What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-09-13 compared with 2023-03-15 · 384 added, 518 removed, 134 unchanged (87% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following management’s

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NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains

forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange

Act of 1934, as amended (the “Exchange Act”).

This section should be read in conjunction with our unaudited condensed financial

statements and related notes included in Part I, Item 1 of this report.

The statements contained in this report that are not purely historical

are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange

These statements relate to future events

or our future financial performance.

This Quarterly Report on Form 10-Q contains forward-looking

statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as

amended (the “Exchange Act”).

This section should be read in conjunction with our unaudited condensed financial statements

and related notes included in Part I, Item 1 of this report.

The statements contained in this report that are not purely historical are

forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange

These statements relate to future events or our

future financial performance.

We have attempted to identify forward-looking statements by terminology including “anticipates,”

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of activity, performance or achievements.

In this Quarterly

Report, unless the context requires otherwise, references to the “Company,” “Alzamend,” “we,” “our

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

We were incorporated on February 26, 2016,

as Alzamend Neuro, Inc.

In this Quarterly Report,

unless the context requires otherwise, references to the “Company,” “Alzamend,” “we,” “our company”

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

incorporated on February 26, 2016, as Alzamend Neuro, Inc.

under the laws of the State of Delaware.

We were formed to acquire and commercialize patented intellectual property

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

With our two product candidates, we aim

to bring treatment or cures not only for Alzheimer’s, but also, bipolar disorder (“BD”), major depressive disorder (“MDD”)

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

Existing Alzheimer’s treatments only temporarily relieve symptoms but do

not, to our knowledge, slow or halt the underlying worsening of the disease.

We have developed a novel approach in an attempt to combat

Alzheimer’s through immunotherapy.

We were formed to acquire and commercialize

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

two product candidates, we aim to bring treatment or cures not only for Alzheimer’s, but also, bipolar disorder (“BD”),

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

Existing Alzheimer’s treatments

only temporarily relieve symptoms but do not, to our knowledge, slow or halt the underlying worsening of the disease.

We have developed

a novel approach to combat Alzheimer’s through immunotherapy.

Critical Accounting Policies and Estimates

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as well as fees paid to other entities that conduct certain research and development activities on behalf of our company.

We have acquired and may continue to acquire

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

The upfront payments to acquire license, product or

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

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

We have acquired and may continue to acquire the

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

The upfront payments to acquire license, product or rights,

as well as any future milestone payments, are immediately recognized as research and development expense provided that there is no alternative

future use of the rights in other research and development projects.

Stock-Based Compensation.

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· Fair Value of Common Stock.

See the subsection titled “Common Stock Valuations”

the subsection titled “Common Stock Valuations” below.

· Risk-Free Interest Rate.

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

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

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

Treasury zero coupon issues in effect at the time of grant for periods corresponding with

the expected term of the option.

· Expected Volatility.

Because we do not have a sufficient trading history for our common

stock (“Common Stock”), the expected volatility was estimated based on the average volatility for comparable publicly traded

life sciences companies over a period equal to the expected term of the stock option grants.

The comparable companies were chosen based

on the similar size, stage in life cycle or area of specialty.

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

information regarding the volatility of our own stock price becomes available.

we do not have a sufficient trading history for our common stock (“Common Stock”), the expected volatility was estimated based

on the average volatility for comparable publicly traded life sciences companies over a period equal to the expected term of the stock

option grants.

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

We will continue

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

· Expected Term.

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

are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the

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

term represents the period that the stock-based awards are expected to be outstanding and is determined using the simplified method (based

on the mid-point between the vesting date and the end of the contractual term), as we do not have sufficient historical data to use any

other method to estimate expected term.

· Expected Dividend Yield.

We have never paid dividends on our Common Stock and have

no plans to pay dividends on our Common Stock.

Therefore, we used an expected dividend yield of zero.

have never paid dividends on our Common Stock and have no plans to pay dividends on our Common Stock.

Therefore, we used an expected dividend

yield of zero.

Certain of such assumptions involve inherent

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These factors included, but were not limited to:

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

· our stage of development and material risks related to our business;

· our results of operations and financial position,

including our levels of available capital resources;

· our stage of development and material risks related

to our business;

· progress of our research and development activities;

· our business conditions and projections;

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

recently completed mergers and acquisitions of peer companies;

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

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

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

company, given prevailing market conditions;

· the valuation of publicly traded companies in

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

· the lack of marketability of our Common Stock

as a private company;

· the prices at which we sold shares of our Common

Stock to outside investors in arms-length transactions;

· the likelihood of achieving a liquidity event

for our security holders, such as an IPO or a sale of our company, given prevailing market conditions;

· trends and developments in our industry;

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

Following the closing of our IPO, our Board

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

· external market conditions affecting the life

sciences and biotechnology industry sectors.

Following the closing of our IPO, our Board determined

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

Plan of Operations

Our plan of operations

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

an Investigational New Drug (“IND”) application for AL001 to the FDA on June 30, 2021.

On July 28, 2021, we announced receipt

of FDA “Study May Proceed” letter for a Phase I study under our IND application for AL001, a lithium-based ionic cocrystal

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

On August 17, 2021,

we announced that we have contracted Altasciences Clinical Kansas (“Altasciences”) to conduct a six-month Phase I relative

bioavailability study for AL001 for dementia related to Alzheimer’s beginning in September 2021.

The Phase I first-in-human study

was for the purpose of determining potential clinically safe and appropriate dosing for AL001 in future studies.

