What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-07-30 compared with 2023-07-27 · 268 added, 218 removed, 350 unchanged (58% of the section changed)

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These assumptions include:

· Fair Value of Common Stock.

See the subsection titled “– Common Stock Valuations”

· Risk-Free Interest Rate.

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use significantly different assumptions or estimates, our stock-based compensation could be materially different.

Common Stock Valuations.

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

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

To determine the fair value

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

of Directors’ assessment of additional objective and subjective factors that it believed were relevant, and factors that may have

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

These factors included, but were not limited to:

· 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 initial public offering

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.

Income Taxes.

recognize deferred income taxes for the future tax consequences attribute to differences between the financial statement carrying amounts

recognize deferred income taxes for the future tax consequences attributed to differences between the financial statement carrying amounts

of existing assets and liabilities and their respective tax bases, operating loss and tax credit carryforwards.

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We had no uncertain tax positions as of April 30, 2024.

Recent Accounting Pronouncements

See Note 3 to our financial

statements included elsewhere in this report for additional information.

Preferred Stock Classification.

We analyze the terms of our preferred stock using Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities

from Equity , to determine whether our preferred stock should be classified as a liability or equity, and if classified as equity,

permanent or temporary.

Common criteria we consider are redemption provisions, conversion options, cumulative of mandatory fixed dividends,

discretionary dividends based on earning, voting rights and collateral requirements.

Emerging Growth Company Status

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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 IND applications to the FDA for these indication 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.

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 30, 2021.

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 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 are investigating the potential of AL001 for patients suffering from BD, MDD

and PTSD, and submitted IND applications to the FDA for these indications.

The IND for BD was submitted in August 2023 and we received

a “study may proceed” letter from the FDA in September 2023.

The IND for MDD was submitted in October 2023 and we received

a “study may proceed” letter from the FDA in November 2023.

The IND for PTSD was submitted in November 2023 and we received

a “study may proceed” from the FDA in December 2023.

We intend to initiate clinical trials in 2025 at this MTD to determine

relative increased lithium levels in the brain compared to a marketed lithium salt for Alzheimer’s, 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.

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.

September 28, 2022, we submitted an IND application to the FDA for ALZN002 and received a “study may proceed” letter on October

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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.

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

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

that of a 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.

13, 2024, we received notice from the company we engaged as our contract research organization (“CRO”), Biorasi, LLC (“Biorasi”)

that Biorasi was terminating our contract with them.

We are currently pursuing the engagement of a replacement CRO.

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.

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

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(14,870,466 )

(12,319,535 )

OTHER INCOME (EXPENSE), NET

OTHER EXPENSE, NET

Interest expense

Gain on extinguishment of debt

Total other income (expense), net

$ (14,878,167 )

Total other expense, net

$ (9,947,746 )

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Basic and diluted weighted average common shares outstanding

* Not meaningful

We currently have only two

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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 compensation

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

research and development expenses:

For the Year Ended April 30,

Professional fees

$ (1,719,414 )

Clinical trial fees

Licenses and fees

Stock compensation expense

Stock-based compensation expense

Other research and development expenses

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During the years ended April

30, 2023 and 2022, we incurred professional fees of $4.6 million and $3.7 million, respectively, which were principally comprised of professional

30, 2024 and 2023, we incurred professional fees of $2.9 million and $4.6 million, respectively, which were primarily comprised of professional

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

The increase relates to professional fees

incurred related to the Phase IIA study for AL001 for dementia related to Alzheimer’s.

The decrease relates to lower professional

fees incurred related to the preparation for the clinical trial for ALZN002 during the year ended April 30, 2024, compared to professional

fees incurred for the Phase IIA clinical trial for AL001 during the year ended April 30, 2023.

Clinical Trial Fees

During the years ended April

30, 2023 and 2022, we incurred clinical trial fees of $2.5 million and $0.2 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 Standard Exclusive License Agreement with Sublicensing Terms.

During the year ended April

30, 2023, we incurred $50,000 in license fees related to the IND filing for ALZN002.

During the year ended April 30, 2022, we incurred

$715,000 in license fees related to the completion of the Phase I study for AL001 for dementia related to Alzheimer’s.

