What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-03-15 compared with 2021-12-13 · 299 added, 267 removed, 347 unchanged (62% of the section changed)

26 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 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.

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 disease.

We have developed a novel approach

in an attempt to combat Alzheimer’s through immunotherapy.

Critical Accounting Policies and Estimates

2 unchanged sentences

Research and development costs consist of scientific consulting

fees and lab supplies, as well as fees paid to other entities that conduct certain research and development activities on behalf of our

fees and lab supplies, as well as fees paid to clinical research organizations that conduct certain research and development activities on behalf of our

We have acquired and may continue

to acquire the rights to develop and commercialize new product candidates from third parties.

The upfront payments to acquire license,

product or rights, as well as any future milestone payments, are immediately recognized as research and development expense provided that

there is no alternative future use of the rights in other research and development projects.

The upfront payments to acquire licenses,

products or rights, as well as any future milestone payments, are immediately recognized as research and development expense provided

that there is no alternative future use of the rights in other research and development projects.

Stock-Based Compensation.

29 unchanged sentences

· 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.

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

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 stock-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 to:

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

10 unchanged sentences

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

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.

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

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.

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

13 unchanged sentences

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.

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.

A full report of the Phase I first-in-human study will be completed in March 2022.

1 study is for the purpose of determining potential clinically safe and appropriate dosing for AL001 in a planned Phase 2 multiple ascending

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 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.

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

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

Preclinical 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

3 unchanged sentences

after the approval of the IND by the FDA.

On December 17, 2021, we announced

that we received positive topline data from our Phase I clinical trial for AL001.

At this time, we will receive a summary of demographic

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

The purpose of the Phase I first-in-human study was to determine

the pharmacokinetics, safety and tolerability of AL001 so as to target doses for a planned Phase II multiple ascending dose study in Alzheimer’s

AL001 is a lithium-delivery system;

it is a lithium-salicylate-L-proline engineered ionic co-crystal under development as an

oral treatment for patients with dementia related to mild, moderate and severe cognitive impairment associated with Alzheimer’s

During Phase I

first-in-human trial, participants received a single dose of AL001 containing lithium in an amount equivalent to 150mg lithium

this is the dose proposed by the inventors as likely appropriate for Alzheimer’s treatment when given three times

Currently, marketed immediate-release lithium carbonate 300mg are given three times daily;

for example, lithium carbonate

300mg three times daily is a dose commonly used for bipolar affective disorders.

It can be difficult to set the appropriate dose of

lithium carbonate and other lithium products due to the small margin between effective and toxic blood levels and to avoid side

effects or inadequate treatment outcomes.

We see the possibility of providing the benefits from lithium at up to 50% of the

currently approved lithium carbonate dosage, with the potential for better outcomes and with elimination of the need for lithium

therapeutic drug monitoring.

Moreover, the data confirms AL001’s potential as a replacement of the current lithium-based

treatments and may provide a treatment for over 40 million Americans suffering from Alzheimer’s and other neurodegenerative

diseases and psychiatric disorders.

Such findings may allow us

to reduce or eliminate the need for Phase II or Phase III studies of efficacy and/or safety of AL001 in such indications as bipolar/affective

disorders in which lithium efficacy has been established.

Bioequivalence may have utility for AL001 when seeking approval for the indications

of currently marketed lithium products, and for new indications as a benchmark for safety.

Given the systemic pharmacokinetic similarity

to marketed immediate-release lithium carbonate products, AL001 may be dosed three times daily in the planned Phase II study, a multiple

ascending dose safety study in Alzheimer’s patients.

In addition, we will pursue investigational new drug applications with the

FDA for bipolar disorder, depression, and post-traumatic stress disorder indication.

The continuation of our current

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Results of Operations

Results of Operations for the Three Months Ended October 31,

Results of Operations for the Three Months Ended January 31,

2022 and 2021

The following table summarizes

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

For the Three Months Ended October 31,

the results of our operations for the three months ended January 31, 2022 and 2021.