The Phase I study investigated

the pharmacokinetics (the movement of drug through the body) of lithium following a single dose of AL001 (the “study drug”)

compared to a typical single dose of a marketed 300 mg immediate-release lithium carbonate capsule (the “comparator” –

currently indicated to treat mood disorders) in healthy male and female subjects.

The lithium and salicylate components of AL001 was given

within the amounts already approved for use in patients.

The purpose of the research study was to test the safety, tolerability, and bioavailability

(how much and when drug gets in the body) of the study drug, AL001, compared to the currently marketed formulation of the comparator,

lithium carbonate.

This was expected to ascertain what AL001 doses should be given, and how often, in subsequent Phase 2 safety and efficacy

trials involving Alzheimer’s patients.

At least 24 healthy male and female human subjects participated in the Phase I trial.

We intend to develop

and commercialize therapeutics that are better than existing treatments and have the potential to significantly improve the lives of individuals

afflicted by Alzheimer’s, BD, MDD and PTSD.

To achieve these goals, we are pursuing the following key business strategies:

· Advance clinical development of AL001 for Alzheimer’s,

BD, MDD and PTSD treatment;

· Advance clinical development of ALZN002 for Alzheimer’s

· Expand our pipeline of pharmaceuticals to include

additional indications for AL001 and delivery methods;

· Focus on translational and functional endpoints

to efficiently develop product candidates;

· Optimize the value of AL001 and ALZN002 in major

pipeline consists of two novel therapeutic drug candidates:

· AL001 - A patented ionic cocrystal technology

delivering a therapeutic combination of lithium, salicylate and proline through three royalty-bearing exclusive worldwide licenses from

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

· ALZN002 - 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 through a royalty-bearing exclusive worldwide license from the Licensor.

Our most advanced product

candidate (lead product) licensed and in clinical development in humans is AL001, an ionic cocrystal of lithium for the treatment of Alzheimer’s,

BD, MDD and PTSD.

Based on our preclinical data involving mice models, AL001 treatment prevented cognitive deficits, depression and irritability

and is superior in improving associative learning and memory and irritability compared with lithium carbonate treatments, supporting the

potential of this lithium formulation for the treatment of Alzheimer’s, BD, MDD and PTSD in humans.

Lithium has been marketed for

more than 35 years and human toxicology regarding lithium use has been well characterized, potentially mitigating the regulatory burden

for safety data.

On May 5, 2022, we initiated a multiple-dose,

steady-state, double-blind, ascending dose safety, tolerability, pharmacokinetic clinical trial of AL001 in patients with mild to moderate

Alzheimer’s and healthy subjects.

We completed the Phase IIA clinical trial patient dosing in March 2023 and announced positive

topline data in June 2023.

We announced that we

successfully identified a maximum tolerated dose (“MTD”) for development of AL001 from a multiple-ascending dose study as

assessed by an independent safety review committee.

This dose, providing lithium at a lithium carbonate equivalent dose of 240 mg 3-times

daily (“TID”), is designed to be unlikely to require lithium therapeutic drug monitoring (“TDM”).

Also, this MTD

is risk mitigated for the purpose of treating fragile populations, such as Alzheimer’s patients.

Lithium is a commonly prescribed drug for manic

episodes in BD type 1 as well as maintenance therapy of BD in patients with a history of manic episodes.

Lithium is also prescribed off-label

for MDD, BD and treatment of PTSD, among other disorders.

Lithium was the first mood stabilizer approved by the U.S.

Food and Drug Administration

(“FDA”) and is still a first-line treatment option (considered the “gold standard”) but is underutilized perhaps

because of the need for TDM.

Lithium was the first drug that required TDM by regulatory authorities in product labelling because the effective

and safe range of therapeutic drug blood concentrations is narrow and well defined for treatment of BD when using lithium salts.

above this range can be toxic, and below can impair effectiveness.

Based on the results

from our Phase IIA MAD study, we plan to initiate two safety and efficacy clinical trials in subjects with mild to moderate dementia of

the Alzheimer’s type.

Additionally, we intend to investigate the potential of AL001 for patients suffering from BD, MDD and PTSD

by submitting Investigational New Drug (“IND”) applications to the FDA for these indications.

The IND for BD was filed in

August 2023 and the INDs for MDD and PTSD are expected to be filed by the end of 2023.

After FDA permission to proceed on the INDs, we

intend to initiate clinical trials at this MTD to determine relative increased lithium levels in the brain compared to a marketed lithium

salt for BD, MDD and PTSD, based on published mouse studies that predict that lithium can be given at lower doses for equivalent therapeutic

benefit when treating with AL001.

For example, the goal is to replace a 300 mg TID lithium carbonate dose for treatment of BD with a 240

mg TID AL001 lithium equivalent, which represents a daily decrease of 20% of lithium given to a patient.

We submitted a pre-IND

meeting request for ALZN002 and supporting briefing documents to the Center for Biological Evaluation and Research of the FDA on July

We received a written response relating to the pre-IND from the FDA providing a path for Alzamend’s planned clinical development

of ALZN002 on September 30, 2021.

The FDA agreed to allow Alzamend to submit an IND to conduct a combined Phase I/II study.

On September 28, 2022,

2021, we announced that the first group of healthy participants were dosed in a six-month Phase I relative bioavailability study for AL001

for dementia related to Alzheimer’s.

On March 28, 2022, we announced receipt of full data set from the Phase I clinical trial for

The full data set builds upon topline data previously reported on December 17, 2021.