Stock Compensation Expense

30, 2024 and 2023, we incurred clinical trial fees of $3.2 million and $2.5 million, respectively, Clinical trial fees for the year ended

April 30, 2024, consisted of $1.9 million for our Phase IIA clinical trial for AL001 and $1.3 million for our Phase IIA clinical trial

Clinical trial fees for the year ended April 30, 2023 were for our Phase I clinical trial for AL001.

Stock-Based Compensation Expense

During the years ended April

30, 2023 and 2022, we incurred $(43,000) and $423,000, respectively, in research and development stock compensation expense related to

stock option grants to consultants.

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

Vesting of options differs

based on the terms of each option.

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

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.

The gain in research and development stock compensation expense for the year ended April

30, 2023 was a result of forfeitures of stock options previously expensed.

30, 2024 and 2023, we incurred $214,000 and $(43,000), respectively, in research and development stock-based compensation expense related

to stock option grants to consultants.

The increase in research and development stock-based compensation expense for the year ended April

30, 2024 was a result of the vesting of performance stock options grants.

Other Research and Development Expenses

During the years ended April

30, 2023 and 2022, we incurred other fees of $0.4 million and $0.2 million, respectively, which were principally comprised of scientific

materials required for our clinical trials.

30, 2024 and 2023, we incurred other fees of $96,000 and $405,000, respectively, which were primarily comprised of scientific materials

required for our clinical trials.

General and Administrative Expenses

General and administrative expenses for the years ended April 30, 2023

and 2022 were $7.4 million and $7.1 million, respectively.

As reflected in the table below, general and administrative expenses primarily

consisted of the following expense categories:

stock compensation expense;

salary and benefits;

General and administrative

expenses for the years ended April 30, 2024 and 2023 were $3.5 million and $7.4 million, respectively.

As reflected in the table below,

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

stock-based compensation expense;

and benefits;

professional fees;

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travel and entertainment;

as well as board of director fees.

For the years ended April 30, 2023 and 2022, the remaining general and administrative

expenses of $319,000 and $336,000, respectively, primarily consisted of payments for advertising and promotion, transfer agent fees, travel,

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

as well as Board fees.

For the years ended April

30, 2024 and 2023, the remaining general and administrative expenses of $381,000 and $514,000, respectively, primarily consisted of payments

for advertising and promotion, transfer agent fees, travel, and other office expenses, none of which is significant individually.

For the Year Ended April 30,

Stock compensation expense

Salary and benefits

Stock-based compensation expense

Professional fees

Marketing fees

Insurance expense

Travel and entertainment

Board of director fees

Other general and administrative expenses

Total general and administrative expenses

Stock Compensation Expense

$ (3,942,071 )

Salary and Benefits

During the years ended April

30, 2023 and 2022, we incurred general and administrative stock compensation expense of $3.6 million and $4.0 million, respectively,

30, 2024 and 2023, we incurred $836,000 and $1.0 million, respectively, in employee-related expenses.

As of April 30, 2024, we had four

full-time and three part-time employees.

The decrease in salary and benefits expense was a result of lower bonuses earned during the year

ended April 30, 2024.

Stock-based Compensation Expense

During the years ended April

30, 2024 and 2023, we incurred general and administrative stock-based compensation expense of $741,000 and $3.6 million, 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.

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 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.

Salary and Benefits

The second largest component

of general and administrative expenses is salary and benefits expense.

During the years ended April 30, 2023 and 2022, we incurred $1.0

million and $873,000, respectively, in employee-related expenses.

As of April 30, 2023, we had four full-time and three part-time employees.

The decrease in stock-based compensation expense for the year

ended April 30, 2024 was a result of fewer stock options vesting during the period compared to the prior year period.

Professional Fees

During the years ended April

30, 2023 and 2022, we reported professional fees of $762,000 and $714,000, respectively, which were principally comprised of the following

Year Ended April 30, 2023

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

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

In December 2017, we paid to Spartan

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

the year ended April 30, 2023, we recorded an expense of $187,000 as a result of this consulting agreement.

· During the year ended April 30, 2023, we incurred $189,000 in consulting fees, mainly for Sarbanes-Oxley

compliance, $187,000 in audit and tax fees, $126,000 in legal fees, $50,000 in related party consulting and $22,000 in investor relations

Year Ended April 30, 2022

· During the year ended April 30, 2022, we incurred $249,000 in audit and tax fees, $248,000 in Spartan

Capital consulting fees, $89,000 in legal fees, $88,000 in related party consulting and $40,000 in investor relations expenses.

