What changed in this filing

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Item 1. Financial Statements

2023-09-13 compared with 2023-03-15 · 475 added, 555 removed, 172 unchanged (86% of the section changed)

2 unchanged sentences

Condensed Balance Sheets

January 31, 2023

July 31, 2023

April 30, 2023

4 unchanged sentences

Property, plant and equipment, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

CURRENT LIABILITIES

Accounts payable and accrued liabilities

Related party payable

TOTAL CURRENT LIABILITIES

TOTAL LIABILITIES

TOTAL LIABILITIES, ALL CURRENT

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ (DEFICIT) EQUITY

Convertible Preferred stock, $ 0.0001

1 unchanged sentence

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

stated value per share, 1,360,000

shares designated;

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

Common stock, $ 0.0001 par value:

300,000,000 shares authorized;

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

January 31, 2023 and April 30, 2022, respectively

96,940,124 issued and outstanding as of July 31, 2023 and April 30, 2023

Additional paid-in capital

5 unchanged sentences

( 44,072,662 )

TOTAL STOCKHOLDERS’ EQUITY

TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY

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 January 31,

For the Nine Months Ended January 31,

For the Three Months Ended July 31,

OPERATING EXPENSES

5 unchanged sentences

( 3,035,542 )

( 11,565,457 )

( 8,446,739 )

OTHER EXPENSE, NET

3 unchanged sentences

$ ( 3,037,074 )

$ ( 11,572,639 )

$ ( 8,492,661 )

Basic and diluted net loss per common share

Basic and diluted weighted average common shares outstanding

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’ Equity

For the Three Months Ended January 31, 2023

Series A Convertible

Note Receivable for

Preferred Stock

Common Stock -

Related Party

BALANCES, October 31, 2022

$ ( 14,883,295 )

$ ( 35,341,560 )

Stock-based compensation to employees and consultants

Issuance of common stock for related party payable

( 5,425,574 )

BALANCES, January 31, 2023

$ ( 14,883,295 )

$ ( 40,767,134 )

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’ Equity

For the Three Months Ended January 31, 2022

Series A Convertible

Note Receivable for

Preferred Stock

Common Stock -

Related Party

BALANCES, October 31, 2021

$ ( 14,883,295 )

$ ( 22,752,233 )

Stock-based compensation to employees and consultants

Proceeds from stock option exercise

Issuance of share of common stock for conversion of debt

( 2,572,865 )

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’ Equity

For the Nine Months Ended January 31, 2023

Condensed Statements of Stockholders’

(Deficit) Equity

For the Three Months Ended July 31, 2023

Series A Convertible

Note Receivable for

Note Receivable

Preferred Stock

4 unchanged sentences

$ ( 44,072,662 )

Issuance of common stock for restricted stock awards

Stock-based compensation to employees and consultants

Issuance of common stock for related party payable

Stock-based compensation

( 3,527,766 )

BALANCES, January 31, 2023

BALANCES, July 31, 2023

$ ( 14,883,295 )

$ ( 47,600,428 )

The accompanying notes are an integral part of these unaudited

condensed financial statements.

$ ( 112,883 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’ Equity

For the Nine Months Ended January 31, 2022

Condensed Statements of Stockholders’ (Deficit) Equity

For the Three Months Ended July 31, 2022

Series A Convertible

Note Receivable for

Note Receivable

Preferred Stock

4 unchanged sentences

$ ( 29,194,495 )

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 stock option exercise

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

Stock-based compensation

( 3,037,074 )

BALANCES, January 31, 2022

BALANCES, July 31, 2022

$ ( 14,883,295 )

$ ( 32,231,569 )

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 Nine Months Ended January 31,

For the Three Months Ended July 31,

Cash flows from operating activities:

3 unchanged sentences

Depreciation expense

Interest expense - debt discount

Stock-based compensation to employees and consultants

2 unchanged sentences

Prepaid expenses - related party

Accounts payable and accrued expenses

Accounts payable and accrued liabilities

Net cash used in operating activities

1 unchanged sentence

( 2,536,690 )

Cash flows from financing activities:

Proceeds from the issuance of common stock and warrants - related party, net

Proceeds from stock option exercise

Proceeds from initial public offering, net of underwriters’ discounts and commissions and issuance costs

Net cash provided by financing activities

Net (decrease) increase in cash

Cash flows from investing activities:

Purchase of machinery

Net cash used in investing activities

Net decrease in cash

( 3,445,443 )

( 2,536,690 )

Cash at beginning of period

Cash at end of period

Supplemental disclosures of cash flow information:

Non-cash financing activities:

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

Fair value of warrants issued in connection with IPO

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.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

2 unchanged sentences

Alzamend Neuro, Inc.