This data affirmed that dose-adjusted relative

bioavailability analysis of the rate and extent of lithium absorption in plasma indicate that AL001 as 150 mg dosage is bioavailability

to the marketed 300 mg lithium carbonate product and the shapes of the lithium plasma concentration versus time curves are similar.

salicylate plasma concentrations are observed to be well tolerated and consistently within safe limits and the safety profiles of both

AL001 and the marketed lithium carbonate capsule were benign.

During Phase I first-in-human trial, participants

received a single dose of AL001 containing lithium in an amount equivalent to 150 mg lithium carbonate;

this is the dose proposed by the

inventors as likely appropriate for Alzheimer’s treatment when given three times daily (“TID”).

Currently, marketed

immediate-release lithium carbonate 300 mg are given TID;

for example, lithium carbonate 300 mg TID is a dose commonly used for bipolar

affective disorders.

It can be difficult to set the appropriate dose of lithium carbonate and other lithium products due to the small

margin between effective and toxic blood levels and to avoid side effects or inadequate treatment outcomes.

We see the possibility of

providing the benefits from lithium at up to 50% of the currently approved lithium carbonate dosage, with the potential for better outcomes

and with elimination of the need for lithium therapeutic drug monitoring.

Moreover, the data confirms AL001’s potential as a replacement

of the current lithium-based treatments and may provide a treatment for over 40 million Americans suffering from Alzheimer’s and

other neurodegenerative diseases and psychiatric disorders.

Such findings may allow us to design a development

program that will potentially reduce the amount of new data generated to support approval.

Bioequivalence may have utility for AL001 when

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

the systemic pharmacokinetic similarity to marketed immediate-release lithium carbonate products, AL001 may be dosed TID in the planned

Phase II study, a multiple ascending dose safety study in Alzheimer’s patients.

In addition, we are pursuing investigational new

drug applications with the FDA for BD, MDD, and PTSD.

On April 28, 2022, we announced that Ault

Lending, LLC (“AL”) has made an additional investment in our company.

On March 28, 2022, we announced receipt of the full

data set from Phase I clinical trial for AL001.

Based on the achievement of this milestone, under the March 12, 2021, securities purchase

agreement, we sold an additional 2,666,667 shares of common stock to AL for $4 million, or $1.50 per share, and issued to AL warrants

to acquire 1,333,333 shares of common stock with an exercise price of $3.00 per share.

2022, we announced that the first patient with mild to moderate Alzheimer’s was dosed in a 12-month Phase IIA multiple

ascending dose (“MAD”) study for dementia related to Alzheimer’s.

The Phase IIA study will evaluate the safety and

tolerability of AL001 under multiple-dose, steady-state conditions and determine the maximum tolerated dose in patients diagnosed

with mild to moderate Alzheimer’s.

Lithium has been well characterized for safety and is approved/marketed in multiple

formulations for bipolar affective disorders.

Lithium dosing for the MAD cohorts is based on a fraction of the usual dose for

treatment of bipolar affective disorder (i.e., AL001 lithium content at a lithium carbonate equivalent of 300 mg TID, daily total of

900 mg), with the target dose for Alzheimer’s treatment at half of that lithium carbonate equivalent value (150 mg TID, daily

total of 450 mg).

In each cohort, consisting of six active and two placebo patients (as per randomization), multiple ascending doses

will be administered TID for 14 days under fasted conditions (at least 1 hour before or 4 hours after meals) up to

tolerability/safety limits.

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

Up to 40 subjects will complete the Phase IIA trial.

The maximum tolerated dose will then be used for further studies.

On October 5, 2022, we announced the addition of a healthy adult subject cohort to the MAD study and that the first healthy patient

On May 17, 2022,

we announced submission of a Pre-IND meeting request for AL001 and supporting briefing documents to the FDA for the treatment of BD, MDD

On July 18, 2022, we announced receipt of a written response from the FDA to our meeting request relating to our Pre-IND application.

The FDA’s response provided a path for our planned clinical development of AL001 for the treatment of BD, MDD and PTSD.

the FDA’s written feedback, we anticipate filing INDs for BD, MDD and PTSD upon the completion of the current Phase IIA MAD study.

This will allow us to initiate Phase II clinical trials for all three new indications.

We have an additional preclinical candidate for Alzheimer’s,

ALZN002, which has transitioned from early-stage development to an extensive program of preclinical study and evaluation, which was completed

on May 31, 2021.

This was followed by a comprehensive report prepared by Charles River Laboratories, Inc., an independent preclinical

service provider, received on July 23, 2021.

Our preclinical program included a toxicologic evaluation, histopathology study and brain

beta amyloid analysis and was expanded to include an immunoglobulin analysis and biodistribution study.

On July 30, 2021, we announced that we submitted

a pre-IND meeting request for ALZN002 and supporting briefing documents to the Center for Biological Evaluation and Research of the FDA.

On September 30, 2021, we announced that we have received a written response to our meeting request relating to our Type B Pre-IND application

from the FDA providing a path for our planned clinical development of ALZN002.

ALZN002 is a patented method using a mutant-peptide sensitized

cell as a cell-based therapeutic vaccine that seeks to restore the ability of a patient’s immunological system to combat Alzheimer’s.

Preclinical work supports ALZN002 being associated with a positive anti-inflammatory response and a decrease in brain amyloid contents.