30, 2024 and 2023, we incurred professional fees of $736,000 and $762,000, respectively.

During the year ended April 30, 2024, we incurred

$341,000 in audit and tax fees, $192,000 in investor relations, $104,000 in legal fees, $33,000 in related party consulting, $28,000 in

Sarbanes-Oxley compliance fees and $38,000 in other professional fees.

During the year ended April 30, 2023, we incurred $189,000 in Sarbanes-Oxley

compliance fees, $187,000 in connection with a consulting agreement, $187,000 in audit and tax fees, $126,000 in legal fees, $50,000 in

related party consulting and $23,000 in other professional fees.

Insurance Expense

During the years ended April

30, 2024 and 2023, we incurred insurance expense of $382,000 and $587,000, respectively, which was primarily directors and officers insurance.

Marketing Fees

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and brand development agreement with AULT.

Insurance Expense

During the years ended April

30, 2023 and 2022, we incurred insurance expense of $587,000 and $714,000, respectively, which was primarily directors and officers insurance.

Other Expense, Net

Interest expense was $8,000

for the year ended April 30, 2023 related to the financing of D&O insurance.

Interest expense was $47,000 for the year ended April

30, 2022 related to the convertible promissory note issued in August 2020, including non-cash interest expense of $13,000 recorded from

the amortization of debt discount.

Current and Deferred Income Taxes

As of April 30, 2023 and 2022, we had deferred tax assets totaling

$10.8 million and $10.1 million, respectively.

The ultimate realization of deferred tax assets is dependent upon the existence, or generation,

of taxable income in the periods when those temporary differences and net operating loss carryovers are deductible.

Management considers

the scheduled reversal of deferred tax liabilities, taxes paid in carryover years, projected future taxable income, available tax planning

strategies, and other factors in making this assessment.

Based on available evidence, management believes it is more likely than not that

some or all of the deferred tax assets will not be realized.

Accordingly, we have established a 100% valuation allowance.

of the full valuation allowance, we did not record an income tax benefit for the years ended April 30, 2023 and 2022.

As of April 30, 2024 and 2023,

we had deferred tax assets totaling $15.8 million and $10.8 million, respectively.

The ultimate realization of deferred tax assets is

dependent upon the existence, or generation, of taxable income in the periods when those temporary differences and net operating loss

carryovers are deductible.

Management considers the scheduled reversal of deferred tax liabilities, taxes paid in carryover years, projected

future taxable income, available tax planning strategies, and other factors in making this assessment.

Based on available evidence, management

believes it is more likely than not that some or all of the deferred tax assets will not be realized.

Accordingly, we have established

a 100% valuation allowance.

As a result of the full valuation allowance, we did not record an income tax benefit for the years ended April

30, 2024 and 2023.

Liquidity and Capital Resources

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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 concern.

As of April 30, 2023, we

had cash of $5.1 million and an accumulated deficit of $44.1 million.

We have incurred recurring losses and reported losses for the year

ended April 30, 2023 totaling $14.9 million.

In the past, we have financed our operations principally through sales of 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 between March 2021 and April 2022.

In addition, we issued AL warrants

to purchase an aggregate of 3,333,333 shares of common stock at an exercise price of $3.00 per share.

Finally, we agreed that for a period

of 18 months following the date of the payment of the final tranche of $4 million on April 26, 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 Annual Report.

On June 17, 2021, we announced

the closing of our IPO of 2,875,000 shares of common stock at a price to the public of $5.00 per share.

The proceeds from the offering

to us, net of underwriting discounts and commissions and offering expenses, were approximately $12.9 million.

Our common stock is listed

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

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 April 30, 2024, we had cash of $376,000 and an accumulated deficit of $54.0 million.

We have incurred recurring losses

and reported losses for the year ended April 30, 2024 totaling $9.9 million.

In the past, we have financed our operations principally

through sales of equity securities and debt instruments.

We will need to obtain substantial

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when needed or on favorable terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization

As previously disclosed, we had anticipated beginning Phase II clinical trials for AL001 additional indications in the first

quarter of calendar 2024.