(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.

“Company” or “Alzamend”), is a 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 two current product candidates, Alzamend aims to bring

treatments or cures to market at a reasonable cost as quickly as possible.

The Company’s current pipeline consists of two novel

therapeutic drug candidates:

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

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 two product candidates and raising capital.

The Company has not generated any

product revenue to date.

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

common stock, par value $ 0.0001 per share (“Common Stock”).

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

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 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 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.

The accompanying financial

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

As of July 31, 2023, the Company had cash

of $ 1.7 million, an accumulated deficit of $ 47.6 million and stockholders’ deficit of $ 113,000 .

For the three months ended July

31, 2023, the Company had a net loss of $ 3.5 million and cash used in operating activities of $ 3.3 million.

Historically, the Company

has financed its operations principally through issuances of equity and debt instruments.

Company believes its current cash on hand is not sufficient to fund its planned operations through one year after the date the financial

statements are issued.

These factors create substantial doubt about the Company’s ability to continue as a going concern for at

least one year after the date that these condensed financial statements are issued.

The Company’s inability to

continue as a going concern could have a negative impact on the company, including our ability to obtain

needed financing.

The Company’s financial statements do not include any adjustments relating to the recoverability and classification

of recorded assets, or the amounts and classifications of liabilities that might be necessary should it be unable to continue as a going

In order to continue as a

going concern, the Company will need to raise additional funds.

The Company plans to seek additional funding through public equity, private

equity and debt financings.

Additional funds may also be received from the exercise of warrants (Note 7) and the receipt of funds from

the note receivable (Note 4).

The terms of any additional financing may adversely affect the holdings or rights of the Company’s

stockholders.

If the Company is unable to obtain funding, it could be required to delay, reduce or eliminate research and development

programs and planned clinical trials which could adversely affect the Company’s business operations.

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.

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, 2023, filed with

the SEC on July 27, 2023.

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, 2023 has been derived

from the audited balance sheet at April 30, 2023 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 significant 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 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.

The Company considers all

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

As of July 31, 2023

and April 30, 2023, 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.

Level 3 assumptions:

Unobservable inputs

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

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

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

1 unchanged sentence

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.

of such other entities, the expected life based on the remaining contractual term of the 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.

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

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.

Research and Development

Research and development costs

are expensed as incurred.

Research and development costs consist of scientific consulting fees, clinical trial 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 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 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 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.

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

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 FASB ASC 480, Distinguishing

Liabilities from Equity and FASB ASC 815, Derivatives and Hedging, depending on the specific terms of the warrant

Loss per Common Share

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:

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 stock options, restricted stock units

and warrants 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 stock options, restricted stock units 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,

For the Three Months Ended July 31,

Stock options (1)

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

Restricted stock units

(1) The Company has excluded 1,500,000 and 2,000,000 stock options for the three months ended July 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.

conditions pursuant to FASB 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 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.

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 July 31, 2023 and April 30, 2023, 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.”).

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:

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

PREPAID EXPENSES

AND OTHER CURRENT ASSETS

Prepaid expenses and other

current assets are as follows:

Schedule of prepaid expenses and other current assets

January 31, 2023

July 31, 2023

April 30, 2023

2 unchanged sentences

Other prepaid expenses

Prepaid consulting fees

Total prepaid expenses and other current assets

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.

During the three months

ended July 31, 2023, the Company prepaid $ 313,000 for clinical trial fees related to ALZN002.

During the year ended April 30, 2023, the

Company prepaid $ 936,000 for clinical trial fees related to ALZN002.

Prepaid clinical trial fees at July 31, 2023 and April 30, 2023 represented

the unused portion of the prepaid clinical trial fees.

On June 14, 2023, the Company purchased directors’ and officers’ insurance

for 12 months in the amount of $ 337,000 .

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

STOCK-BASED COMPENSATION

2016 Stock Incentive Plan

2016 Stock Incentive

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

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

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.