Based on ALZN002’s positive toxicology results, the biologic nature of this product and the urgent need to deliver treatments for

Alzheimer’s to patients, we proposed, and the FDA agreed, to conduct a combined Phase I/II study.

On September 29, 2022, we announced that

we submitted an IND application to the FDA for ALZN002 to conduct a Phase I/IIA clinical trial.

The purpose of this trial is to assess

the safety, tolerability, and efficacy of multiple ascending doses of ALZN002 compared with that of placebo in 20-30 subjects with mild

to moderate dementia of the Alzheimer’s type.

Also, the trial is designed to determine the optimal dosage of ALZN002, allowing for

induction of anti-Amyloid-beta antibody responses that can target Alzheimer’s-associated brain proteins while maintaining safety.

The primary goal of this initial clinical trial is to determine an appropriate dose of ALZN002 for treatment of patients with Alzheimer’s

in a larger Phase IIB efficacy and safety clinical trial (ALZN002-02), which we expect to initiate within three months of receiving data

from the initial trial.

On October 31, 2022 we announced receipt

of a “study may proceed” letter from the FDA for a phase I/IIA clinical trial under our IND application for ALZN002 to treat

mild to moderate dementia of the Alzheimer’s type.

We are advancing the process and expect that the first patient will be dosed

in the first quarter of 2023.

The continuation of our current plan of

operations with respect to completing our IND applications and conducting the series of human clinical trials for each of our therapeutics

requires us to raise additional capital to fund our operations.

Because our working capital requirements

depend upon numerous factors, including the progress of our preclinical and clinical testing, timing and cost of obtaining regulatory

approvals, changes in levels of resources that we devote to the development of manufacturing and marketing capabilities, competitive and

technological advances, status of competitors, and our ability to establish collaborative arrangements with other organizations, we will

require additional financing to fund future operations.

we submitted an IND application to the FDA for ALZN002 and received a “study may proceed” letter on October 31, 2022.

product candidate is an immunotherapy vaccine designed to treat mild to moderate dementia of the Alzheimer’s type.

proprietary “active” immunotherapy product, which means it is produced by each patient’s immune system.

of autologous DCs that are activated white blood cells taken from each individual patient so that they can be engineered outside of the

body to attack Alzheimer’s-related amyloid-beta proteins.

These DCs are pulsed with a novel amyloid-beta peptide (E22W) designed

to bolster the ability of the patient’s immune system to combat Alzheimer’s;

the goal being to foster tolerance to treatment

for safety purposes while stimulating the immune system to reduce the brain’s beta-amyloid protein burden, resulting in reduced

Alzheimer’s signs and symptoms.

Compared to passive immunization treatment approaches that use foreign blood products (such as monoclonal

antibodies), active immunization with ALZN002 is anticipated to offer a more robust and long-lasting effect on the clearance of amyloid.

This could provide a safer approach due to its reliance on autologous immune components, using each individual patient’s own white

blood cells rather than foreign cells and/or blood products.

On April 3, 2023, we

announced the initiation of a Phase I/IIA clinical trial for ALZN002 to treat mild to moderate dementia of the Alzheimer’s type.

The purpose of this trial is to assess the safety, tolerability, and efficacy of multiple ascending doses of ALZN002 compared with that

of placebo in 20-30 subjects with mild to moderate morbidity.

The primary goal of this clinical trial is to determine an appropriate dose

of ALZN002 for treatment of patients with Alzheimer’s in a larger Phase IIB efficacy and safety clinical trial, which Alzamend expects

to initiate within three months of receiving data from the initial trial.

The continuation of our current plan of operations

with respect to completing our IND applications and conducting the series of human clinical trials for each of our therapeutics requires

us to raise additional capital to fund our operations.

Because our working capital requirements depend

upon numerous factors, including the progress of our preclinical and clinical testing, timing and cost of obtaining regulatory approvals,

changes in levels of resources that we devote to the development of manufacturing and marketing capabilities, competitive and technological

advances, status of competitors, and our ability to establish collaborative arrangements with other organizations, we will require additional

financing to fund future operations.

Results of Operations

Results of Operations for the Three Months Ended January 31, 2023 and 2022

The following table summarizes the results

of our operations for the three months ended January 31, 2023 and 2022:

For the Three Months Ended January 31,

Results of Operations for the Three Months Ended July 31,

2023 and 2022

The following table summarizes the results of

our operations for the three months ended July 31, 2023 and 2022.

For the Three Months Ended July 31,

OPERATING EXPENSES

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$ (3,037,074 )

$ (2,852,709 )

Basic and diluted net loss per common share

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* Not meaningful

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

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

With our two product

candidates, we aim to bring treatments or cures not only for Alzheimer’s, but also BD, MDD and PTSD.

These product candidates are

in the early clinical stage of development and will require extensive clinical study, review and evaluation, regulatory review and approval,

significant marketing efforts and substantial investment before either or both of them, or any respective successors, will provide us

with any revenue.

We did not generate any revenues during the three months ended January 31, 2023 and 2022, and we do not anticipate that

we will generate revenue for the foreseeable future.

General and Administrative Expenses

General and administrative expenses for

each of the three months ended January 31, 2023 and 2022 were $2.5 million and $1.7 million, respectively.

As reflected in the table below,

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

stock-based compensation expense;

marketing fees;

travel and entertainment;

as well as salaries and benefits.

For the three months ended January

31, 2023 and 2022, the remaining general and administrative expenses of $119,000 and $102,000, respectively, consisted of payments for

filing fees, transfer agent fees, license fees, and other office expenses, none of which was significant individually.