Due to the Company’s inability to obtain significant additional financing, we have been unable to initiate

those clinical trials and reduce the working capital deficiency.

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

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

On September 8, 2023, we entered

into an At-the-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC, as sales agent to sell shares of our common stock,

having an aggregate offering price of up to approximately $9.8 million from time to time, through an “at the market offering”

(the “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.

During the year ended April

30, 2024, we sold an aggregate of 107,682 shares of common stock pursuant to the ATM Offering for proceeds of $1.3 million.

2024, we terminated our ATM Offering.

Series B Preferred Financing

On January 31, 2024, we entered into a securities

purchase agreement with Ault Lending (“AL SPA”) whereby Ault Lending may purchase of up to 6,000 shares of series B convertible

preferred stock (“Series B Convertible Preferred Stock”) and warrants to purchase shares up to 600,000 shares of our common

The AL SPA provides that Ault Lending may purchase up to $6 million of Series B Convertible Preferred Stock in one or more closings.

Ault Lending has the right to purchase up to $2 million of Series B Convertible Preferred Stock, on or before March 31, 2024, and the

right to purchase up to $4 million of Series B Convertible Preferred Stock after March 31, 2024, but on or before March 31, 2025 (the

“Termination Date”).

The Agreement will automatically terminate if the final closing has not occurred prior to the Termination

On January 31, 2024, we sold

1,220 shares of Series B Convertible Preferred Stock and warrants to purchase 122,000 shares of common stock with an exercise price of

$12.00, for a total purchase price of $1.22 million.

The purchase price was paid by the cancellation

of $1.15 million of cash advances made by Ault Lending to us between November 9, 2023 and January 31, 2024 and a subscription receivable

On March 26, 2024, we sold 780 shares of Series B Convertible Preferred Stock and warrants to purchase 78,000 shares

of common stock with an exercise price of $12.00, for a total purchase price of $780,000.

29, 2024, we sold 100 shares of Series B Convertible Preferred Stock and warrants to purchase 10,000 shares of common stock with

an exercise price of $12.00, for a total purchase price of $100,000.

Series B Convertible Preferred Stock has a stated value of $1,000 per share (“Series

B Stated Value”) and does not accrue dividends.

Each share of Series B Convertible Preferred Stock is convertible into a

number of shares of common stock determined by dividing the Series B Stated Value by $10.00

(the “ Series B Conversion Price”).

B Conversion Price is subject to adjustment in the event of an issuance of common stock at a price per share lower than the Series

B Conversion Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events.

holders of the Series B Convertible Preferred Stock are entitled to vote with the common stock as a single class on an as-converted basis,

subject to applicable law provisions of the Delaware General Corporation Law and Nasdaq, provided however, that for purposes of complying

with Nasdaq regulations, the conversion price, for purposes of determining the number of votes the holder of Series B Convertible Preferred

Stock is entitled to cast, shall not be lower than $8.73 (the “Voting Floor Price”), which represents the closing sale price

of the common stock on the trading day immediately prior to the date of execution of the AL SPA.

The Voting Floor Price shall be adjusted

for stock dividends, stock splits, stock combinations and other similar transactions.

The warrants have an exercise

price of $12.00 (the “ Series B Exercise Price”) and become exercisable on the

first business day after the six-month anniversary of issuance (the “ Series B Initial

Exercise Date”) and have a five-year term, expiring on the fifth anniversary of the Series

B Initial Exercise Date.

The Series B Exercise Price is subject to adjustment in the

event of an issuance of common stock at a price per share lower than the Series B Exercise

Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events.

For the period ended January

31, 2024, we recorded the Series B Convertible Preferred Stock as mezzanine equity and the warrant as a liability.

On March 21, 2024,

we amended our Amended and Restated Certificate of Designations for our Series B Convertible Preferred Stock to remove certain change

of control language that could be interpreted to require either debt or equity classification of the Series B Convertible Preferred Stock.

As a result, we classified both the Series B Convertible Preferred Stock and warrant as equity for the period ended April 30, 2024.

Series A Preferred Financing

May 8, 2024, we and Orchid Finance, LLC (“Orchid”) , entered into a securities purchase agreement (the “Orchid

SPA”) for the purchase of up to 2,500 shares of Series A Convertible Preferred Stock (“Series A Convertible Preferred Stock”)

and warrants to purchase shares up to 2,500,000 shares of common stock in several tranche closings.

On May 10, 2024, we sold 100

shares of Series A Convertible Preferred Stock and warrants to purchase 80,000 shares of common stock with an exercise price of $12.50,

for a total purchase price of $1.0 million.

The purchase price was paid by the surrender and cancellation

of a term note issued by us to Orchid of $311,356, consisting of $310,000 of principal and $1,356 of accrued and unpaid interest, $100,000

discount and net cash of $588,644.

On June 25, 2024, we sold 150 shares of Series A Convertible Preferred Stock and warrants to

purchase 120,000 shares of common stock with an exercise price of $12.50, for a total purchase price of $1.5 million.

purchase price was paid in cash.

to the Orchid SPA, Orchid has agreed to purchase the remaining 2,250 Preferred Shares based on our achievement of the milestones set forth

below (the “Milestones”):

250 Preferred Shares, for $2,500,000, within 30 days of the effectiveness of a resale registration statement (the “Registration Statement”);

200 Preferred Shares, for $2,000,000, within 60 days of the effectiveness of the Registration Statement and the execution of a partnership agreement with a nationally renowned research facility for a clinical trial (the “Fourth Tranche”);

100 Preferred Shares, for $1,000,000, on each monthly anniversary of the effectiveness of the Registration Statement until all remaining 1,800 Preferred Shares have been sold (each, a “Final Tranche”).

Notwithstanding

the foregoing Milestones, Orchid has the ability to invest any amount in its sole discretion in advance of the dates that the foregoing

Milestones shall have been met.

In the event that the average closing price of the common stock during the three trading days preceding

the date of a tranche closing shall not be equal to or greater than $2.50 a share (the “Floor Price”), then the applicable

closing shall be delayed until such time as the price meets the required threshold.

pay Ault Lending an origination fee of five percent (5%) of the total gross proceeds we receive from Orchid upon each purchase of Series

A Convertible Preferred Stock.

We also agreed to pay Orchid a fee of $100,000 upon the first closing, which occurred on May 10, 2024,

the Fourth Tranche and the third, eighth and thirteenth closings constituting parts of the Final Tranche.

Registration Statement registering for resale the shares of common stock issuable upon conversion of the Series A Convertible Preferred

Stock and exercise of the warrants was declared effective on July 9, 2024.

In addition, we agreed to use our best efforts to hold a special

meeting of our stockholders within 90 days of the execution date of the Orchid SPA for purposes of seeking stockholder approval of the

issuance of all the shares of common stock issuable upon conversion of the Series A Convertible Preferred Stock and the exercise of the

warrants in excess of the “Nasdaq Limit”, which is 19.99% of our shares of common stock issued and outstanding on the execution

date of the Orchid SPA.

We held a special meeting of stockholders on July 8, 2024, at which time, the stockholders approved the issuance

of all the shares of common stock issuable upon conversion of the Series A Convertible Preferred Stock and the exercise of the warrants

in excess of the “Nasdaq Limit”.

Series A Convertible Preferred Stock has a stated value of $10,000 per share (“Series

A Stated Value”) and accrues dividends at the rate of 15% per annum, payable quarterly in arrears in cash or paid-in-kind

shares, in Orchid’s sole discretion.

Each share of Series A Convertible Preferred Stock is convertible into a number of shares of

common stock determined by dividing the Series A Stated Value by (y)

the greater of (i) the Floor Price and (ii) the lesser of (A) $15.00 and (B) 80% of the lowest closing price of our common stock during

the three trading days immediately prior to the date of conversion into conversion shares (the “ Series

A Conversion Price”).

The Series A Conversion Price is subject to adjustment

in the event of an issuance of common stock at a price per share lower than the Series A Conversion

Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events.

The holders of the Series

A Convertible Preferred Stock are entitled to vote with the common stock as a single class on an as-converted basis, subject to applicable

law provisions of the Delaware General Corporation Law and Nasdaq, provided however, that for purposes of complying with Nasdaq regulations,

the conversion price, for purposes of determining the number of votes the holder of Series B Convertible Preferred Stock is entitled to

cast, shall not be lower than $5.63 (the “Series A Voting Floor Price”), which represents the closing sale price of the common

stock on the trading day immediately prior to the date of execution of the Orchid SPA.

The Series A Voting Floor Price shall be adjusted

for stock dividends, stock splits, stock combinations and other similar transactions.

The warrants have an exercise

price of $12.50 (the “ Series A Exercise Price”) and are exercisable upon issuance

and have a five-year term, expiring on the fifth anniversary of issuance.

The Series A Exercise

Price is subject to adjustment in the event of an issuance of common stock at a price per share lower than the Series

A Exercise Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events.

are exercisable on a cashless basis in the event that there is not then an effective resale registration statement for the common stock

issuable upon exercise of the warrants.

The following table summarizes our cash flows for

1 unchanged sentence

For the Year Ended April 30,

Net cash (used in) provided by:

Net cash provided by (used in):

Operating activities

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Financing activities

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

$ (4,764,811 )

$ (8,922,952 )

Operating Activities

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This consisted primarily of a net loss of $9.9 million, partially offset

by non-cash charges of $3.6 million in stock-based compensation expense and an increase in our net operating assets and liabilities of

$2.3 million.

The increase in our net operating assets and liabilities was primarily due to an increase in accounts payable and accrued

liabilities and a decrease in prepaid expenses – related party.

by non-cash charges of $956,000 in stock-based compensation expense and an increase in our net operating assets and liabilities of $671,000.

The increase in our net operating assets and liabilities was primarily due to an increase in accounts payable and accrued liabilities

and a decrease in prepaid expenses.

During the year ended April

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The increase in our net operating assets and liabilities was primarily due to an increase in accounts payable and accrued

liabilities and a decrease in prepaid expenses and other current assets.

liabilities and a decrease in prepaid expenses – related party.

Investing Activities

During the year ended April 30, 2022, net cash used in investing activities

was $106,000, from the purchase of equipment and machinery.

We purchased a CliniMACS Plus instrument to be used on the ALZN002 project

at the University of Miami.

The machine was purchased from Miltenyi Biotec and is utilized to separate monocytes from blood.

this equipment to streamline the development of DCs to create the ALZN002 vaccine for patients in the Phase I/IIA clinical trial.

Financing Activities

During the year ended April

30, 2023, net cash provided by financing activities was $200 from the exercise of stock options.

30, 2024, net cash used in investing activities was $147,000, from the purchase of equipment and machinery to be used in our ALZN002 Phase

I/IIA clinical trial.

Financing Activities

During the year ended April

30, 2022, net cash provided by financing activities was $18.9 million.

This consisted primarily of proceeds from our initial public offering

of $12.9 million, net of costs, and proceeds of $6 million from the issuance of common stock and warrants to AL.

30, 2024, net cash provided by financing activities was $2.1 million from the sale of convertible preferred stock to Ault Lending, a related

party, $1.3 million from proceeds from the ATM Offering and $300,000 from a promissory note.

During the year ended April 30, 2023, net cash

provided by financing activities was $200 from the exercise of stock options.

Contractual Obligations

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and on June 8, 2023, we 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 for the license fees.

The AL001 License Agreements

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

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

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

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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”).

to the ALZN002 License, on April 17, 2023, we entered into the Sixth Amendment to the ALZN002 License and on December 11, 2023, we entered

into the Seventh Amendment to the ALZN002 License (collectively, the “ALZN002 License Agreement”).

The Seventh Amendment to

the ALZN002 License modified the timing of the payments for the license fees.

The ALZN002 License Agreement

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Minimum royalties for ALZN002 are $20,000 on the first anniversary of the first commercial sale, $40,000

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

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.

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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 for the license fees.

The November AL001 License

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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 first commercial sale and $100,000

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.

19 unchanged sentences

Upon completion of first clinical trial

24 months from completion of the first Phase II clinical trial

Upon first patient treated in a Phase III clinical trial

3 unchanged sentences

ALZN002 License:

Upon IND application filing

September 2023

Upon IND application - completed January 2022

Upon first dosing of patient in first 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

Upon completion of first Phase IIB 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 first commercial sale

* Milestone met and completed

Additional AL001 Licenses:

36 months from completion of the first Phase II clinical trial

Upon first patient treated in a Phase III clinical trial

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Because we are a smaller reporting

company, this section is not applicable.

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-K

Item 7. Management’s Discussion and Analysis