2021,

primarily related to the convertible promissory note issued in February 2021 including non-cash interest expense of $10,000 recorded from

the amortization of debt discount.

Liquidity and Capital Resources

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statements have been prepared on the basis that our company will continue as a going concern.

As of July 31, 2021, we had cash of $15.6

As of October 31, 2021, we had cash of $13.6

million and an accumulated deficit of $22.8 million.

We have incurred recurring losses and reported losses for the three months ended

July 31, 2021 totaling $2.3 million.

In the past, we have financed our operations principally through issuances of promissory notes and

equity securities.

In March of 2021, the Company entered into a securities purchase agreement

with Digital Power Lending, a California limited liability company and wholly owned subsidiary of Ault Global, or DPL, pursuant to which

the Company agreed to sell an aggregate of 6,666,667 shares of its 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 the $50,000 convertible promissory note, each as described below, for an aggregate of 2,666,667 shares of our common stock.

to the securities purchase agreement, DPL purchased an additional (i) 1,333,333 shares of our common stock upon FDA approval of our IND

for our Phase Ia clinical trials for a purchase price of $2 million, and (ii) 2,666,667 shares of our common stock once we have completed

these Phase Ia clinical trials for a purchase price of $4 million.

We further agreed to issue DPL warrants to purchase a number of shares

of its 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, we agreed that for a period of eighteen 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.

On June 17, 2021 we announced

the closing of our IPO of 2,500,000 shares of our common stock and full exercise of the underwriter’s over-allotment option to purchase

375,000 additional shares of our common stock at a price to the public of $5.00 per share.

The gross proceeds from the offering to our

company, before deducting the underwriting discounts and estimated offering expenses, were approximately $14.4 million.

Our common stock

is listed on The Nasdaq Capital Market under the ticker symbol “ALZN”.

On July 28, 2021, we received

from the FDA a “Study May Proceed” letter for a Phase Ia study under our Investigational New Drug application for AL001.

on the achievement of this milestone, we 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 our common stock with an exercise price of $3.00 per share.

We have incurred recurring losses and reported losses for the three and six months

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

In the past, we have financed our operations principally

through issuances of promissory notes and equity securities.

In March of 2021, we entered into a securities purchase agreement with

DPL, pursuant to which we 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 the $50,000 convertible promissory note, previously issued to Ault Global, for an aggregate of 2,666,667 shares of

Common Stock.

Under the terms of the securities purchase agreement, DPL (i) purchased, in July 2021, an additional 1,333,333 shares of

Common Stock upon FDA approval of our IND for our Phase Ia clinical trials for AL001 for a purchase price of $2 million, and (ii) will

purchase 2,666,667 shares of Common Stock once we have completed these Phase Ia clinical trials for AL001 for a purchase price of $4 million.

We further agreed to issue 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, we agreed that for a period of eighteen 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.

On June 17, 2021 we announced the closing of our IPO of 2,875,000 shares

of Common Stock at a price to the public of $5.00 per share.

The proceeds from the offering to us, net of underwriting discounts and estimated

offering expenses, were approximately $12.9 million.

Our Common Stock is listed on The Nasdaq Capital Market under the ticker symbol “ALZN”.

We contracted Altasciences

to conduct a six-month Phase I relative bioavailability study for AL001 for dementia related to Alzheimer’s that started on September

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.

We expect to continue to incur

losses for the foreseeable future and needs to raise additional capital until we are able to generate revenues from operations sufficient

losses for the foreseeable future and need to raise additional capital until we are able to generate revenues from operations sufficient

to fund our development and commercial operations.

However, based on our current business plan, we believe that our cash and cash equivalents

at July 31, 2021, are sufficient to meet our anticipated cash requirements during the twelve-month period subsequent to the issuance of

the financial statements included in this Quarterly Report.

at October 31, 2021, are sufficient to meet our anticipated cash requirements during the twelve-month period subsequent to the issuance

of the financial statements included in this Quarterly Report.

The following table summarizes our cash flows for

the three months ended July 31, 2021:

For the Three Months Ended July 31,

the six months ended October 31, 2021:

For the Six Months Ended October 31,

Net cash provided by (used in):

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Operating Activities

During the three months ended

July 31, 2021, net cash used in operating activities was $1.2 million.

This consisted primarily of a net loss of $2.3 million, partially

offset by non-cash charges of $744,000 and an increase in our net operating assets of $353,000.

The non-cash charges primarily consisted

of stock-based compensation expense.

The increase in our net operating assets was due to an increase in accounts payable and accrued expenses,

partially offset by a decrease in prepaid expenses and other current assets.

During the three months ended July 31, 2020, net cash used in operating

activities was $205,000.

This consisted primarily of a net loss of $1.3 million, partially offset by non-cash charges of $591,000 and

an increase in our net operating assets of $520,000.

During the six months

ended October 31, 2021, net cash used in operating activities was $3.3 million.

This consisted primarily of a net loss of $5.9

million, partially offset by non-cash charges of $2.0 million and an increase in our net operating assets and liabilities of

The non-cash charges primarily consisted of stock-based compensation expense.

increase in our net operating assets was due to an increase in accounts payable and accrued expenses and an increase in prepaid expenses

and other current assets.

The increase in our net operating assets and

liabilities were due to an increase in accounts payable and accrued expenses and a decrease in prepaid expenses and other current

During the six months

ended October 31, 2020, net cash used in operating activities was $648,000.

This consisted primarily of a net loss of $2.7 million,

partially offset by non-cash charges of $1.2 million and an increase in our net operating assets and liabilities of $812,000.

non-cash charges primarily consisted of stock-based compensation expense.

The increase in our net operating assets and liabilities

were due to an increase in accounts payable and accrued expenses and an increase in prepaid expenses and other current assets.

Investing Activities

There were no investing activities

for the three months ended July 31, 2021.

During the three months ended

July 31, 2020, net cash provided by investing activities was $101,000.

This consisted of proceeds from repayment of notes receivable from

our related party, AVLP.

for the six months ended October 31, 2021.

During the six months ended October 31, 2020, net cash provided by

investing activities was $101,000.

This consisted of proceeds from repayment of notes receivable from a related party, Avalanche International

Financing Activities

During the three months ended

July 31, 2021, net cash provided by financing activities was $14.9 million.

This consisted primarily of proceeds from our initial public

offering and proceeds from issuance of common stock and warrant to our related party, DPL.

During the three months ended

July 31, 2020, net cash provided by financing activities was $77,000.

This consisted primarily of proceeds from our convertible note payable

and convertible note payable-related party.

During the six months ended October 31, 2021, net cash provided by

financing activities was $14.9 million.

This consisted primarily of proceeds from our initial public offering of $12.9 million, net of

On July 28, 2021, we received from the FDA a “Study May Proceed” letter for a Phase Ia study under our IND application

Based on the achievement of this milestone, we 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 our Common Stock with an exercise price of $3.00 per share.

During the six months ended

October 31, 2020, net cash provided by financing activities was $463,000.

This consisted primarily of proceeds from our convertible note

payable and convertible note payable-related party.

Impact of Coronavirus on Our Operations

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from the spread of COVID-19 or its consequences, including downturns in business sentiment generally or in our sector in particular.

Our operations are located

in Orange County, CA and Tampa, FL, and certain members of our senior management work in Atlanta, GA and New York, NY.

We have been following

the recommendations of local health authorities to minimize exposure risk for our employees, including the temporary closures of our offices

where certain of our employees work and having employees work remotely to the extent possible, has not negatively impacted their efficiency.

Currently, we and our third-party facilities are working closely to pre-COVID-19 levels and expect normal operations for the balance of

the calendar year.

Our operations are located in Orange County, CA and Tampa, FL, and

certain members of our senior management work in Atlanta, GA and New York, NY.

We have been following the recommendations of local health

authorities to minimize exposure risk for our employees, including the temporary closures of our offices where certain of our employees

work and having employees work remotely to the extent possible, has not negatively impacted their efficiency.

Currently, we and our third-party

facilities are working closely to maintain pre-COVID-19 levels.

Although we currently expect normal operations for the balance of the

fiscal year, recent events, such as the identification of the Omnicron variant and the various responses that federal, state and local

governments have taken as a result, may have an adverse impact on our operations that is not currently anticipated.

Contractual Obligations

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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 us 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.

Inc.(“Licensor”), pursuant to which the Licensor granted us 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, we were 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 our common stock.

Additionally, we are required to pay milestone payments on the due dates to the licensor for the license of the technology,

of 4% on net sales of products developed from the licensed technology, we are required to pay milestone payments on the due dates to 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

We have met the Pre-IND meeting

and IND application filing milestones encompassing AL001.

If we fail to meet a milestone by its specified date, the licensor may terminate

the license agreement.

If we fail to meet a milestone

by its specified date, Licensor may terminate the license agreement.

The licensor was also granted

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the owner of any equity securities of our 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, we were 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 our common stock equal to 3% of the sum of the total number of issued and outstanding

Additionally, we are required to pay milestone payments on the due dates to the licensor for the license of the technology, as

There are certain license fees and milestone payments required to be

paid pursuant to the terms “AL001 license agreements” with 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.

Additionally, we are required to pay milestone payments on the due dates to the 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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For information about recent

accounting pronouncements that may impact our financial statements, please refer to Note 3 of Notes to Financial Statements under the

heading “Recent Accounting Standards.”

accounting pronouncements that may impact our financial statements, please refer to Note 3 of the Notes to Unaudited Condensed Financial

Statements under the heading “Recent Accounting Standards.”

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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 2. Management’s Discussion and Analysis