For the Three Months Ended January 31,

Stock-based compensation expense

Professional fees

Salary and benefits

Travel and entertainment

Marketing fees

Board of director fees

Other general and administrative expenses

Total general and administrative expenses

* Not meaningful

Stock-Based Compensation Expense

During the three months ended January 31,

2023 and 2022, we incurred general and administrative stock-based compensation expense of $1.6 million and $1.0 million, respectively,

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

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

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

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

We valued the options at their date of grant utilizing the Black-Scholes

option pricing model.

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

Stock-based compensation

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

such obligations with cash payments.

Marketing Fees

During the three months ended January 31, 2023, we reported marketing

fees of $247,000, which were principally comprised of the related party marketing and brand development agreement.

Salaries and Benefits

During the three months ended January 31,

2023 and 2022, we incurred $233,000 and $204,000, respectively, in employee-related expenses.

As of January 31, 2023, we had four full-time

and three part-time employees.

our Executive Vice President and General Counsel and Kenneth S.

Cragun, our Senior Vice President of Finance work for us on a part-time

Nisser spends no less than an average of 8 hours per week on our company’s business and Mr.

Cragun spends no less than

an average of 4 hours per week on our company’s business.

have only two product candidates, AL001 and ALZN002.

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

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

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

We did not generate any revenues during

the three months ended July 31, 2023 and 2022, and we do not anticipate that we will generate revenue for the foreseeable future.

Research and Development Expenses

Research and development expenses for the

three months ended January 31, 2023 and 2022 were $2.9 million and $874,000, respectively.

As reflected in the table below, research and

development expenses primarily consisted of professional fees, clinical trial fees, licenses and fees, as well as stock-based compensation

For the Three Months Ended January 31,

Research and development expenses for the three months ended July 31,

2023 and 2022 were $2.4 million and $1.4 million, respectively.

As reflected in the table below, research and development expenses primarily

consisted of professional fees, clinical trial fees and licenses and fees.

For the Three Months Ended July 31,

Professional fees

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Licenses and fees

Stock-based compensation expense

Other research and development expenses

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Professional Fees

During the three months ended January 31,

2023 and 2022, we incurred professional fees of $861,000 and $480,000, respectively, which were principally comprised of professional

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

The increase relates to professional fees

incurred related to IND preparation for ALZN002.

During the three months ended July 31, 2023 and

2022, we reported professional fees of $1.1 million and $1.2 million, respectively, which were principally comprised of professional fees

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

The decrease relates to lower professional fees

incurred related to Phase IIA clinical trial monitoring AL001 partially offset by increased professional fees related to IND preparation

for the additional indications for AL001.

Clinical Trial Fees

During the three months ended January 31,

2023 and 2022, we incurred clinical trial fees of $2.1 million and $283,000, respectively, which were principally comprised of clinical

trial fees attributed to our Phase I and Phase IIA clinical trials for AL001.

During the three months ended July 31, 2023 and

2022, we incurred clinical trial fees of $1.2 million and $24,000, respectively.

Clinical trial fees for the three months ended July 31,

2023, consisted of $926,000 for our Phase IIA clinical trial for AL001 and $319,000 for our Phase IIA clinical trial for ALZN002.

trial fees for the three months ended July 31, 2022 were for our Phase I clinical trial for AL001.

Licenses and Fees

There are certain initial license fees and

milestone payments required to be paid to the University of South Florida and the Licensor, for the licenses of the technologies, pursuant

to the terms of the License Agreement with Sublicensing Terms.

Stock-Based Compensation Expense

During the three months ended January 31,

2023 and 2022, we incurred $(43,000) and $106,000, respectively, in research and development stock-based compensation expense related

to stock option grants to consultants.

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

Vesting of options

differs based on the terms of each option.

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

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

instead of settling such obligations with cash payments.

Other Expense, Net

Interest Expense

Interest expense was $2,000 for the three

months ended January 31, 2023, primarily related to financing of D&O insurance.

Results of Operations for the Nine Months Ended January 31, 2023 and 2022

The following table summarizes the results

of our operations for the nine months ended January 31, 2023 and 2022:

For the Nine Months Ended January 31,

OPERATING EXPENSES

Research and development

General and administrative

Total operating expenses

Loss from operations

(11,565,457 )

OTHER EXPENSE, NET

Interest expense

Total other expense, net

$ (11,572,639 )

$ (8,492,661 )

$ (3,079,978 )

Basic and diluted net loss per common share

Basic and diluted weighted average common shares outstanding

* Not meaningful

We were formed on February 26, 2016, to

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

With our two product candidates, we aim to bring treatment or cures not only for Alzheimer’s, but also BD, MDD

These product candidates are in the early clinical stage of development and will require extensive clinical study, review and

evaluation, regulatory review and approval, significant marketing efforts and substantial investment before either or both of them, or

any respective successors, will provide us with any revenue.

We did not generate any revenues during the nine months ended January 31,

2023 and 2022, and we do not anticipate that we will generate revenue for the foreseeable future.

There are certain initial license fees and milestone

payments required to be paid to the University of South Florida and the Licensor, for the licenses of the technologies, pursuant to the

terms of the License Agreement with Sublicensing Terms.

Other Research and Development Expenses

During the three months ended July 31, 2023 and

2022, we incurred other fees of $51,000 and $156,000, respectively, which were principally comprised of scientific materials required

for our clinical trials.