For the Three Months Ended January 31,

OPERATING EXPENSES

6 unchanged sentences

Interest expense - related party

Gain on extinguishment of debt

Total other expense, net

3 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

* 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 three months

ended October 31, 2021 and 2020, 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.

did not generate any revenues during the three months ended January 31, 2022 and 2021, 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 October 31, 2021 and 2020 were $1.8 million and $823,000, respectively.

expenses for the three months ended January 31, 2022 and 2021 were $1.7 million and $881,000, 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;

as well as salaries and benefits.

For the three months ended January 31, 2022 and 2021, the remaining general and administrative

expenses of $94,000 and $12,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, license fees, travel,

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

For the Three Months Ended January 31,

Stock compensation expense

Professional fees

4 unchanged sentences

Stock Compensation Expense

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.

During the three months ended

January 31, 2022 and 2021, we incurred general and administrative stock compensation expense of $1.0 million and $553,000, 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.

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.

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

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 Common Stock from authorized shares instead of settling such obligations with cash payments.

Insurance Expense

The second largest component

of our general and administrative expenses is professional fees.

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

of general and administrative expenses is insurance expense.

During the three months ended January 31, 2022, we incurred insurance expense

of $214,000, which was primarily directors and officers insurance that was required as part of the IPO process.

Professional Fees

During the three months ended

January 31, 2022 and 2021, we reported professional fees of $146,000 and $203,000, respectively, which were principally comprised of the

following items:

Three Months Ended January 31, 2022

· 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 agreement.

the three months ended January 31, 2022, we recorded an expense of $70,000 as a result of this consulting agreement.

· During the three months ended January 31, 2022, we incurred $32,000 in management fees, $20,000 in audit

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

Three Months Ended January 31, 2021

· During the three months ended January 31, 2021, 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 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

· 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.

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

amortizing the cost of these services over the two-year term of the Uplisting Agreement.

During the three months ended January 31, 2021,

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 January 31, 2021, we also incurred $33,000 in audit fees.

Salaries and Benefits

During the three months ended

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

As of October 31, 2021, we had

January 31, 2022 and 2021, we incurred $204,000 and $113,000, respectively, in employee-related expenses.

As of January 31, 2022, we had

three full-time and four part-time employees.

9 unchanged sentences

Research and development expenses

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

for the three months ended January 31, 2022 and 2021, were $874,000 and $234,000, 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,

For the Three Months Ended January 31,

Professional fees

6 unchanged sentences

During the three months ended

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

January 31, 2022 and 2021, we reported professional fees of $763,000 and $192,000, 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 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.

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

January 31, 2022, we had an over accrual of $50,000 in PIND license fees, offset by $5,000 in royalty fee as a result of our first dosage

of patients during the quarter ended January 31, 2022 for the Phase I relative bioavailability study for AL001 for dementia related to

Stock Compensation Expense

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.

During the three months ended

January 31, 2022 and 2021, we incurred $106,000 and $22,000, 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.

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.

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 $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,

Interest expense was $16,000

for the three months ended January 31, 2022, primarily related to the convertible promissory note issued in February 2021 including non-cash

interest expense of $3,000 recorded from the amortization of debt discount.

Results of Operations for the Nine Months Ended January 31,

2022 and 2021

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,

the results of our operations for the nine months ended January 31, 2022 and 2021.

For the Nine Months Ended January 31,

OPERATING EXPENSES

7 unchanged sentences

Interest income - related party

Gain on extinguishment of debt

Total other expense, net

5 unchanged sentences

* 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.

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 clinical and preclinical

stage of development, respectively, 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 nine months ended January 31, 2022 and 2021 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.

expenses for the nine months ended January 31, 2022 and 2021 were $4.9 million and $2.7 million, respectively.

As reflected in the table

2 unchanged sentences

fees, insurance, as well as salaries and benefits.

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

For the nine months ended January 31, 2022 and 2021, the remaining general and administrative

expenses of $389,000 and $159,000, 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,

For the Nine Months Ended January 31,

Stock compensation expense

5 unchanged sentences

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.

During the nine months ended

January 31, 2022 and 2021, we incurred general and administrative stock compensation expense of $2.8 million and $1.7 million, 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.

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.

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

During the nine months ended January 31, 2022 and 2021, we reported professional

fees of $678,000 and $547,000, 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

Nine Months Ended January 31, 2022

· During the nine months ended January 31, 2022, we recorded an expense of $178,000 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

· During the nine months ended January 31, 2022, we incurred $134,000 in investor relations, $144,000 in

audit fees, $78,000 in legal fees, $31,000 in Board fees and $72,000 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

Nine Months Ended January 31, 2021

· During the nine months ended January 31, 2021, we recorded an expense of $210,000 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

· During the nine months ended January 31, 2021, we recorded an expense of $178,000 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.

· During the nine months ended January 31, 2021, we incurred $95,000 in audit fees and $65,000 in legal

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

During the nine months ended

January 31, 2022 and 2021, we incurred $547,000 and $338,000, respectively, in employee-related expenses.

As of January 31, 2022, we had

three full-time and four part-time employees.

9 unchanged sentences

Research and development expenses

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

for the nine months ended January 31, 2022 and 2021, were $3.5 million and $1.0 million, 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,

For the Nine Months Ended January 31,

Professional fees

5 unchanged sentences

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

During the nine months ended

January 31, 2022 and 2021, we reported professional fees of $2.9 million and $903,000, respectively, which were principally comprised

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

2 unchanged sentences

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.

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 AL001 License Agreements.

During the nine months ended

January 31, 2022, we accrued $65,000 in license fees as we have submitted our IND application on June 30, 2021, offset by an over accrual

of $50,000 at the end of 2020.

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.

During the nine months ended

January 31, 2022 and 2021 we incurred $359,000 and $65,000, 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.

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.

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.

Interest expense was $46,000

for the nine months ended January 31, 2022, primarily related to the convertible promissory note issued in February 2021 including non-cash

interest expense of $13,000 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 October 31, 2021, we had cash of $13.6

As of January 31, 2022, we had cash of $11.8

million and an accumulated deficit of $25.3 million.

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.

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

ended January 31, 2022 totaling $2.6 million and $8.5 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.

through sales 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 BitNile,

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.

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 expect to continue to incur

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

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

at January 31, 2022, 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 six months ended October 31, 2021:

For the Six Months Ended October 31,

the nine months ended January 31, 2022:

For the Nine Months Ended January 31,

Net cash provided by (used in):

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$ (5,051,637 )

$ (1,454,154 )

Investing activities

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Operating Activities

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.

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.

During the nine months ended

January 31, 2022, net cash used in operating activities was $5.1 million.

This consisted primarily of a net loss of $8.5 million, partially

offset by non-cash charges of $3.2 million in stock-based compensation expense and an increase in our net operating assets and liabilities

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 assets.

During the nine months ended

January 31, 2021, net cash used in operating activities was $1.5 million.

This consisted primarily of a net loss of $3.8 million, partially

offset by non-cash charges of $1.8 million in stock-based compensation expense and an increase in our net operating assets and liabilities

The increase in our net operating assets and liabilities were due to a decrease 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 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

for the nine months ended January 31, 2022.

During the nine months ended

January 31, 2021, net cash provided by investing activities was $101,000.

This consisted of proceeds from repayment of notes receivable

from a related party, Avalanche International Corp.

Financing Activities

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.

During the nine months ended

January 31, 2022, 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 costs.

On July 28, 2021, we received from the FDA a “Study May Proceed” letter for a Phase

Ia study under our IND application for AL001.

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 nine months ended

January 31, 2021, net cash provided by financing activities was $1.3 million.

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 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

Our operations are located

in Orange County, CA and Atlanta, GA, and one member of our senior management works in 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.

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 Omicron 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.

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On May 1, 2016, we entered

into a Standard Exclusive License Agreement for AL002 with Sublicensing Terms with the University of South Florida Research Foundation,

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.

into a Standard Exclusive License Agreement for AL002 with Sublicensing Terms with the 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

In addition to royalty payments

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Original AL001 License:

6 months from the June 30, 2021 IND filing date

Paid in November 2021

IND application filing

12 months from the June 30, 2021 IND filing date

Paid in November 2021

Upon first dosing of patient in a clinical trial

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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 “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:

There are certain license

fees and milestone payments required to be paid pursuant to the terms of the 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:

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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