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

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

at the date of grant.

The options expire between five and 10

years from the date of grant.

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

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.

2021 Stock Incentive 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”).

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

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

Stock Subject to the 2021 Plan.

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

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.

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

The Company has valued

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

As of the 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.

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 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 nine months ended January 31, 2023 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 three months ended July 31, 2023 is presented below:

Schedule of share-based payment arrangement, option, activity

Outstanding Options

Aggregate Intrinsic

Balance at April 30, 2023

Options granted

( 2,000,000 )

Options exercised

Options expired

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 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

1.01 %- 1.07 %

Dividend yield

Expected 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:

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 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:

Company based the risk-free interest rate over the expected term of the options based on the constant maturity rate of U.S.

Treasury securities

with similar maturities as of the date of the grant.

Expected Dividend:

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 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.

Balance at July 31, 2023

Options vested and expected to vest at July 31, 2023

Options exercisable at July 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 options.

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

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.

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%.

On November 22, 2022, the Compensation Committee

of the Board modified the performance criteria for these awards.

These awards have multiple separate market triggers for vesting based

upon either (i) the successful achievement of tiered 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) tiered target

prices for a change in control transaction.

The target prices ranged 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%.

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.

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 performance options

will be reduced by 25%.

Due to the significant risks and uncertainties associated with achieving the market-contingent awards, as of July

31, 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

1 unchanged sentence

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

date and the remaining 50% vest upon the completion and announcement of topline data from the Company’s Phase I/IIA 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-based compensation related to the completion of Phase I of

AL001 over the implied service period to complete this milestone.

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

As of July 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 had

recognized the related stock-based compensation during the three months ended January 31, 2023.

As of July 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 I/IIA of ALZN002.

Performance Contingent

Stock Options Granted to TAMM Net

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

to 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/IIA of ALZN002 by December 31, 2022.

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/IIA for ALZN002, as of July 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 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 BD 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;

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

(“FDA”) for the additional Investigational New Drug (“IND”) on/or before December 31, 2023, as follows:

– 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

and (iv) ALZN002

– Alzheimer’s disease.

As of July 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

The Company’s results

of operations include expenses relating to stock-based compensation for three months ended July 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

For the Three Months Ended July 31,

General and administrative

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:

As of July 31, 2023, total

unamortized stock-based compensation expense related to unvested employee and non-employee awards that are expected to vest was $ 1.0 million.

The weighted-average period over which such stock-based compensation expense will be recognized is approximately 1.3 years.

The following table summarizes

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

Schedule of common stock warrants outstanding

$ 1.00 - $ 6.25

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)

Risk-free interest rate

0.87 % - 0.90 %

Dividend yield

Expected Term:

term represents the period that the warrants granted are expected to be outstanding.

Expected Volatility:

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 January 31, 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:

Company based the risk-free interest rate over the expected term of the warrants based on the constant maturity rate of U.S.

securities with similar maturities as of the date of the grant.

Expected Dividend:

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

Therefore, the expected dividend yield was zero.

OTHER RELATED PARTY TRANSACTIONS

In March 2021, the Company entered into

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.

Under the terms of the securities purchase agreement, AL (i) purchased an additional 1,333,333 shares of Common

Stock upon approval of the IND for Phase IA clinical trials for AL001 for a purchase price of $2 million, and (ii) purchased 2,666,667

shares of Common Stock upon the completion of Phase IA clinical trials for AL001 for a purchase price of $4 million.

The Company issued

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 of 18 months following the date of the payment of the final tranche of $4 million, AL 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.

In November 2022, the Company entered into

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.

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

Contractual Obligations

On May 1, 2016, the Company entered into

a Standard Exclusive License Agreement for ALZN002 with Sublicensing Terms with Licensor, pursuant to which Licensor granted the Company

a royalty bearing exclusive worldwide license limited to the field of Alzheimer’s Immunotherapy and Diagnostics, under United States

8,188,046, entitled “Amyloid Beta Peptides and Methods of Use,” filed April 7, 2009 and granted May 29, 2012.

are certain initial license fees and milestone payments required to be paid by the Company to the Licensor pursuant to the terms of license

The license agreements for ALZN002 require the Company to pay royalty payments of 4 % on net sales of products developed

from the licensed technology for ALZN002 while the license agreements for AL001 require that the Company pay combined royalty payments

of 4.5 % on net sales of products developed from the licensed technology for AL001.