General and Administrative Expenses

General and administrative expenses for

each of the nine months ended January 31, 2023 and 2022 were $5.8 million and $4.9 million, respectively.

As reflected in the table below,

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

General and administrative expenses for the three

months ended July 31, 2023 and 2022 were $1.2 million and $1.7 million, respectively.

As reflected in the table below, general and administrative

expenses primarily consisted of the following expense categories:

stock-based compensation expense;

marketing fees;

travel and entertainment;

board of director fees;

professional fees;

as well as salaries and benefits.

For the nine months

ended January 31, 2023 and 2022, the remaining general and administrative expenses of $191,000 and $294,000, respectively, consisted of

payments for filing fees, transfer agent fees, license fees, and other office expenses, none of which is significant individually.

For the Nine Months Ended January 31,

For the three months ended July 31, 2023 and 2022, the remaining general and administrative

expenses of $121,000 and $128,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, travel and entertainment,

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

For the Three Months Ended July 31,

Stock-based compensation expense

7 unchanged sentences

Stock-Based Compensation Expense

During the nine months ended January 31,

2023 and 2022, we incurred general and administrative stock-based compensation expense of $3.1 million and $2.8 million, respectively,

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

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

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

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

We valued the shares issued for services

at their intrinsic value on the date of issuance.

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

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

Salaries and Benefits

During the nine months ended January 31,

2023 and 2022, we incurred $676,000 and $547,000, respectively, in employee-related expenses.

As of January 31, 2023, we had four full-time

and three part-time employees.

Nisser, our Executive Vice President and General Counsel

and Kenneth S.

Cragun, our Senior Vice President of Finance work for us on a part-time basis.

Nisser spends no less than an average

of 8 hours per week on our company’s business and Mr.

Cragun spends no less than an average of 4 hours per week on our company’s

During the three months ended July 31, 2023 and

2022, we incurred general and administrative stock-based compensation expense of $369,000 and $867,000, respectively, related to stock

option grants to executives, employees and consultants.

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

of options differs based on the terms of each option.

We valued the options at their date of grant utilizing the Black-Scholes option

pricing model.

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

Stock-based compensation is

a non-cash expense because we settle these obligations by issuing shares of our common stock from authorized shares instead of settling

such obligations with cash payments.

Professional Fees

During the nine months ended January 31,

2023 and 2022, we reported professional fees of $567,000 and $616,000, respectively, which were principally comprised of Spartan Capital

consulting fees and audit fees.

During the three months ended July 31,

2023 and 2022, we reported professional fees of $151,000 and $243,000, respectively, which were principally comprised of the following

Three Months Ended July 31, 2023

· During the three months ended July 31, 2023,

we incurred $78,000 in audit fees, $16,000 in tax preparation fees, $13,000 in related party consulting, $6,000 in Sarbanes-Oxley compliance

fees and $3,000 in miscellaneous fees.

Three Months Ended July 31, 2022

· During the three months ended July 31, 2022,

we recorded an expense of $70,000 in connection with the five-year consulting agreement with Spartan Capital.

· During the three months ended July 31, 2022,

we incurred $80,000 in audit fees, $23,000 in Sarbanes-Oxley compliance fees, $24,000 in tax preparation fees and $13,000 in related party

Insurance Expense

During the three months ended July 31, 2023 and

2022, we incurred insurance expense of $118,000 and $196,000, respectively, which was primarily directors’ and officers’ insurance.

Salaries and Benefits

During the three months ended July 31, 2023 and

2022, we incurred $153,000 and $224,000, respectively, in employee-related expenses.

As of July 31, 2023, we had four full-time and three

part-time employees.

Marketing Fees

During the nine months ended January 31, 2023 and 2022, we reported

marketing fees of $495,000 and $7,000, respectively, which were principally comprised of the related party marketing and brand development

During the nine months ended January 31, 2023 and 2022, we reported

insurance expense of $457,000 and $500,000, respectively, which was principally comprised of Directors and Officers insurance.

Research and Development Expenses

Research and development expenses for the

nine months ended January 31, 2023 and 2022 were $5.8 million and $3.5 million, respectively.

As reflected in the table below, research

and development expenses primarily consisted of professional fees, clinical trial fees, licenses and fees, as well as stock-based compensation

For the Nine Months Ended January 31,

Professional fees

Clinical trials fees

Licenses and fees

Stock-based compensation expense

Other research and development expenses

Total research and development expenses

Professional Fees

During the nine months ended January 31, 2023 and 2022, we reported

professional fees of $3.0 million and $1.9 million, respectively, which were principally comprised of professional fees attributed to

various types of scientific services, including FDA consulting services.

The increase relates to professional fees incurred related to

preparation of Phase IIA clinical trials for AL001 and IND preparation for ALZN002.

Clinical Trial Fees

During the nine months ended January 31, 2023 and 2022, we incurred

clinical trial fees of $2.6 million and $1.0 million, respectively, which were principally comprised of clinical trial fees attributed

to our Phase I and Phase IIA clinical trials for AL001.

Licenses and Fees

There are certain initial license fees and

milestone payments required to be paid to the University of South Florida and the Licensor, for the licenses of the technologies, pursuant

to the terms of the License Agreement with Sublicensing Terms.

Stock-Based Compensation Expense

During the nine months ended January 31,

2023 and 2022, we incurred $(43,000) and $359,000, respectively, in research and development stock-based compensation expense related

to stock option grants to consultants.

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

Vesting of options

differs based on the terms of each option.

