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Item 1. Financial Statements

2023-03-15 compared with 2022-12-12 · 387 added, 364 removed, 340 unchanged (69% of the section changed)

2 unchanged sentences

Condensed Balance Sheets

October 31, 2022

January 31, 2023

April 30, 2022

12 unchanged sentences

STOCKHOLDERS’ EQUITY

Convertible Preferred stock, $ 0.0001 par value:

Convertible Preferred stock, $ 0.0001

shares authorized;

Series A Convertible

Preferred Stock, $ 0.0001 stated value per share, 1,360,000 shares designated;

nil issued and outstanding as of October 31, 2022 and

April 30, 2022

Series A Convertible Preferred Stock, $ 0.0001

stated value per share, 1,360,000 shares designated;

nil 0 issued and outstanding as of January 31, 2023 and April 30, 2022

Common stock, $ 0.0001 par value:

1 unchanged sentence

96,427,624 and 95,481,790 shares issued and outstanding as of

October 31, 2022 and April 30, 2022, respectively

January 31, 2023 and April 30, 2022, respectively

Additional paid-in capital

7 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part of

these unaudited condensed financial statements.

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Operations

For the Three Months Ended October 31,

For the Six Months Ended October 31,

For the Three Months Ended January 31,

For the Nine Months Ended January 31,

OPERATING EXPENSES

16 unchanged sentences

Basic and diluted weighted average common shares outstanding

The accompanying notes are an integral part of

these unaudited condensed financial statements.

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’

For the Three Months Ended October 31, 2022

Condensed Statements of Stockholders’ Equity

For the Three Months Ended January 31, 2023

Series A Convertible

3 unchanged sentences

Related Party

BALANCES, July 31, 2022

BALANCES, October 31, 2022

$ ( 14,883,295 )

$ ( 35,341,560 )

Issuance of common stock for restricted stock awards

Stock-based compensation to employees and consultants

Issuance of common stock for related party payable

( 5,425,574 )

BALANCES, October 31, 2022

BALANCES, January 31, 2023

$ ( 14,883,295 )

$ ( 40,767,134 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’

For the Three Months Ended October 31, 2021

Condensed Statements of Stockholders’ Equity

For the Three Months Ended January 31, 2022

Series A Convertible

3 unchanged sentences

Related Party

BALANCES, July 31, 2021

BALANCES, October 31, 2021

$ ( 14,883,295 )

$ ( 22,752,233 )

Issuance of common stock for restricted stock awards

Stock-based compensation to employees and consultants

Proceeds from sale of common stocks & warrants-related party

Proceeds from sale of common stocks and warrants-related party (in shares)

Proceeds from stock option exercise

Proceeds from initial public offering, net of underwriters' discounts and commissions and issuance costs of $1.5 million

Stock issued during period value new issues three shares (in shares)

Conversion of Series A convertible stock

Conversion of Series A convertible stock (in shares)

Issuance of share of common stock for conversion of debt

( 2,572,865 )

BALANCES, October 31, 2021

BALANCES, January 31, 2022

$ ( 14,883,295 )

$ ( 25,325,098 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’

For the Six Months Ended October 31, 2022

Condensed Statements of Stockholders’ Equity

For the Nine Months Ended January 31, 2023

Series A Convertible

8 unchanged sentences

Stock-based compensation to employees and consultants

Issuance of common stock for related party payable

( 11,572,639 )

BALANCES, October 31, 2022

BALANCES, January 31, 2023

$ ( 14,883,295 )

$ ( 40,767,134 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’

For the Six Months Ended October 31, 2021

Condensed Statements of Stockholders’ Equity

For the Nine Months Ended January 31, 2022

Series A Convertible

11 unchanged sentences

Proceeds from initial public offering, net of underwriters' discounts and commissions and issuance costs of $1.5 million

Issuance of shares of common stock for conversion of debt

Conversion of Series A convertible stock

1 unchanged sentence

( 8,492,661 )

BALANCES, October 31, 2021

BALANCES, January 31, 2022

$ ( 14,883,295 )

$ ( 25,325,098 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Cash Flows

For the Six Months Ended

For the Nine Months Ended January 31,

Cash flows from operating activities:

25 unchanged sentences

Fair value of warrants issued in connection with IPO

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Issuance of common stock on conversion of note

Issuance of common stock for related party payable

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Alzamend Neuro, Inc.

2 unchanged sentences

Alzamend Neuro, Inc.

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

for the treatment of Alzheimer’s disease (“Alzheimer’s”), bipolar disorder (“BD”), major depressive

disorder (“MDD”) and post-traumatic stress disorder (“PTSD”).

With the Company’s two current product candidates,

Alzamend aims to bring treatments or cures to market as quickly as possible.

The Company’s current pipeline consists of two novel

therapeutic drug candidates (collectively, the “Technology”):

(i) a patented ionic cocrystal technology delivering a therapeutic

combination of lithium, proline and salicylate, for the treatment of Alzheimer’s BD, MDD and PTSD, known as AL001, through two royalty-bearing

exclusive worldwide licenses from the University of South Florida Research Foundation, Inc., as licensor (the “Licensor”);

and (ii) a patented method using a mutant peptide sensitized cell as a cell-based therapeutic vaccine that seeks to restore the ability

of a patient’s immunological system to combat Alzheimer’s, known as ALZN002, through a royalty-bearing exclusive worldwide

license from the same Licensor.