On July 2, 2018,

the Company entered into two Standard Exclusive License Agreements with Sublicensing Terms for AL001 with the Licensor and its affiliate,

the University of South Florida (the “AL001 Licenses”), pursuant to which the Licensor granted the Company a royalty bearing

exclusive worldwide licenses limited to the field of Alzheimer’s, under United States Patent Nos.

(i) 9,840,521, entitled “Organic

Anion Lithium Ionic Cocrystal Compounds and Compositions”, filed September 24, 2015 and granted December 12, 2017, and (ii) 9,603,869,

entitled “Lithium Co-Crystals for Treatment of Neuropsychiatric Disorders”, filed May 21, 2016 and granted March 28, 2017.

On February 1, 2019, the Company entered into the First Amendments to the AL001 Licenses, on March 30, 2021, the Company entered into

the Second Amendments to the AL001 Licenses and on June 8, 2023, the Company entered into the Third Amendments to the AL001 Licenses (collectively,

the “AL001 License Agreements”).

The Third Amendments to the AL001 Licenses modified the timing of the payments license fees.

The AL001 License Agreements require that the Company pay combined

royalty payments of 4.5% on net sales of products developed from the licensed technology for AL001.

The Company has already

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

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

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

Minimum royalties for AL001 License Agreements are $40,000 on

the first anniversary of the first commercial sale, $80,000 on the second anniversary of the first commercial sale and $100,000 on

the third anniversary of the first commercial sale and every year thereafter, for the life of the AL001 License Agreements.

On May 1, 2016,

the Company entered into a Standard Exclusive License Agreement with Sublicensing Terms for ALZN002 with the Licensor (the “ALZN002

License”), pursuant to which the Licensor granted the Company a royalty bearing exclusive worldwide license limited to the field

of Alzheimer’s Immunotherapy and Diagnostics, under United States Patent No.

8,188,046, entitled “Amyloid Beta Peptides and

Methods of Use”, filed April 7, 2009 and granted May 29, 2012.

On August 18, 2017, the Company entered into the First Amendment

to the ALZN002 License, on May 7, 2018, the Company entered into the Second Amendment to the ALZN002 License, on January 31, 2019, the

Company entered into the Third Amendment to the ALZN002 License, on January 24, 2020, the Company entered into the Fourth Amendment to

the ALZN002 License, on March 30, 2021, the Company entered into the Fifth Amendment to the ALZN002 License and on April 17, 2023, the

Company entered into the Sixth Amendment to the ALZN002 License (collectively, the “ALZN002 License Agreement”).

Amendments to the ALZN002 License modified the timing of the payments license fees.

The ALZN002 License Agreement requires the Company to pay royalty payments

of 4% on net sales of products developed from the licensed technology for ALZN002.

The Company has already paid an initial

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 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 follows:

Original AL001 License:

license fee of $200,000 for ALZN002.

As an additional licensing fee for the license of ALZN002, the Licensor received 3,601,809 shares

of the Company’s common stock.

Minimum royalties for ALZN002 are $20,000 on the first anniversary of the first commercial sale,

$40,000 on the second anniversary of the first commercial sale and $50,000 on the third anniversary of the first commercial

sale and every year thereafter, for the life of the ALZN002 License Agreement.

On November 19,

2019, the Company entered into two Standard Exclusive License Agreements with Sublicensing Terms for two additional indications of AL001

with the Licensor (the “November AL001 License”), pursuant to which the Licensor granted the Company a royalty bearing exclusive

worldwide licenses limited to the fields of (i) neurodegenerative diseases excluding Alzheimer’s and (ii) psychiatric diseases and

On March 30, 2021, the Company entered into the First Amendments to the November AL001 License and on April 17, 2023, the Company

entered into the Second Amendments to the November AL001 License (collectively, the “November AL001 License Agreements”).

The Second Amendments to the November AL001 License modified the timing of the payments license fees.

The November AL001 License Agreements require the Company to pay royalty

payments of 3% on net sales of products developed from the licensed technology for AL001 in those fields.

The Company paid

an initial license fee of $20,000 for the additional indications.

Minimum royalties for November AL001 License Agreements are $40,000 on

the first anniversary of the first commercial sale, $80,000 on the second anniversary of the first commercial sale and $100,000 on

the third anniversary of the first commercial sale and every year thereafter, for the life of the November AL001 License Agreements.

license agreements have an indefinite term that continue until the later of the date no licensed patent under the applicable agreement

remains a pending application or enforceable patent, the end date of any period of market exclusivity granted by a governmental regulatory

body, or the date on which the Company’s obligations to pay royalties expire under the applicable license agreement.

Under the various

license agreements, if the Company fails to meet a milestone by its specified date, Licensor may terminate the license agreement.

Licensor was also granted a preemptive right to acquire such shares or other equity securities that may be issued from time to time by

the Company while the Licensor remains the owner of any equity securities of the Company.

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 Licenses:

Schedule of contractual obligation, fiscal year maturity

7 unchanged sentences

Upon completion of first clinical trial

12 months from completion of the first Phase II clinical trial

24 months from completion of first Phase II clinical trial

Upon first patient treated in a Phase III clinical trial

8 years from the effective date of the agreement

Food and Drug Administration (“FDA”) approval

Upon FDA approval

Milestone met and completed

ALZN002 License:

Completed September 2022

Completed January 2022

Upon IND application filing

12 months from IND application filing date

Upon first dosing of patient in first Phase I clinical trial

12 months from first patient dosed in Phase I

Upon completion of first Phase I clinical trial

September 2023

Upon first dosing of patient in Phase I clinical trial

24 months from completion of first Phase I clinical trial

Upon completion of first Phase II clinical trial

12 months from completion of the first Phase II clinical trial

12 months from completion of first Phase II clinical trial

Upon first patient treated in a Phase III clinical trial

7 years from the effective date of the agreement

Upon FDA BLA approval

Upon FDA Biologics License Application approval

Milestone met and completed

Company has met the pre-IND meeting, IND application filing, and successfully completed the Phase I clinical trial milestones encompassing

AL001 and the IND application filing milestone for ALZN002.

If the Company fails to meet a milestone by its specified date, the Licensor

may terminate the license agreement.

was also granted a preemptive right to acquire such shares or other equity securities that may be issued from time to time by the Company

while Licensor remains the owner of any equity securities of the Company.

June 10, 2020, the Company obtained two (2) additional royalty-bearing exclusive worldwide licenses from the Licensor to a therapy

One of the additional licenses is for the treatment of neurodegenerative diseases excluding Alzheimer’s and the other

license is for the treatment of psychiatric diseases and disorders.

There are certain license fees and milestone payments required to

be paid pursuant to the terms of the Standard Exclusive License Agreements with Sublicensing Terms, both dated June 10, 2020 and

effective as of November 1, 2019, with the Licensor and the University of South Florida (the “June AL001 License Agreements”).

Under each of the June AL001 License Agreements, a royalty payment of 3 % is required on net sales of products developed from the

licensed technology.

For the two (2) additional AL001 licenses, in the aggregate, the Company has paid initial license fees of $ 20,000 .

Additionally, under each of the June AL001 License Agreements, the Company is required to pay milestone payments on the due dates to the

Licensor for the license of the technology, as follows:

Additional AL001 Licenses:

Upon IND application filing

IND application filing

12 months from IND filing date

Upon first dosing of patient in a clinical trial

12 months from first patient dosing

Upon Completion of first clinical trial

36 months from completion of the first Phase II clinical trial

AL001 Licenses:

36 months from completion of first Phase II clinical trial

Upon first patient treated in a Phase III clinical trial

8 years from the effective date of the agreement

August 1, 2029

First commercial sale

EQUITY TRANSACTIONS

The Company is

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

The Board has designated 1,360,000 shares as the Series A

Preferred Shares.

The rights, preferences, privileges and restrictions on the remaining authorized 8,640,000 shares of Preferred Stock

have not been determined.

The Board is authorized to create a new series of preferred shares and determine the number of shares, as well

as the rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred shares.

Series A Preferred Shares

As of January 31, 2023, there were no Series

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

On April 30, 2019, the Company and ALSF

entered into a SPA for the purchase of 10,000,000 shares of Common Stock for a total purchase price of $ 15,000,000 , or $ 1.50 per share

with 5,000,000 warrants with a 5 -year life and an exercise price of $ 3.00 per share and vesting upon issuance.

The total purchase price

of $ 15,000,000 was in the form of a non-interest bearing note receivable with a 12 -month term from ALSF, a related party.

secured by a pledge of the purchased shares.

Pursuant to the SPA, ALSF is entitled to full ratchet anti-dilution protection, most-favored

nation status, denying the Company the right to enter into a variable rate transaction absent its consent, a right to participate in any

future financing the Company may consummate and to have all the shares of Common Stock to which it is entitled under the SPA registered

under the Securities Act within 180 days of the final closing of the IPO.

In May 2021, the term of the note receivable was extended to

December 31, 2023.

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

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

Series A Convertible Preferred Stock.

The rights, preferences, privileges and restrictions on the remaining authorized 8,640,000 shares

of Preferred Stock have not been determined.

The Board is authorized to create a new series of preferred shares and determine the number

of shares, as well as the rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred shares.

Series A Convertible

Preferred Stock

As of July 31, 2023, there

were no shares of Series A Convertible Preferred Stock issued or outstanding.

On April 30, 2019, the Company

and ALSF entered into a securities purchase agreement (the “SPA”) for the purchase of 10,000,000 shares of Common Stock for

a total purchase price of $ 15,000,000 , or $ 1.50 per share with 5,000,000 warrants with a 5 -year life and an exercise price of $ 3.00 per

share and vesting upon issuance.

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

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

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

In March 2021, the Company entered into

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 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,

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

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

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

purchase price of $2 million, and (ii) 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

of 18 months following the date of the payment of the final tranche of $4 million, on April 28, 2022, AL 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.

Pursuant to the SPA, ALSF is entitled

to full ratchet anti-dilution protection, most-favored nation status, denying the Company the right to enter into a variable rate transaction

absent its consent, a right to participate in any future financing the Company may consummate and to have all the shares of Common Stock

to which it is entitled under the SPA registered under the Securities Act within 180 days of the final closing of the IPO.

the term of the note receivable was extended to December 31, 2023.

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

In March 2021, the Company

entered into a securities purchase agreement with Ault Lending, LLC, formerly known as Digital Power Lending, LLC (“Ault Lending”)

pursuant to which the Company agreed to sell an aggregate of 6,666,667 shares of Common Stock for an aggregate of $ 10 million, or $ 1.50

per share, which sales will be made in tranches.

On March 9, 2021, Ault Lending 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

Under the terms of the securities purchase agreement, Ault Lending (i) purchased an additional 1,333,333 shares of Common Stock

upon approval by the FDA of the Company’s IND for its Phase IA clinical trials for AL001 for a purchase price of $2 million, and

(ii) purchased 2,666,667 shares of Common Stock upon the completion of these Phase IA clinical trials for AL001 for a purchase price of

In addition, the Company issued to Ault Lending warrants to purchase 3,333,333 shares of Common Stock at an exercise price

of $3.00 per share.

The term of the warrants is five years.

Finally, the Company agreed

that for a period of 18 months following the date of the payment of the final tranche of $4 million, on April 28, 2022, 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.

RELATED PARTY TRANSACTIONS

November 2022, the Company entered into a marketing and brand development agreement with Ault Alliance, Inc.

(“AULT”), effective

August 1, 2022, whereby AULT 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 July 31, 2023,

the balance of related party prepaid expenses was zero.

SUBSEQUENT EVENTS

The Company has evaluated subsequent events

through the date the financial statements were issued.

The Company has determined that there are no such events that warrant disclosure

or recognition in the condensed financial statements presented herein.

On September 8, 2023, the

Company entered into an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with Ascendiant Capital Markets, LLC,

as sales agent to sell shares of its Common stock, having an aggregate offering price of up to approximately $ 9.8 million (the “Shares”)

from time to time, through an “at the market offering” (the “ATM Offering”) as defined in Rule 415 under the Securities

Act of 1933, as amended (the “Securities Act”).

On September 8, 2023, the Company filed a prospectus supplement with the SEC

relating to the offer and sale of up to approximately $ 9.8 million in shares of common stock in the ATM Offering.

The offer and sale of the Shares will be made

pursuant to the Company’s effective “shelf” registration statement on Form S-3 and an accompanying base prospectus

contained therein (Registration Statement No.

333-273610) filed with the SEC on August 2, 2023 and declared effective by the SEC

on August 10, 2023.

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