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

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

instead of settling such obligations with cash payments.

Other Expense, Net

Interest Expense

Interest expense was $7,000 for the nine months ended January

31, 2023, primarily related to financing of D&O insurance.

During the three months ended July 31,

2023 and 2022, we incurred marketing fees of $247,000 and $1,000, respectively, which was primarily expenses related to the marketing

and brand development agreement with Ault Alliance, Inc., a related party.

Liquidity and Capital Resources

The accompanying financial statements have

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

As of January 31, 2023, we had cash of $7.4 million and

an accumulated deficit of $40.8 million.

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

31, 2023 totaling $5.4 million and $11.6 million, respectively.

In the past, we have financed our operations principally through issuances

of promissory notes and equity securities.

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

AL, pursuant to which we 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 the $50,000 convertible promissory note, previously issued to Ault Alliance, Inc.

(formerly, BitNile Holdings, Inc.), 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, in

July 2021, an additional 1,333,333 shares of Common Stock upon FDA approval of our IND for our Phase IA clinical trials for AL001 for

a purchase price of $2 million, and (ii) purchased, in April 2022, 2,666,667 shares of Common Stock upon completion of our Phase IA clinical

trials for AL001 for a purchase price of $4 million.

We issued AL warrants to purchase 3,333,333 shares of Common Stock at an exercise

price of $3.00 per share.

Finally, we agreed that for a period of eighteen months following the date of the payment of the final tranche

of $4 million, 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.

The accompanying financial statements have been

prepared assuming that we will continue as a going concern.

We have incurred recurring net losses and operations have not provided sufficient

We believe that we will continue to incur operating and net losses each quarter until at least the time we are able to generate

revenues from operations.

We believe our current cash on hand is insufficient to fund our planned

operations through one year after the date the financial statements are issued.

These factors create substantial doubt about our ability

to continue as a going concern for at least one year after the date that our financial statements are issued.

Our inability to continue as a going

concern could have a negative impact on our company, including our ability to obtain needed financing.

We intend to finance our future development activities and our working capital needs largely through the sale of equity securities with

some additional funding from other sources, including debt financing, until such time as funds provided by operations are sufficient to

fund working capital requirements.

Our 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 we be unable to continue as a going

As of July 31, 2023, we had cash of $1.7 million, an accumulated deficit of $47.6 million and stockholders’ deficit of

We have incurred recurring losses and reported losses for the three months ended July 31, 2023 totaling $3.5 million.

past, we have financed our operations principally through sales of equity securities and debt instruments.

We will need to obtain substantial additional

3 unchanged sentences

Our future capital requirements will depend on many factors, including:

· successful enrollment in, and completion of, clinical trials;

· our ability to establish agreements with third-party manufacturers for clinical supply for our clinical

trials and, if our product candidates are approved, commercial manufacturing;

· our ability to maintain our current research and development programs and establish new research and development

· addition and retention of key research and development personnel;

· our efforts to enhance operational, financial, and information management systems, and hire additional

personnel, including personnel to support development of our product candidates;

· negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter

and performing our obligations in such collaborations;

· the timing and amount of milestone and other payments we may receive under our collaboration arrangements;

· our eventual commercialization plans for our product candidates;

· the costs involved in prosecuting, defending, and enforcing patent claims and other intellectual property

· successful enrollment in and completion of clinical

· our ability to establish agreements with third-party

manufacturers for clinical supply for our clinical trials and, if our product candidates are approved, commercial manufacturing;

· our ability to maintain our current research

and development programs and establish new research and development programs;

· addition and retention of key research and development

· our efforts to enhance operational, financial,

and information management systems, and hire additional personnel, including personnel to support development of our product candidates;

· negotiating favorable terms in any collaboration,

licensing, or other arrangements into which we may enter and performing our obligations in such collaborations;

· the timing and amount of milestone and other

payments we may receive under our collaboration arrangements;

· our eventual commercialization plans for our

product candidates;

· the costs involved in prosecuting, defending,

and enforcing patent claims and other intellectual property claims;

· the costs and timing of regulatory approvals.

A change in the outcome of any of these

or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated

A change in the outcome of any of these or other

variables with respect to the development of any of our product candidates could significantly change the costs and timing associated

with the development of that product candidate.

1 unchanged sentence

funds to meet operational needs and capital requirements associated with such operating plans.

We expect to continue to incur losses for

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

our development and commercial operations.

However, based on our current business plan, we believe that our cash at January 31, 2023,

is sufficient to meet our anticipated cash requirements during the twelve-month period subsequent to the issuance of the financial statements

included in this Quarterly Report.

The following table summarizes our cash flows for the nine months

ended January 31, 2023 and 2022:

For the Nine Months Ended January 31,

Net cash provided by (used in):

On September 8, 2023, we

entered into a Sales Agreement with Ascendiant Capital Markets, LLC, as sales agent to sell Shares from time to time, through an ATM Offering

as defined in Rule 415 under the Securities Act.

On September 8, 2023, we 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 our 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.

The following table summarizes our cash flows for the three months

ended July 31, 2023 and 2022:

For the Three Months Ended July 31,

Net cash used in:

Operating activities

1 unchanged sentence

$ (2,536,690 )

Financing activities

Net (decrease) increase in cash

Investing activities

Net decrease in cash

$ (3,445,443 )

$ (2,536,690 )

Operating Activities

During the nine months ended January 31,

2023, net cash used in operating activities was $6.7 million.