The Company is devoting substantially

all its efforts towards research and development of its Technology and raising capital.

The Company has not generated any product revenue

The Company has financed its operations to date primarily through debt financings and through the sale of its common stock, par

value $ 0.0001 per share (“Common Stock”).

(the “Company”

or “Alzamend”), is an early clinical-stage biopharmaceutical company focused on developing novel products for the treatment

of Alzheimer’s disease (“Alzheimer’s”), bipolar disorder (“BD”), major depressive disorder (“MDD”)

and post-traumatic stress disorder (“PTSD”).

With the Company’s two current product candidates, Alzamend aims to bring

treatments or cures to market as quickly as possible.

The Company’s current pipeline consists of two novel therapeutic drug candidates

(collectively, the “Technology”):

(i) a patented ionic cocrystal technology delivering a therapeutic combination of lithium,

proline and salicylate, for the treatment of Alzheimer’s BD, MDD and PTSD, known as AL001, through two royalty-bearing exclusive

worldwide licenses from the University of South Florida Research Foundation, Inc., as licensor (the “Licensor”);

a patented method using a mutant peptide sensitized cell as a cell-based therapeutic vaccine that seeks to restore the ability of a patient’s

immunological system to combat Alzheimer’s, known as ALZN002, through a royalty-bearing exclusive worldwide license from the same

The Company is devoting substantially all

its efforts towards research and development of its Technology.

The Company has not generated any product revenue to date.

has financed its operations to date primarily through debt financings and through the sale of its common stock, par value $ 0.0001 per

share (“Common Stock”).

The Company expects to continue to incur net losses in the foreseeable future.

LIQUIDITY AND GOING CONCERN

The accompanying condensed

financial statements have been prepared on the basis that the Company will continue as a going concern.

As of October 31, 2022, the Company

had cash of $ 9.2 million and an accumulated deficit of $ 35.3 million .

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

The accompanying condensed financial statements

have been prepared on the basis that the Company will continue as a going concern.

As of January 31, 2023, the Company had cash of $ 7.4

million and an accumulated deficit of $ 40.8 million.

The Company incurred losses for the three and nine months ended January 31, 2023

totaling $ 5.4 million and $ 11.6 million, respectively.

Historically, the Company has financed its operations principally through

issuances of equity and debt instruments.

The Company expects

to continue to incur losses for the foreseeable future and needs to raise additional capital until it is able to generate revenues from

operations sufficient to fund its development and commercial operations.

However, based on the Company’s current business plan,

management believes that the Company’s cash at October 31, 2022 is sufficient to meet the Company’s anticipated cash requirements

during the twelve-month period subsequent to the issuance of the financial statements included in this Quarterly Report.

Historically, the Company has financed its operations principally through issuances

of equity and debt instruments.

The Company expects to continue to

incur losses for the foreseeable future and needs to raise additional capital until it is able to generate revenues from operations sufficient

to fund its development and commercial operations.

However, based on the Company’s current business plan, management believes that

the Company’s cash at January 31, 2023 is sufficient to meet the Company’s anticipated cash requirements during the twelve-month

period subsequent to the issuance of the financial statements included in this Quarterly Report.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed

financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States

of America (“U.S.

GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim

reports of companies filing as a smaller reporting company.

These financial statements should be read in conjunction with the audited

financial statements and notes thereto contained in the Company’s Report on Form 10-K for the year ended April 30, 2022, filed with

the SEC on July 19, 2022.

In the opinion of management, the accompanying condensed interim financial statements include all adjustments

necessary in order to make the financial statements not misleading.

The results of operations for interim periods are not necessarily

indicative of the results to be expected for the full year or any other future period.

Certain notes to the financial statements that

would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported

in the Company’s Report on Form 10-K have been omitted.

The accompanying condensed balance sheet at April 30, 2022 has been derived

from the audited balance sheet at April 30, 2022 contained in such Form 10-K.

The accompanying condensed financial statements

of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim reports of companies filing

as a smaller reporting company.

These financial statements should be read in conjunction with the audited financial statements and notes

thereto contained in the Company’s Report on Form 10-K for the year ended April 30, 2022, filed with the SEC on July 19, 2022.

the opinion of management, the accompanying condensed interim financial statements include all adjustments necessary in order to make

the financial statements not misleading.

The results of operations for interim periods are not necessarily indicative of the results to

be expected for the full year or any other future period.

Certain notes to the financial statements that would substantially duplicate

the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Company’s Report

on Form 10-K have been omitted.

The accompanying condensed balance sheet at April 30, 2022 has been derived from the audited balance sheet

at April 30, 2022 contained in such Form 10-K.

Accounting Estimates

The preparation of financial

statements, in conformity with U.S.

GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets

and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of

expenses during the reporting period.

The Company’s critical accounting policies that involve significant judgment and estimates

include stock-based compensation, warrant valuation, and valuation of deferred income taxes.

The preparation of financial statements,

in conformity with U.S.

GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities

and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during

the reporting period.

The Company’s critical accounting policies that involve significant judgment and estimates include stock-based

compensation, warrant valuation, and valuation of deferred income taxes.

Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all

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

As of October 31, 2022

and April 30, 2022, the Company had no cash equivalents.

Fair Value of Financial

Financial Accounting Standards

Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement , defines fair value

as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous

market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques

used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy

is based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last

is considered unobservable:

Quoted prices in

active markets for identical assets or liabilities.

Inputs other than

Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;

quoted prices in

markets that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially the

full term of the assets or liabilities.

The Company considers all highly liquid

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

As of January 31, 2023 and April 30,

2022, the Company had no cash equivalents.

Fair Value of Financial Instruments

Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“ASC”) 820, Fair Value Measurement , defines fair value as the exchange price that

would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset

or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair

value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy is based on three

levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last is considered unobservable:

Quoted prices in active markets

for identical assets or liabilities.

Inputs other than Level 1 that

are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;

quoted prices in markets that

are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of

the assets or liabilities.

Level 3 assumptions:

inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including

liabilities resulting from imbedded derivatives associated with certain warrants to purchase Common Stock.

The fair values of warrants

are determined using the Black-Scholes valuation model, a “Level 3” fair value measurement, based on the estimated fair value

of Common Stock, volatility based on the historical volatility data of similar companies, considering the industry, products and market

capitalization of such other entities, the expected life based on the remaining contractual term of the conversion option and warrants

and the risk free interest rate based on the implied yield available on U.S.

Treasury Securities with a maturity equivalent to the warrants’

contractual life.

Property and Equipment,

Property and equipment are

stated at cost, net of accumulated depreciation.

Depreciation is computed using the straight-line method over the estimated useful life

of five years.

Unobservable inputs

that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including liabilities

resulting from imbedded derivatives associated with certain warrants to purchase Common Stock.

The fair values of warrants are determined

using the Black-Scholes valuation model, a “Level 3” fair value measurement, based on the estimated fair value of Common Stock,

volatility based on the historical volatility data of similar companies, considering the industry, products and market capitalization

of such other entities, the expected life based on the remaining contractual term of the conversion option and warrants and the risk free

interest rate based on the implied yield available on U.S.

Treasury Securities with a maturity equivalent to the warrants’ contractual

Property and Equipment, Net

Property and equipment are stated at cost,

net of accumulated depreciation.

Depreciation is computed using the straight-line method over the estimated useful life of five years.

Significant additions and improvements are capitalized, while repairs and maintenance are charged to expense as incurred.

Research and Development

Research and development costs

are expensed as incurred.

Research and development costs consist of scientific consulting fees and lab supplies, as well as fees paid

to other entities that conduct certain research and development activities on behalf of the Company.

The Company has acquired and

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

The upfront payments to acquire

license, 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.

Research and Development Expenses

Research and development costs are expensed

Research and development costs consist of scientific consulting fees and lab supplies, as well as fees paid to other entities

that conduct certain research and development activities on behalf of the Company.

The Company has acquired and may continue

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

The upfront payments to acquire license,

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

The Company recognizes stock-based

compensation expense for stock options on a straight-line basis over the requisite service period and account for forfeitures as they

The Company’s stock-based compensation costs are based upon the grant date fair value of options estimated using the Black-Scholes

option pricing model.

To the extent any stock option grants are made subject to the achievement of a performance-based milestone, management

evaluates when the achievement of any such performance-based milestone is probable based on the relative satisfaction of the performance

conditions as of the reporting date.

The Company recognizes stock-based

compensation expense for restricted stocks on a straight-line basis over the requisite service period and account for forfeitures as they

The Company’s stock-based compensation for restricted stocks is based upon the estimated fair value of the Common Stock.

The Black-Scholes option pricing

model utilizes inputs which are highly subjective assumptions and generally require significant judgment.

Certain of such assumptions

involve inherent uncertainties and the application of significant judgment.

As a result, if factors or expected outcomes change and the

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

The Company accounts for stock

warrants as either equity instruments, derivative liabilities, or liabilities in accordance with ASC 480, Distinguishing Liabilities

from Equity and ASC 815, Derivatives and Hedging, depending on the specific terms of the warrant agreement.

The Company recognizes stock-based compensation

expense for stock options on a straight-line basis over the requisite service period and account for forfeitures as they occur.

The Company’s

stock-based compensation costs are based upon the grant date fair value of options estimated using the Black-Scholes option pricing model.

To the extent any stock option grants are made subject to the achievement of a performance-based milestone, management evaluates when

the achievement of any such performance-based milestone is probable based on the relative satisfaction of the performance conditions as

of the reporting date.

The Company recognizes stock-based compensation

expense for restricted stocks on a straight-line basis over the requisite service period and account for forfeitures as they occur.

Company’s stock-based compensation for restricted stocks is based upon the estimated fair value of the Common Stock.

The Black-Scholes option pricing model utilizes

inputs which are highly subjective assumptions and generally require significant judgment.

Certain of such assumptions involve inherent

uncertainties and the application of significant judgment.

As a result, if factors or expected outcomes change and the Company uses significantly

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

The Company accounts for stock warrants

as either equity instruments, derivative liabilities, or liabilities in accordance with ASC 480, Distinguishing Liabilities from

Equity and ASC 815, Derivatives and Hedging, depending on the specific terms of the warrant agreement.

Loss per Common Share

The Company utilizes FASB

ASC 260, Earnings per Share .

Basic loss per share is computed by dividing loss available to common stockholders by the weighted-average

number of common shares outstanding.

Diluted loss per share is computed similar to basic loss per share except that the denominator is

increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued

and if the additional common shares were dilutive.

Diluted loss per common share reflects the potential dilution that could occur if convertible

preferred stock, options and warrants were to be exercised or converted or otherwise resulted in the issuance of Common Stock that then

shared in the earnings of the entity.

Since the effects of outstanding

options, warrants, convertible preferred stock and convertible notes are anti-dilutive in the periods presented, shares of Common Stock

underlying these instruments have been excluded from the computation of loss per common share.

The following sets forth the

number of shares of Common Stock underlying outstanding convertible preferred stock, options, warrants, and convertible notes that have

been excluded from the computation of loss per common share:

For the Six Months Ended October 31,

The Company utilizes FASB ASC 260, Earnings

Basic loss per share is computed by dividing loss available to common stockholders by the weighted-average number of common

shares outstanding.

Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include

the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional

common shares were dilutive.

Diluted loss per common share reflects the potential dilution that could occur if convertible preferred stock,

options and warrants were to be exercised or converted or otherwise resulted in the issuance of Common Stock that then shared in the earnings

of the entity.

Since the effects of outstanding options,

warrants, convertible preferred stock and convertible notes are anti-dilutive in the periods presented, shares of Common Stock underlying

these instruments have been excluded from the computation of loss per common share.

The following sets forth the number of

shares of Common Stock underlying outstanding options and warrants that have been excluded from the computation of loss per common share:

Schedule of antidilutive securities excluded from computation of earnings per share

For the Nine Months Ended January 31,

Stock options (1)

Convertible notes

(1) The Company has excluded 2,000,000

and 5,500,000

stock options for the six months ended October 31, 2022 and 2021, respectively, with an exercise price of $ 0.0004 ,

from its anti-dilutive securities as these shares have been included in our determination of basic loss per share as they represent shares

issuable for little or no cash consideration upon the satisfaction of certain conditions pursuant to ASC 260-10-45-14.

(1) The Company has excluded 2,000,000 and 4,500,000 stock options for the nine months ended January 31, 2023

and 2022, respectively, with an exercise price of $ 0.0004 , from its anti-dilutive securities as these shares have been included in our

determination of basic loss per share as they represent shares issuable for little or no cash consideration upon the satisfaction of certain

conditions pursuant to ASC 260-10-45-14.

Recent Accounting Standards

From time to time, new accounting

pronouncements are issued by the FASB and adopted by the Company as of the specified effective date.

Unless otherwise discussed, the impact

of recently issued standards that are not yet effective are not expected to have a material impact on the Company’s financial position

or results of operations upon adoption.

The Company has considered

all other recently issued accounting standards and does not believe the adoption of such standards will have a material impact on its

financial statements.

From time to time, new accounting pronouncements

are issued by the FASB and adopted by the Company as of the specified effective date.

Unless otherwise discussed, the impact of recently

issued standards that are not yet effective are not expected to have a material impact on the Company’s financial position or results

of operations upon adoption.

The Company has considered all other recently

issued accounting standards and does not believe the adoption of such standards will have a material impact on its financial statements.

NOTE RECEIVABLE FOR COMMON STOCK, RELATED PARTY

On April 30, 2019, the Company

and Ault Life Sciences Fund, LLC (“ALSF”) entered into a securities purchase agreement for the purchase of 10,000,000 shares

of Common Stock for a total purchase price of $ 15,000,000 , or $1.50 per share with 5,000,000 warrants with a 5 -year life and an exercise

price of $ 3.00 per share and vesting upon issuance.

The total purchase price of $15,000,000 was in the form of a non-interest bearing

note receivable with a 12-month term from ALSF, a related party.

On April 30, 2019, the Company and Ault

Life Sciences Fund, LLC (“ALSF”) entered into a securities purchase agreement for the purchase of 10,000,000 shares of Common

Stock for a total purchase price of $ 15,000,000 , or $1.50 per share with 5,000,000 warrants with a 5 -year life and an exercise price of

$ 3.00 per share and vesting upon issuance.

The total purchase price of $15,000,000 was in the form of a non-interest bearing note receivable

with a 12-month term from ALSF, a related party.

In November 2019, the term of the note receivable was extended to December 31, 2021,

and in May 2021, the term of the note receivable was extended to December 31, 2023.

The note is secured by a pledge of the purchased

As the note receivable from ALSF is related to the issuance of Common Stock, it is recorded as an offset to additional paid-in

At October 31, 2022 and April 30, 2022, the outstanding balance of the note receivable was $ 14,883,295 .

ALSF is wholly owned

by Ault Life Sciences, Inc.

The note is secured by a pledge of the purchased shares.

As the note receivable from ALSF is related to the issuance of Common Stock, it is recorded as an offset to additional paid-in capital.

At January 31, 2023 and April 30, 2022, the outstanding balance of the note receivable was $ 14,883,295 .

ALSF is wholly owned by Ault Life

Sciences, Inc.

ALSI is majority owned by Ault & Company, Inc.

(“Ault & Co.”).

Horne and Nisser, directors of the Company, are also directors of Ault & Co.

EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other

current assets were as follows:

October 31, 2022

and Nisser, directors of the Company, are also directors of Ault & Co.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets

were as follows:

Schedule of prepaid expenses and other current assets

January 31, 2023

April 30, 2022

Prepaid consulting fees

Prepaid clinical trial fees

Prepaid insurance

Other prepaid expenses

Prepaid consulting fees

Total prepaid expenses and other current assets

On June 16, 2022, the

Company purchased directors and officers (“D&O”) insurance for 12 months in the amount of $ 492,000 .

Prepaid insurance

at October 31, 2022 represented the unamortized portion of annual premium paid for this policy of $ 353,000 .

At October 31, 2022, prepaid

consulting fees of $ 47,000 consisted of payments to Spartan Capital Securities, LLC.

On January 5, 2023, the Company prepaid

$ 437,466 for clinical trial fees related to AL002.

Prepaid clinical trial fees at January 31, 2023, represented the unused portion of the prepaid clinical fees.

On June 16, 2022, the Company

purchased directors and officers (“D&O”) insurance for 12 months in the amount of $ 492,000 .

Prepaid insurance at January 31, 2023 represented the unamortized portion of the annual insurance premium.

STOCK-BASED COMPENSATION

2016 Stock Incentive

2016 Stock Incentive Plan

On April 30, 2016, the Company’s

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

The Plan provides for the issuance of a

maximum of 12,500,000 shares of Common Stock to be offered to the Company’s directors, officers, employees, and consultants.

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

granted under the Plan have an exercise price equal to or greater than the fair value of the underlying Common Stock at the date of grant

and become exercisable based on a vesting schedule determined at the date of grant.

The options expire between five and 10 years from

The Plan provides for the issuance of

a maximum of 12,500,000

shares of Common Stock to be offered to the Company’s directors, officers, employees, and consultants.

On March 1, 2019, the

Company’s stockholders approved an additional 7,500,000

shares to be available for issuance under the Plan.

Options granted under the Plan have an exercise price equal to or greater than

the fair value of the underlying Common Stock at the date of grant and become exercisable based on a vesting schedule determined at

the date of grant.

Restricted stock awards granted under the Plan are subject to a vesting period determined at the date of grant.

2021 Stock Incentive

In February 2021, the Company’s

board of directors (the “Board”) adopted, and the stockholders approved, the Alzamend Neuro, Inc.

The options expire between five 5 and 10

years from the date of grant.

Restricted stock awards granted under the Plan are subject to a vesting period determined at the date

2021 Stock Incentive Plan

(the “2021 Plan”).

In February 2021, the Company’s board

of directors (the “Board”) adopted, and the stockholders approved, the Alzamend Neuro, Inc.

2021 Stock Incentive Plan (the

“2021 Plan”).

The 2021 Plan authorizes the grant to eligible individuals of (1) stock options (incentive and non-statutory),

(2) restricted stock, (3) stock appreciation rights, or SARs, (4) restricted stock units, and (5) other stock-based compensation.

Stock Subject to the 2021

The maximum number of shares of Common Stock that may be issued under the 2021 Plan is 10,000,000 shares, which number

will be increased to the extent that compensation granted under the 2021 Plan is forfeited, expires or is settled for cash (except as

otherwise provided in the 2021 Plan).

Substitute awards (awards made or shares issued by the Company in assumption of, or in substitution

or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company that the Company

acquires or any subsidiary of the Company or with which the Company or any subsidiary combines) will not reduce the shares authorized

for grant under the 2021 Plan, nor will shares subject to a substitute award be added to the shares available for issuance or transfer

under the 2021 Plan.

All options that the Company

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

Stock Subject to the 2021 Plan.

maximum number of shares of Common Stock that may be issued under the 2021 Plan is 10,000,000 shares, which number will be increased to

the extent that compensation granted under the 2021 Plan is forfeited, expires or is settled for cash (except as otherwise provided in

the 2021 Plan).

Substitute awards (awards made or shares issued by the Company in assumption of, or in substitution or exchange for, awards

previously granted, or the right or obligation to make future awards, in each case by a company that the Company acquires or any subsidiary

of the Company or with which the Company or any subsidiary combines) will not reduce the shares authorized for grant under the 2021 Plan,

nor will shares subject to a substitute award be added to the shares available for issuance or transfer under the 2021 Plan.

All options that the Company grants are

granted at the per share fair value on the grant date.

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

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

As of the date of issuance of these options,

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

Accordingly, the fair value of the underlying options was determined

based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other

The Company has valued

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

As of the date of issuance of these options, there

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

Accordingly, the fair value of the underlying options was determined based

on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities.

The risk-free interest rate used in the calculations is based on the implied yield available on U.S.

Treasury issues with an

equivalent term approximating the expected life of the options as calculated using the simplified method.

The expected life of the options

used was based on the contractual life of the option granted.

Stock-based compensation is a non-cash expense because the Company settles

these obligations by issuing shares of Common Stock from its authorized shares instead of settling such obligations with cash payments.

A summary of stock option

activity for the six months ended October 31, 2022 is presented below:

Treasury issues with an equivalent

term approximating the expected life of the options as calculated using the simplified method.

The expected life of the options used was

based on the contractual life of the option granted.

Stock-based compensation is a non-cash expense because the Company settles these

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

A summary of stock option activity for

the nine months ended January 31, 2023 is presented below:

Schedule of share-based payment arrangement, option, activity

Outstanding Options

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Options granted

( 2,000,000 )

Options exercised

Options expired

( 1,391,671 )

Balance at October 31, 2022

Options vested and expected to vest at October 31, 2022

Options exercisable at October 31, 2022

The aggregate intrinsic value

in the table above represents the total pretax intrinsic value (i.e., the difference between the estimated fair value on the respective

date and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised

their options.

Balance at January 31, 2023

Options vested and expected to vest at January 31, 2023

Options exercisable at January 31, 2023

The aggregate intrinsic value in the table

above represents the total pretax intrinsic value (i.e., the difference between the estimated fair value on the respective date and the

exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their

Stock Options Granted to Employees and Consultants

The estimated fair value of

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

option-pricing model using the following assumptions:

For the Six Months Ended October 31,

The estimated fair value of stock options

granted to employees and consultants during the nine months ended January 31, 2023 and 2022 were calculated using the Black-Scholes option-pricing

model using the following assumptions:

Schedule of stock options granted to employees and consultants

For the Nine Months Ended January 31,

Expected term (in years)

85.53 % - 87.10 %

Risk-free interest rate

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Expected Term:

expected term represents the period that the options granted are expected to be outstanding and is determined using the simplified method

(based on the mid-point between the vesting date and the end of the contractual term).

term represents the period that the options granted are expected to be outstanding and is determined using the simplified method (based

on the mid-point between the vesting date and the end of the contractual term).

Expected Volatility:

Company uses an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry

uses an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry

that were deemed to be representative of future stock price trends as the Company did not have sufficient trading history for its Common

Stock at October 31, 2021.

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

the volatility of its own stock price becomes available.

Stock at January 31, 2023 and 2022.

The Company will continue to apply this process until a sufficient amount of historical information

regarding the volatility of its own stock price becomes available.

Risk-Free Interest Rate:

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Expected Dividend:

Company has not paid and does not anticipate paying any dividends in the near future.

has not paid and does not anticipate paying any dividends in the near future.

Therefore, the expected dividend yield was zero.

Stock-based compensation to

employees and consultants from stock option grants for the six months ended October 31, 2022 and 2021 was $ 1.6 million and $ 2.0 million,

respectively.

Performance Contingent

Stock Options Granted to Employee

On November 26, 2019, the

Board granted 4,250,000 performance- and market-contingent awards to certain key employees and a director.

These grants were made outside

Stock-based compensation to employees and

consultants from stock option grants for the nine months ended January 31, 2023 and 2022, was $ 3.1 million and $ 3.2 million, respectively.

Performance Contingent Stock Options

Granted to Employee

On November 26, 2019, the Board granted

4,250,000 performance- and market-contingent awards to certain key employees and a director.

These grants were made outside of the Plan.

These awards have an exercise price of $1.50 per share.

These awards have multiple separate market triggers for vesting based

upon either (i) the successful achievement of stepped target closing prices on a national securities exchange for 90 consecutive trading

days later than 180 days after the Company’s initial public offering (“IPO”) for its Common Stock, or (ii) stepped target

prices for a change in control transaction.

These awards have multiple separate market triggers for vesting based upon either

(i) the successful achievement of stepped target closing prices on a national securities exchange for 90 consecutive trading days later

than 180 days after the Company’s initial public offering (“IPO”) for its Common Stock, or (ii) stepped target prices

for a change in control transaction.

The target prices range from $10 per share to $40 per share.

In the event any of the stock

price milestones are not achieved within three years , the unvested portion of the performance options will be reduced by 25%.

significant risks and uncertainties associated with achieving the market-contingent awards, as of October 31, 2022, the Company believes

that the achievement of the requisite performance conditions is not probable and, as a result, no compensation cost has been recognized

for these awards.

On November 22, 2022, the

Compensation Committee of the Board modified the performance criteria for these awards.

The target price range is now $10 per share to

$20 per share.

Additionally, if the stock price milestones are now not achieved by November 27, 2026, as opposed to within three years,

the unvested portion of the portion of the performance options will be reduced by 25%.

Performance Contingent

Stock Options Granted to TAMM Net

On March 23, 2021, the Company

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

to purchase an aggregate of 450,000 shares of Common

In the event any of the stock price

milestones are not achieved within three years , the unvested portion of the performance options will be reduced by 25%.

On November 22, 2022, the Compensation Committee

of the Board modified the performance criteria for these awards.

The target price range is now $10 per share to $20 per share.

Additionally,

if the stock price milestones are now not achieved by November 27, 2026, as opposed to within three years, the unvested portion of the

portion of the performance options will be reduced by 25%.

Due to the significant risks and uncertainties associated with achieving the

market-contingent awards, as of January 31, 2023, the Company believes that the achievement of the requisite performance conditions is

not probable and, as a result, no compensation cost has been recognized for these awards.

On November 29, 2022, the Compensation Committee of the Board granted

2,000,000 performance-based stock option to the Chief Executive Officer at an exercise price of $1.17 per share, of which 50% vest upon

the completion and announcement of topline data from the Company’s Phase II clinical trial of AL001 within three years from grant

date and the remaining 50% vest upon the completion and announcement of topline data from the Company’s Phase II clinical trial

of ALZN002 within four years from the grant date.

As of January 31, 2023, the Company believes that it is probable that the performance

condition of the completion and announcement of topline data from the Company’s Phase II clinical trial of AL001 will be achieved

and has recognized the related stock-based compensation.

As of January 31, 2023, the Company believes that the achievement of the second

performance condition is not probable and, as a result, no compensation cost has been recognized related to Phase II of ALZN002.

Performance Contingent Stock Options

Granted to TAMM Net

On March 23, 2021, the Company issued performance-based

stock options to the certain team members at TAMM Net, Inc.

(“TAMM Net”) to purchase an aggregate of 450,000 shares of Common

Stock at a per share exercise price of $1.50 per share, of which 50% vest upon the completion of Phase I of AL001 by March 31, 2022, and

the remaining 50% vest upon completion of Phase I of ALZN002 by December 31, 2022.

The performance goal of completing

Phase I of AL001 was achieved on March 22, 2022, and the Company recognized stock compensation related to the completion of Phase I of

The performance goal of completing Phase

I of AL001 was achieved on March 22, 2022, and the Company recognized stock-based compensation related to the completion of Phase I of

AL001 over the implied service period to complete this milestone.

Due to the significant risks and uncertainties associated with achieving

the completion of Phase I for ALZN002, as of October 31, 2022, the Company believes that the achievement of the requisite performance

conditions is not probable and, as a result, no compensation cost has been recognized for these awards related to ALZN002.

Performance Contingent

Stock Options Granted to Consultants

On October 14, 2021, the Company

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

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

AL001 for a PTSD indication, AL001 for a depression indication and ALZN002 for an Alzheimer’s indication.

As of October 31, 2022, the

Company believes that the achievement of the requisite performance conditions is not probable and, as a result, no compensation cost has

been recognized for these awards related to Phase II of AL001 and ALZN002.

Stock-Based Compensation

The Company’s results

of operations include expenses relating to stock-based compensation for three and six months ended October 31, 2022 and 2021, that were

comprised as follows:

For the Three Months Ended October 31,

For the Six Months Ended October 31,

On January 19, 2023, the Board modified

the performance criteria for these awards.

The remaining 50% of the grant will now vest upon the completion and announcement of topline

data of the first cohort from a Phase I/IIA clinical trial of ALZN002 on/or before March 31, 2024.

Due to the significant risks and uncertainties

associated with achieving the completion of Phase I for ALZN002, as of January 31, 2023, the Company believes that the achievement of

the requisite performance conditions is not probable and, as a result, no compensation cost has been recognized for these awards related

Performance Contingent Stock Options

Granted to Consultants

On October 14, 2021, the Company issued

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

$2.42 per share, of which 50,000 vest upon completion of each of the Phase II clinical trials of AL001 for a Bipolar indication, AL001

for a PTSD indication, AL001 for a depression indication and ALZN002 for an Alzheimer’s indication.

On January 19, 2023, the Board modified

the performance criteria for these awards.

The revised grant will vest 25% if the Company (a) completes and announces topline data from

a Phase II clinical trial of AL001 and ALZN002, as applicable, that would support a new drug application for the drug candidate and the

indication listed below, and (b) obtained a “Study May Proceed” letter from the U.S.

Food and Drug Administration for the

additional IND on/or before December 31, 2023, as follows:

(i) AL001 – bipolar disorder;

(ii) AL001- major depressive disorder;

(iii) AL001 – post-traumatic stress disorder;

and (iv) ALZN002 – Alzheimer’s disease.

As of January 31, 2023, the Company believes

that the achievement of the requisite performance conditions is not probable and, as a result, no compensation cost has been recognized

for these awards related to Phase II of AL001 and ALZN002.

Stock-Based Compensation Expense

The Company’s results of operations

include expenses relating to stock-based compensation for three and nine months ended January 31, 2023 and 2022, that were comprised

Schedule of stock-based compensation

For the Three Months Ended January 31,

For the Nine Months Ended January 31,

Research and development

General and administrative

As of October 31, 2022, total

unamortized stock-based compensation expense related to unvested employee and non-employee awards that are expected to vest was $ 2.8 million .

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

The following table summarizes

information about Common Stock warrants outstanding and exercisable at October 31, 2022:

As of January 31, 2023, total unamortized

stock-based compensation expense related to unvested employee and non-employee awards that are expected to vest was $ 1.5

The weighted-average period over which such stock-based compensation expense will be recognized is approximately 1.8

The following table summarizes information

about Common Stock warrants outstanding and exercisable at January 31, 2023:

Schedule of Common Stock warrants outstanding

$ 1.00 - $ 6.25

The estimated fair value of warrants granted during the six months

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

For the Six Months Ended October 31,

The estimated fair value of warrants granted during the nine

months ended January 31, 2022 were calculated using the Black-Scholes option-pricing model using the following assumptions:

Schedule of assumptions used

For the Nine Months

Ended January 31, 2022

Expected term (in years)

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that were deemed to be representative of future stock price trends as the Company did not have sufficient trading history for its Common

Stock at October 31, 2021.

Stock at January 31, 2022.

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

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In March 2021, the Company entered into

a securities purchase agreement with Ault Lending, LLC (formerly, Digital Power Lending, LLC) (“AL”) pursuant to which the

Company sold an aggregate of 6,666,667 shares of Common Stock for an aggregate of $ 10 million, or $1.50 per share, which sales were made

On March 9, 2021, AL paid $ 4 million, less the $1.8 million in prior advances and the surrender for cancellation of a $50,000

convertible promissory note held by BitNile Holdings, Inc.

(“BitNile”), the parent company of AL, for an aggregate of 2,666,667

a securities purchase agreement with Ault Lending, LLC (“AL”) pursuant to which the Company sold an aggregate of 6,666,667

shares of Common Stock for an aggregate of $ 10 million, or $1.50 per share, which sales were made in tranches.

On March 9, 2021, AL paid

$ 4 million, less the $1.8 million in prior advances and the surrender for cancellation of a $50,000 convertible promissory note held by

Ault Alliance, Inc.

(formerly, BitNile Holdings, Inc.) (“Ault Alliance”), the parent company of AL, for an aggregate of 2,666,667

shares of Common Stock.

9 unchanged sentences

In November 2022, the Company entered into

a marketing and brand development agreement with BitNile, effective August 1, 2022, whereby BitNile will provide various marketing services

over twelve months valued at $1.4 million.

The Company had the right to pay the fee in cash or shares of its Common Stock with a value

of $1.50 per share.

a marketing and brand development agreement with Ault Alliance, effective August 1, 2022, whereby Ault Alliance will provide various marketing

services over twelve months valued at $1.4 million.

The Company had the right to pay the fee in cash or shares of its Common Stock with

a value of $1.50 per share.

On November 11, 2022, the Company elected to pay the fee with 933,334 shares of its Common Stock.

The Company recorded

the value of the agreement using the closing price of the Company’s Common Stock on November 11, 2022, and will amortize the expense

over twelve months beginning in August 2022.

At October 31, 2022, the balance of related party prepaid expenses was $ 742,000 and the balance

of related party payable was $ 989,000 .

recorded the value of the agreement using the closing price of the Company’s Common Stock on November 11, 2022, and will amortize

the expense over twelve months beginning in August 2022.

At January 31, 2023, the balance of related party prepaid expenses was $ 495,000 .

COMMITMENTS AND CONTINGENCIES

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license fee of $200,000 for ALZN002 and an initial license fee of $200,000 for AL001.

As an additional licensing fee for the license

of ALZN002, the Licensor received 3,601,809 shares of common stock.

As an additional licensing fee for the license of

ALZN002, the Licensor received 3,601,809 shares of common stock.

As an additional licensing fee for the license of the AL001 technologies,

the Licensor received 2,227,923 shares of common stock.

Minimum royalties for AL001 are $25,000 in 2023, $45,000 in 2024 and $70,000

in 2025 and every year thereafter, for the life of the agreement.

Minimum royalties for ALZN002 are $20,000 in 2022, $40,000 in 2023

and $50,000 in 2024 and every year thereafter, for the life of the respective agreement.

Additionally, the Company is required to

pay milestone payments on the due dates to the Licensor for the license of the AL001 technologies and for the ALZN002 technology, as

Minimum royalties for AL001 are $25,000 in 2023, $45,000 in 2024 and $70,000 in

2025 and every year thereafter, for the life of the agreement.

Minimum royalties for ALZN002 are $20,000 in 2022, $40,000 in 2023 and

$50,000 in 2024 and every year thereafter, for the life of the respective agreement.

Additionally, the Company is required to pay milestone

payments on the due dates to the Licensor for the license of the AL001 technologies and for the ALZN002 technology, as follows:

Original AL001 License:

Schedule of Contractual Obligation, Fiscal Year Maturity

Completed September 2019

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8 years from the effective date of the agreement

Upon FDA approval

Food and Drug Administration (“FDA”) approval

* Milestone met and completed

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Series A Preferred Shares

As of October 31, 2022, there were no Series

As of January 31, 2023, there were no Series

A Preferred Shares or any other shares of Preferred Stock issued or outstanding.

14 unchanged sentences

a securities purchase agreement with AL pursuant to which the Company agreed to sell an aggregate of 6,666,667 shares of Common Stock

for an aggregate of $ 10 million, or $ 1.50 per share, which sales will be made in tranches.

for an aggregate of $ 10 million, or $ 1.50 per share, which sales were made in tranches.

On March 9, 2021, AL paid $ 4 million, less

the $ 1.8 million in prior advances and the surrender for cancellation of a $ 50,000 convertible promissory note held by BitNile, for an

aggregate of 2,666,667 shares of Common Stock.

the $ 1.8 million in prior advances and the surrender for cancellation of a $ 50,000 convertible promissory note held by Ault Alliance,

for an aggregate of 2,666,667 shares of Common Stock.

Under the terms of the securities purchase agreement, AL (i) purchased an additional

shares of Common Stock upon approval by the FDA of the Company’s IND for its Phase IA clinical trials for AL001 for a purchase price

of $2 million, and (ii) purchased 2,666,667 shares of Common Stock upon the completion of these Phase IA clinical trials for AL001 for

a purchase price of $4 million.

The Company further agreed to issue to AL warrants to purchase 3,333,333 shares of Common Stock at an

exercise price of $3.00 per share.

1,333,333 shares of Common Stock upon approval by the FDA of the Company’s IND for its Phase IA clinical trials for AL001 for a

purchase price of $2 million, and (ii) purchased 2,666,667 shares of Common Stock upon the completion of these Phase IA clinical trials

for AL001 for a purchase price of $4 million.

The Company further agreed to issue to AL warrants to purchase 3,333,333 shares of Common

Stock at an exercise price of $3.00 per share.

Finally, the Company agreed that for a period

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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 1. Financial Statements