This consisted primarily of a net loss of $11.6 million, partially offset

by an increase in our net operating assets and liabilities of $1.8 million and non-cash charges of $3.1 million.

The non-cash charges

primarily consisted of stock-based compensation expense.

The increase in our net operating assets and liabilities was due to an increase

in accounts payable and accrued liabilities and in prepaid expenses and other current assets.

During the nine months ended January 31, 2022, net cash used in operating

activities was $5.1 million.

This consisted primarily of a net loss of $8.5 million, partially offset by an increase in non-cash charges

of $3.2 million and our net operating assets and liabilities of $277,000.

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

The increase in our net operating assets and liabilities was primarily due to an increase in prepaid expenses and other current

During the three months ended July 31, 2023, net

cash used in operating activities was $3.3 million.

This consisted primarily of a net loss of $3.5 million and a decrease in our net operating

assets and liabilities of $152,000, partially offset by non-cash charges of $382,000.

The non-cash charges primarily consisted of stock-based

compensation expense.

The decrease in our net operating assets and liabilities was due to a decrease in accounts payable and accrued liabilities,

an increase in prepaid expenses and other current assets and a decrease in prepaid expenses - related party.

Investing Activities

There were no investing activities for the

nine months ended January 31, 2023 or 2022.

During the three months ended July 31, 2023, net

cash used in investing activities was $147,000 from the purchase of machinery and equipment.

We purchased equipment, which draws blood

from patients and separates the monocytes from their blood, to be used in the ALZN002 clinical trials.

Financing Activities

There were no financing activities for the

nine months ended January 31, 2023.

Financing activities for the nine months ended January 31, 2022 related primarily to proceeds from

our initial public offering.

License Agreement

On May 1, 2016,

we entered into a Standard Exclusive License Agreement for ALZN002 with Sublicensing Terms with the University of South Florida Research

Foundation, Inc., as licensor (the “Licensor”), pursuant to which the Licensor granted us a royalty bearing exclusive worldwide

license limited to the field of Alzheimer’s Immunotherapy and Diagnostics, under United States Patent No.

8,188,046, entitled “Amyloid

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

There are certain

initial license fees and milestone payments required to be paid by us to the Licensor, pursuant to the terms of license agreements we

have entered into with the Licensor.

The license agreements for ALZN002 require us 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 we pay combined royalty payments

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

We have 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 our common stock.

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

received 2,227,923 shares of our 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, we are 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:

There were no financing activities for the three months ended July

31, 2023 or 2022.

Contractual Obligations

On July 2, 2018, we 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 us 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, we entered into

the First Amendments to the AL001 Licenses, on March 30, 2021, we entered into the Second Amendments to the AL001 Licenses and on June

8, 2023, we entered into the Third Amendments to the AL001 Licenses (collectively, the “AL001 License Agreements”).

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

The AL001 License Agreements require that

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

We have 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 our 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, we entered into a Standard

Exclusive License Agreement with Sublicensing Terms for ALZN002 with the Licensor (the “ALZN002 License”), pursuant to which

the Licensor granted us a royalty bearing exclusive worldwide license limited to the field of Alzheimer’s Immunotherapy and Diagnostics,

under United States Patent No.

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

May 29, 2012.

On August 18, 2017, we entered into the First Amendment to the ALZN002 License, on May 7, 2018, we entered into the Second

Amendment to the ALZN002 License, on January 31, 2019, we entered into the Third Amendment to the ALZN002 License, on January 24, 2020,

we entered into the Fourth Amendment to the ALZN002 License, on March 30, 2021, we entered into the Fifth Amendment to the ALZN002 License

and on April 17, 2023, we entered into the Sixth Amendment to the ALZN002 License (collectively, the “ALZN002 License Agreement”).

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

The ALZN002 License Agreement requires us

to pay royalty payments of 4% on net sales of products developed from the licensed technology for ALZN002.

We have already paid an initial

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 our 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, we 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 us a royalty bearing exclusive worldwide licenses limited to the fields

of (i) neurodegenerative diseases excluding Alzheimer’s and (ii) psychiatric diseases and disorders.

On March 30, 2021, we entered

into the First Amendments to the November AL001 License and on April 17, 2023, we 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

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

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.

These 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 licensee’s

obligations to pay royalties expire under the applicable license agreement.

Under our various license agreements, if we fail to meet a

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

The Licensor was also granted a preemptive right to acquire

such shares or other equity securities that may be issued from time to time by us while the Licensor remains the owner of any equity securities

of our company.

Additionally, we are 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:

Completed September 2019

1 unchanged sentence

Completed June 2021

ND application filing

IND application filing

Completed December 2021

5 unchanged sentences

8 years from the effective date of the agreement

Upon FDA approval

Upon FDA NDA 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

We have 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 we fail to meet a milestone by its specified date, Licensor may terminate

the license agreement.

The Licensor was

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

Licensor remains the owner of any equity securities of our company.

June 10, 2020, we obtained two (2) additional royalty-bearing exclusive worldwide licenses from the Licensor to a therapy named AL001.

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”).

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

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

Additionally, under

each of the June AL001 License Agreements, we are required to pay milestone payments on the due dates to the Licensor for the license

of the technology, as follows:

Additional AL001 Licenses:

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

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

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements

that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues

or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Recent Accounting Standards

For information about recent accounting

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

under the heading “Recent Accounting Standards.”

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Because we are

a smaller reporting company, this section is not applicable.

Because we are a smaller

reporting company, this section is not applicable.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis