Alzamend Neuro, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. As of April 30, 2024, we carried out an evaluation, under the supervision of, and with the participation of, our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Based upon that evaluation, our principal executive officer and principal financial officer, with the assistance of other members of the Company's management, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this annual report and has determined that our disclosure controls and procedures were not effective due to the material weaknesses as described herein. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of April 30, 2024. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated 2013 Framework. Our management has concluded that, as of April 30, 2024, our internal control over financial reporting was not effective. A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (United States) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following material weaknesses: 1. We do not have sufficient resources in our accounting department, which restricts our ability to perform sufficient reviews and approval of manual journal entries posted to the general ledger and to consistently execute review procedures over general ledger account reconciliations, financial statement preparation and accounting for non-routine transactions; and - 61 - 2. Our primary user access controls (i.e., provisioning, de-provisioning, privileged access and user access reviews) to ensure appropriate authorization and segregation of duties that would adequately restrict user and privileged access to the financially relevant systems and data to appropriate personnel were not designed and/or implemented effectively. We did not design and/or implement sufficient controls for program change management to certain financially relevant systems affecting our processes. Planned Remediation We are implementing measures designed to improve our internal control over financial reporting to remediate material weaknesses, including the following: · Continue to formalize our internal control documentation and strengthening supervisory reviews by our management; and · Developing plans to add additional qualified accounting personnel and segregate duties amongst accounting personnel. Management continues to work to improve its controls related to our material weaknesses, specifically relating to user access and change management surrounding our information technology systems and applications. Management will continue to implement measures to remediate material weaknesses, such that these controls are designed, implemented, and operating effectively. The remediation actions include: (i) enhancing design and documentation related to both user access and change management processes and control activities; and (ii) developing and communicating additional policies and procedures to govern the area of information technology change management. In order to achieve the timely implementation of the above, management has commenced the following actions and will continue to assess additional opportunities for remediation on an ongoing basis: · Engaging a third-party specialist to assist management with improving the Company’s overall control environment, focusing on change management and access controls; and · Implementing new applications and systems that are aligned with management’s focus on creating strong internal controls. We are currently working to improve and simplify our internal processes and implement enhanced controls, as discussed above, to address the material weaknesses in our internal control over financial reporting and to remedy the ineffectiveness of our disclosure controls and procedures. These material weaknesses will not be considered to be remediated until the applicable remediated controls are operating for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Despite the existence of these material weaknesses, we believe that the financial statements included in the period covered by this Annual Report on Form 10-K fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles. Changes in Internal Control over Financial Reporting During the fourth fiscal quarter of 2024, there were no changes in our internal control over financial reporting which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION Trading Plans During the three months ended April 30, 2024, no director or Section 16 officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. - 62 - PART III ITEM 10. Directors, Executive Officers and Corporate Governance The following table sets forth the names and ages of our executive officers, directors and director nominees, and their positions with us, as of the date of this Annual Report: Name Age Position Stephan Jackman 48 Chief Executive Officer and Director David J. Katzoff 62 Chief Financial Officer Henry Nisser 55 Executive Vice President, General Counsel and Director Kenneth S. Cragun 63 Senior Vice President of Finance William B. Horne 56 Chairman of the Board Milton C. Ault III 54 Vice Chairman of the Board Mark Gustafson 64 Director Lynne Fahey McGrath, M.P.H., Ph.D. 69 Director Jeffrey Oram 57 Director Andrew H. Woo, M.D., Ph.D. 61 Director The following information provides a brief description of the business experience of each executive officer and director. Stephan Jackman joined our company as Chief Executive Officer in November 2018. Mr. Jackman was elected as a director in September 2020. He has played an intricate role in the development of therapeutic treatments, products and programs from the research stage to market and commercialization. Mr. Jackman has demonstrated a dedicated dual focus of creating value for internal and external stakeholders while developing strategic alliances and cross-function teams to meet and exceed goals. Prior to joining our company, from October 2017 to November 2018, Mr. Jackman was the Chief Operating Officer of Ennaid Therapeutics, an emerging biopharmaceutical company focusing on cures for mosquito borne infectious diseases such as Zika and Dengue viruses. From October 2015 to October 2017, Mr. Jackman was Chief Operating Officer of Exit 9 Technologies, a technology startup with a digital platform that connects retailers, publishers and customers. Additionally, from August 2014 to October 2015, he was an independent project and management consultant assisting startups, Fortune 500 companies and non-profits with major strategic initiatives. He has also held positions of increasing responsibility at Novartis Pharmaceuticals Corporation, L’Oréal USA, SBM Management Services and Family Intervention Services. Mr. Jackman holds a Master of Science in Management and a Bachelor of Engineering in Mechanical Engineering from Stevens Institute of Technology. David J. Katzoff joined our company on a part-time basis in November 2019, serving as our Senior Vice President of Operations from November 2019 to December 2020, as our Chief Operating Officer from December 2020 until August 2022 and currently serves as our Chief Financial Officer since August 2022. Mr. Katzoff has served as Senior Vice President of Finance of AULT since January 2019. Since February 2021, Mr. Katzoff has served as the Vice President of Finance of Ault Disruptive Technologies Corporation, a publicly traded special purpose acquisition company (“Ault Disruptive”). From December 2021 to September 2023, Mr. Katzoff served as the Chief Financial Officer of TurnOnGreen, Inc. (formerly, Imperalis Holding Corp.) (“TurnOnGreen”), an OTCQB quoted company. From 2015 to 2018, Mr. Katzoff served as Chief Financial Officer of Lumina Media, LLC, a privately-held media company and publisher of life-style publications. From 2003 to 2017, Mr. Katzoff served a Vice President of Finance of Local Corporation, a publicly-held local search company. Mr. Katzoff received a B.S. degree in Business Management from the University of California at Davis. Henry C.W. Nisser has served as our Executive Vice President and General Counsel on a part-time basis since May 2019. Mr. Nisser was appointed as a director in September 2020. Since May 2019, Mr. Nisser has served as the Executive Vice President and General Counsel of AULT and as one of its directors since September 2020; he became AULT’s President on January 12, 2021. Since March 2023, Mr. Nisser has served as the President, General Counsel and director of RiskOn International, Inc., an OTCPK quoted company (“ROI”). Since February 2021, Mr. Nisser has served as the President, General Counsel and a director of Ault Disruptive. Since April 2023, Mr. Nisser has served as a director of The Singing Machine Company, Inc., an issuer listed on Nasdaq (“MICS”). Mr. Nisser is the Executive Vice President and General Counsel of Avalanche International Corp., a publicly traded Nevada company categorized as a “voluntary filer” (not required to file periodic reports) (“Avalanche”). Mr. Nisser has served as a President, General Counsel and a director of Ault & Co. since May 2019. From October 2011 through April 2019, Mr. Nisser was an associate and subsequently a partner with Sichenzia Ross Ference LLP, a law firm in New York. While with this law firm, his practice was concentrated on national and international corporate law, with a particular focus on U.S. securities compliance, public as well as private M&A, equity and debt financings and corporate governance. Mr. Nisser received his B.A. degree from Connecticut College, where he majored in International Relations and Economics. He received his LL.B. from University of Buckingham School of Law in the United Kingdom. - 63 - Kenneth S. Cragun joined our company on a part-time basis in December 2018. Since February 2021, Mr. Cragun has served as the Chief Financial Officer of Ault Disruptive. Since August 2020, Mr. Cragun has served as the Chief Financial Officer of AULT and between October 2018 and August 2020, served as its Chief Accounting Officer. Since September 2018, Mr. Cragun has served on the board of directors and Chairman of the Audit Committee of Verb Technology Company, Inc. Since July 2022, Mr. Cragun has served on the board of directors of MICS. He served as a CFO Partner at Hardesty, LLC, a national executive services firm between October 2016 and October 2018. His assignments at Hardesty included serving as Chief Financial Officer of CorVel Corporation, a publicly traded company and a nationwide leader in technology driven, healthcare-related, risk management programs, and of RISA Tech, Inc., a private structural design and optimization software company. Mr. Cragun was also Chief Financial Officer of two Nasdaq-traded companies, Local Corporation, from April 2009 to September 2016, which operated Local.com, a U.S. top 100 website, and Modtech Holdings, Inc., from June 2006 to March 2009, a supplier of modular buildings. Prior thereto, he had financial leadership roles with increasing responsibilities at MIVA, Inc., ImproveNet, Inc., NetCharge Inc., C-Cube Microsystems, Inc, and 3-Com Corporation. Mr. Cragun began his professional career at Deloitte. Mr. Cragun holds a Bachelor of Science degree in accounting from Colorado State University-Pueblo. William B. Horne has served as a director of our company since June 2016 and upon the effectiveness of our initial public offering in June 2021, Mr. Horne become our Chairman of the Board. Mr. Horne served as our Chief Financial Officer from June 2016 through December 2018. Mr. Horne has been a member of the board of directors of AULT since October 2016. In January 2018, Mr. Horne was appointed as AULT’s Chief Financial Officer until August 2020, when he resigned as its Chief Financial Officer and was appointed as its President. On January 12, 2021, Mr. Horne resigned as AULT’s President and became its Chief Executive Officer. Mr. Horne has served as a director and Chief Executive Officer of Ault Disruptive since its inception in February 2021. Mr. Horne has served as a director and Chief Financial Officer of Avalanche since June 2016. Mr. Horne has served as a director and Chief Financial Officer of Ault & Co. since October 2017. He served as the Chief Financial Officer of Targeted Medical Pharma, Inc. from August 2013 to May 2019. Mr. Horne previously held the position of Chief Financial Officer in various public and private companies in the healthcare and high-tech field. Mr. Horne has a Bachelor of Arts Magna Cum Laude in Accounting from Seattle University. Milton C. Ault, III has served as a director of our company since January 2024. Mr. Ault is the Company’s founder and served as Chairman and a director from inception in 2016 until the Company’s initial public offering in June 2021. Since January 2021, Mr. Ault has served as the Executive Chairman of AULT. Between December 2017 and January 2021, Mr. Ault was the Chief Executive Officer of AULT and between March 2017 and December 2017, Mr. Ault served as the Executive Chairman of AULT. Mr. Ault has served as the Chairman of the Board of Ault Disruptive since its incorporation in February 2021. Since January 2024, Mr. Ault has served as the Chairman and Chief Executive Officer of ROI. Since April 2023, Mr. Ault has served as the Executive Chairman of the board of directors of MICS. Mr. Ault has served as Chairman and Chief Executive Officer of Ault & Co. since December 2015, and as Chairman of Avalanche since September 2014. Since January 2011, Mr. Ault has been the Vice President of Business Development for MCKEA Holdings, LLC, a family office (“MCKEA”). Mr. Ault is a seasoned business professional and entrepreneur who has spent more than twenty-seven years identifying value in various financial markets including equities, fixed income, commodities, and real estate. Throughout his career, Mr. Ault has consulted for a few publicly traded and privately held companies, providing each of them the benefit of his diversified experience, that range from development stage to seasoned businesses. Mark Gustafson joined our Board and became the Chairman of the Audit Committee in June 2021. Mr. Gustafson is a Chartered Professional Accountant with over 35 years of corporate, private and public company experience. Since June 2024, Mr. Gustafson has been the Chief Financial Officer of Orga Energy Ltd., a private oil and gas production company based in Calgary, Alberta. From January 2023 to June 2024, Mr. Gustafson was a director and non-executive Chairman of BrainLuxury, Inc., a private U.S. company that is developing and selling nutrients for the brain. Since April 2021, Mr. Gustafson has been the Chief Financial Officer, and since January 2022, a director, for PharmaKure Limited, a private London-based biopharmaceutical company dedicated to the treatment of neurodegenerative diseases. Between December 2021 and December 2023, Mr. Gustafson served as an independent director and Chairman of the Audit Committee of Ault Disruptive. From June 2020 to March 2024, Mr. Gustafson was a director of Alpha Helium Inc., a private Canadian-based company helium exploration company. From 2014 to 2020, he was the Chief Executive Officer of Challenger Acquisitions Limited, a London Stock Exchange listed entertainment company. From 2010 to 2012, Mr. Gustafson was the President and Chief Executive Officer of Euromax Resources Limited, a Toronto Stock Exchange listed mineral exploration company. From 2005 to 2009, he served as Chairman and Chief Executive Officer of Triangle Energy Corporation, a New York Stock Exchange listed oil and gas exploration company, from 2004 to 2006, he served as President and Chief Executive Officer of Torrent Energy Corporation, a private oil and gas company, and from 2001 to 2002, he served as a financial consultant for Samson Oil & Gas and Peavine Resources, two private oil and gas companies. From 1997 to 1999, Mr. Gustafson served as President and Chief Executive Officer of Total Energy Services Ltd., a Toronto Stock Exchange listed oilfield services company, from 1993 to 1995, he served as the Chief Financial Officer of Q/media Software Corporation, a Toronto Stock Exchange listed software company, and from 1987 to 1993, he served initially as the Chief Financial Officer and then as a Vice President in charge of two operating divisions at EnServ Corporation, a Toronto Stock Exchange listed oilfield services company. From 1981 to 1987, he served as an audit manager at Price Waterhouse in Calgary Alberta. Mr. Gustafson received his Bachelor of Business Administration from Wilfrid Laurier University. Mr. Gustafson has been a Chartered Accountant since 1983. - 64 - Lynne Fahey McGrath, M.P.H., Ph.D. joined our Board in June 2021. Dr. McGrath has served as a consultant to various companies in the biopharmaceutical industry, including: to the executive team of Nobias Therapeutics, Inc., a biotechnology product development company, between May 2020 and December 2021; a regulatory consultant with FoxKiser, LLC, a biotechnology consulting firm, from August 2018 to March 2020; and a regulatory consultant with Catalyst Healthcare Consulting, a biotechnology consulting firm, from 2020 to 2021. Dr. McGrath was a senior lead and Vice President of Regulatory Affairs at Regenxbio, Inc., where she headed global strategy for its portfolio of gene therapy products, from April 2015 to July 2018. Previously, she held senior positions at Novartis Corporation including Vice President, Global Head of Regulatory Affairs at Novartis Consumer Health and U.S. Head of Regulatory Affairs at Novartis Oncology from 2003 to April 2015. Dr. McGrath received a B.S. degree from the University of Connecticut, M.S. in Environmental Science from Rutgers University and M.P.H. and Ph.D. in Public Health from the University of Medicine and Dentistry of New Jersey Robert Wood Johnson Medical School. Jeffrey Oram joined our Board in June 2021. Mr. Oram is a business professional with more than 25 years of corporate, private and institutional investment experience. Mr. Oram has spent the last 13 years in the institutional real estate capital markets. Since 2016, he has been a Principal at Godby Realtors, a private real estate investment and brokerage firm. From 2010 to 2018, Mr. Oram served as an Executive Member of the New Jersey State Investment Council, which oversees the investment of the State of New Jersey’s pension fund. From 2011 to 2016, he served as Executive Managing Director at Colliers International, from 2009 to 2011 he served as Director at Marcus and Millichap, and from 2003 to 2009, served as First Vice President at CB Richard Ellis. Mr. Oram received a Bachelor of Science degree in Biology from Princeton University. Andrew H. Woo, M.D., Ph.D. joined our Board in June 2021. Dr. Woo is in private practice at Santa Monica Neurological Consultants and serves as an Assistant Clinical Professor of Neurology at the David Geffen School of Medicine at UCLA and Cedars-Sinai Medical Center. He also serves on the board for the Multiple Sclerosis Association of America and its Navigating MS International Steering Committee. He has been presented with UCLA clinical faculty teaching awards in 2006, 2012 and 2019 and is listed in America’s Top Physicians by the Consumer Research Council of America and Castle Connolly America’s Top Doctors 2006, 2007, 2010-2021, Southern California Super Doctors since 2008, and Los Angeles Magazine Top Doctors. He is an invited speaker at the Muntada International Symposium in Abu Dhabi. Dr. Woo received his B.A. from Cornell University and completed his M.D. and Ph.D. in Neuroimmunology in the Department of Molecular and Cell Biology at Brown University. He completed his medicine internship at Weil-Cornell Presbyterian Hospital/Cornell Medical Center in New York, his neurology residency at UCLA, and his fellowship in neurophysiology at Harbor-UCLA. Board Leadership Structure and Risk Oversight Our Board is currently chaired by Mr. Horne. Mr. Horne has been a director since June 2016 and served as our Chief Financial Officer from June 2016 until December 2018. Given Mr. Horne’s extensive history with and knowledge of our company, we believe his role as our Chairman facilitates a regular flow of information between the Board and management and ensures that they both act with a common purpose. One of the key functions of our Board is informed oversight of our risk management process. Our Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole, as well as through various standing committees of our Board that address risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for us. Our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements, in addition to oversight of the performance of our internal audit function. Our Nominating and Corporate Governance Committee monitors the effectiveness of our corporate governance guidelines, including whether they are successful in preventing illegal or improper liability-creating conduct. Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking. Board Committees Our Board has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The responsibilities of the Audit Committee (which consists of Mr. Gustafson (Chair), Mr. Oram and Dr. Woo) include recommending to the Board the independent registered public accounting firm to be retained by our company, reviewing with our independent registered public accounting firm the scope and results of their audits, and reviewing with the independent registered public accounting firm and management our accounting and reporting principles, policies and practices, as well as our accounting, financial and operating controls and staff. The Compensation Committee (which consist of Dr. McGrath (Chair), Mr. Gustafson and Mr. Oram) has responsibility for establishing and reviewing employee compensation. The Compensation Committee also has responsibility for administering and interpreting the Alzamend Neuro, Inc. 2021 Stock Incentive Plan, and determining the recipients, amounts and other terms (subject to the requirements of the Plan) of stock options and other equity-based awards which may be granted under the 2021 Stock Incentive Plan from time to time. The purpose of the Nominating and Corporate Governance Committee (which consist of Mr. Oram (Chair), Dr. McGrath and Dr. Woo) is to select, or recommend for our entire Board’s selection, the individuals to stand for election as directors at the annual meeting of stockholders, as well as to consider the adequacy of our corporate governance and oversee and approve management continuity planning processes. - 65 - Certain Board Arrangements In May 2021, the Board and Mr. Ault, our Founder and Chairman Emeritus, agreed to certain arrangements with regard to our Board composition and other matters. Contemporaneously with the consummation of the initial public offering, and in consideration for (i) the conversion of 750 shares of our series A convertible preferred stock beneficially owned by Mr. Ault through ALSI into 100,000 shares of common stock, (ii) the extension of the maturity date of the promissory note in the original principal amount of $15,000,000 (the “ ALSF Note ”) issued to us by ALSF to December 31, 2023, and (iii) the resignation of Mr. Ault as a director and executive officer of our company, the Board agreed that William B. Horne be named our Chairman of the Board and remain in that position for so long as Mr. Ault beneficially owns no less than 5% of the outstanding shares of common stock (for which Mr. Horne will be paid $50,000 per year for his services), and Mr. Nisser remains a member of our Board for so long as Mr. Ault beneficially owns no less than 5% of the outstanding shares of common stock (for no additional remuneration). Additionally, Mr. Ault will hold the position of Founder and Chairman Emeritus and, as such, have the right to nominate an observer to our Board for a period of five years after the closing date of the initial public offering. Immediately following the closing of the initial public offering in June 2021, we entered into a five-year consulting agreement with Mr. Ault under which he will provide strategic advisory and consulting services to us in consideration for annual fees of $50,000. Upon Mr. Ault’s reappointment to the Board in January 2024, the consulting agreement was terminated. Term of Office Directors serve until the next annual meeting of our stockholders and until their successors are elected and qualified. Officers are appointed to serve at the discretion of our Board. Family Relationships There are no family relationships among any of our executive officers and directors. Involvement in Certain Legal Proceedings Except as set forth below, to the best of our knowledge, during the past 10 years, none of the following occurred with respect to a present or former director, executive officer or employee: • been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); • had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; * • been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; • been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; ** • been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; and • or been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. * Mr. Cragun served as Chief Financial Officer of Local Corporation (April 2009 to September 2016), formerly based in Irvine, California, and, in June 2015, Local Corporation filed a voluntary petition in the United States Bankruptcy Court for the Central District of California seeking relief under the provisions of Chapter 11 of Title 11 of the United States Code. ** Please see the press release issued by AULT on August 15, 2023. - 66 - Except as disclosed in “Certain Relationships and Related Party Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. Code of Business Conduct and Ethics Our Board has adopted a written code of business conduct and ethics, revised effective May 25, 2021, that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions (the “Code of Conduct and Ethics”). In addition, on May 25, 2021, we adopted Code of Ethics for our Chief Executive Officer and our Senior Financial Officers (the “Code of Ethics”). We have posted on our website a current copy of both codes and all disclosures that are required by law in regard to any amendments to, or waivers from, any provision of the Code of Conduct and Ethics. ITEM 11. EXECUTIVE COMPENSATION Summary Compensation Table The following table sets forth summary compensation information for the following persons: (i) all persons serving as our principal executive officer during the years ended April 30, 2024 and 2023, and (ii) up to our two other most highly compensated executive officers who received compensation during the years ended April 30, 2024 and 2023, who were executive officers on the last day of our fiscal year. We refer to these persons as our “named executive officers” in this Annual Report. The following table includes all compensation earned by the named executive officers for the respective period, regardless of whether such amounts were actually paid during the period: Name and principal position Year Salary ($) Bonus ($) Stock award ($) Option Awards⁽¹⁾ ($) All Other Compensation (2) ($) Total ($) Stephan S. Jackman 2024 350,000 75,000 — — 18,617 443,617 Chief Executive Officer 2023 300,000 120,000 — 1,789,375 14,236 2,223,611 David J. Katzoff (3) 2024 150,000 — — — — 150,000 Chief Financial Officer 2023 116,667 — — — — 116,667 (1) The values reported in the “Option Awards” column represents the aggregate grant date fair value, computed in accordance with ASC 718, Share Based Payments , of grants of stock options to each of our named executive officers and directors. (2) The amounts included in “All Other Compensation” consist of health insurance benefits. (3) Mr. Katzoff was appointed our Chief Financial Officer on August 5, 2022. Prior thereto that he was our Chief Operating Officer. Employment Agreements None. CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing disclosure regarding the ratio of annual total compensation of Mr. Jackman, our Chief Executive Officer, to that of our median employee. Our median employee earned $130,000 in total compensation for our fiscal year ended April 30, 2024. Based upon the total fiscal year 2024 compensation reported for Mr. Jackman of $443,617 as reported under “Total” in the Summary Compensation Table, our ratio of PEO to median employee pay was 3:1. Calculation Methodology To identify our median employee, we identified our total employee population worldwide as of April 30, 2024, excluding our Chief Executive Officer, in accordance with SEC rules. On April 30, 2024, all of our employee population was located in the U.S. We collected full-year fiscal year 2024 actual gross earnings data for the April 30, 2024 employee population, including cash-based compensation and equity-based compensation that was realized in fiscal year 2024, relying on our internal payroll records. Compensation was annualized on a straight-line basis for non-temporary new hire employees who did not work with our company for the full calendar year. - 67 - Once we determined the median employee, we calculated total compensation for the median employee in the same manner in which we determine the compensation shown for our named executive officers in the Summary Compensation Table, in accordance with SEC rules. Policies on Ownership, Insider Trading, 10b5-1 Plans and Hedging We do not have formal stock ownership guidelines for our employees or directors, because the Board is satisfied that stock and option holdings among our employees or directors are sufficient at this time to provide motivation and to align this group’s interests with those of our stockholders. We have established an insider trading policy that provides guidelines to, and imposes restrictions on, officers, directors and employees with respect to transactions in our securities. Our insider trading policy prohibits certain actions by such individuals relating to buying and selling our common stock, and discourages certain other actions in other situations. Such individuals are authorized to enter into trading plans established according to Section 10b5-1 of the Exchange Act with an independent broker-dealer. Under these plans, the individual must not exercise any influence over the amount of the securities to be traded, the price at which they are to be traded or the date of the trade. The plan must either specify the amount, pricing and timing of transactions in advance or delegate discretion on these matters to an independent third party. Such plans provide a defense from insider trading liability. We have not adopted any hedging policies. Outstanding Equity Awards at Fiscal Year End The following table provides information on outstanding equity awards as of April 30, 2024 awarded to our named executive officers: OUTSTANDING EQUITY AWARDS AT APRIL 30, 2024 Option Awards Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Stephan Jackman 20,000 - - 150.00 11/15/2028 - 13,333 13,333 225.00 11/18/2029 - 13,333 13,333 175.50 11/29/2032 David J. Katzoff 2,666 - - 150.00 1/21/2029 4,840 826 - 225.00 11/1/2029 1,424 243 - 225.00 11/26/2029 - 6,666 6,666 225.00 11/18/2029 Incentive Compensation Plans 2016 Stock Incentive Plan In April 2016, our stockholders approved our company’s 2016 Stock Incentive Plan (the “2016 Plan”). The 2016 Plan provides for the issuance of a maximum of 83,333 shares of our common stock to be offered to our directors, officers, employees and consultants. On March 1, 2019, our stockholders approved an additional 50,000 shares to be available for issuance under the 2016 Plan. Options granted under the 2016 Plan have an exercise price equal to or greater than the fair value of the underlying common stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. The options expire between five and 10 years from the date of grant. Restricted stock awards granted under the 2016 Plan are subject to a vesting period determined at the date of grant. 2021 Stock Incentive Plan In February 2021, our Board adopted, and our stockholders approved, the Alzamend Neuro, Inc. 2021 Stock Incentive Plan (the “2021 Plan”). The 2021 Plan authorizes the grant to eligible individuals of (1) stock options (incentive and non-statutory), (2) restricted stock, (3) stock appreciation rights, or SARs, (4) restricted stock units, and (5) other stock-based compensation. - 68 - Stock Subject to the 2021 Plan. The maximum number of shares of our common stock that may be issued under the 2021 Plan is 66,666 shares, which number will be increased to the extent that compensation granted under the 2021 Plan is forfeited, expires or is settled for cash (except as otherwise provided in the 2021 Plan). Substitute awards (awards made or shares issued by us in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company that we acquire or any subsidiary of ours or with which we or any subsidiary combines) will not reduce the shares authorized for grant under the 2021 Plan, nor will shares subject to a substitute award be added to the shares available for issuance or transfer under the 2021 Plan. No Liberal Share Recycling. Notwithstanding anything to the contrary, any and all stock that is (i) withheld or tendered in payment of an option exercise price; (ii) withheld by us or tendered by the grantee to satisfy any tax withholding obligation with respect to any award; (iii) covered by a SAR that it is settled in stock, without regard to the number of shares of stock that are actually issued to the grantee upon exercise; or (iv) reacquired by us on the open market or otherwise using cash proceeds from the exercise of options, will not be added to the maximum number of shares of stock that may be issued under the 2021 Plan. Eligibility. Employees of, and consultants to, our company or our affiliates and members of our Board are eligible to receive equity awards under the 2021 Plan. Only our employees, and employees of our parent and subsidiary corporations, if any, are eligible to receive incentive stock options. Employees, directors (including non-employee directors) and consultants of or for our company and our affiliates are eligible to receive non-statutory stock options, restricted stock, purchase rights and any other form of award the 2021 Plan authorizes. Purpose. The purpose of the 2021 Plan is to promote the interests of our company and our stockholders by providing executive officers, employees, non-employee directors, and key advisors of our company and our subsidiaries with appropriate incentives and rewards to encourage them to enter into and remain in their positions with us and to acquire a proprietary interest in our long-term success, as well as to reward the performance of these individuals in fulfilling their personal responsibilities for long-range and annual achievements. Administration. Unless otherwise determined by the Board, the Compensation Committee administers the 2021 Plan. The Compensation Committee is composed solely of “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act, “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code, and “independent directors” within the meaning of the Nasdaq Marketplace Rules. The Compensation Committee has the power, in its discretion, to grant awards under the 2021 Plan, to select the individuals to whom awards are granted, to determine the terms of the grants, to interpret the provisions of the 2021 Plan and to otherwise administer the 2021 Plan. Except as prohibited by applicable law or any rule promulgated by a national securities exchange to which our company may in the future be subject, the Compensation Committee may delegate all or any of its responsibilities and powers under the 2021 Plan to one or more of its members, including, without limitation, the power to designate participants and determine the amount, timing and term of awards under the 2021 Plan. In no event, however, will the Compensation Committee have the power to accelerate the payment or vesting of any award, other than in the event of death, disability, retirement or a change of control of our company. The 2021 Plan provides that members of the Compensation Committee will be indemnified and held harmless by us from any loss or expense resulting from claims and litigation arising from actions related to the 2021 Plan. Term. The 2021 Plan was effective as of February 17, 2021, and awards may be granted through February 16, 2031. No awards may be granted under the 2021 Plan subsequent to that date. The Board may suspend or terminate the 2021 Plan without stockholder approval or ratification at any time or from time to time. Amendments. Subject to the terms of the 2021 Plan, the Compensation Committee, as administrator, has the sole discretion to interpret the provisions of the 2021 Plan and outstanding awards. Our Board generally may amend or terminate the 2021 Plan at any time and for any reason, except that no amendment, suspension or termination may impair the rights of any participant without his or her consent, and except that approval of our stockholders is required for any amendment which, among provisions, increases the number of shares of common stock subject to the 2021 Plan, decreases the price at which grants may be granted and reprices existing options. Repricing Prohibition. Other than in connection with certain corporate events, the Compensation Committee will not, without the approval of our stockholders, (a) lower the option price per share of an option or SAR after it is granted, (b) cancel an option or SAR when the exercise price per share exceeds the fair market value of one share in exchange for cash or another award (other than in connection with a change of control), or (c) take any other action with respect to an option or SAR that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which our shares are then listed. Minimum Vesting Requirement. Grantees of full-value awards (i.e., awards other than options and SARs), will be required to continue to provide services to us or an affiliated company) for not less than one-year following the date of grant in order for any such full-value awards to fully or partially vest (other than in case of death, disability or a Change of Control). Notwithstanding the foregoing, up to 5% of the available shares of stock authorized for issuance under the 2021 Plan may provide for vesting of full-value awards, partially or in full, in less than one year. - 69 - Adjustments upon Changes in Capitalization. In the event of any merger, reorganization, consolidation, recapitalization, dividend or distribution (whether in cash, shares or other property, other than a regular cash dividend), stock split, reverse stock split, spin-off or similar transaction or other change in our corporate structure affecting our common stock or the value thereof, appropriate adjustments to the 2021 Plan and awards will be made as the Board determines to be equitable or appropriate, including adjustments in the number and class of shares of stock available for issuance under the 2021 Plan, the number, class and exercise or grant price of shares subject to awards outstanding under the 2021 Plan, and the limits on the number of awards that any person may receive. Change of Control. Agreements evidencing awards under the 2021 Plan may provide that upon a Change of Control (as defined in the 2021 Plan), unless otherwise provided in the agreement evidencing an award), outstanding awards may be cancelled and terminated without payment if the consideration payable with respect to one share of stock in connection with the Change of Control is less than the exercise price or grant price applicable to such award, as applicable. Notwithstanding any other provisions of the 2021 Plan to the contrary, the vesting, payment, purchase or distribution of an award may not be accelerated by reason of a Change of Control for any participant unless the Grantee’s employment is involuntarily terminated as a result of the Change of Control as provided in the Award agreement or in any other written agreement, including an employment agreement, between us and the participant. If the Change of Control results in the involuntary termination of participant’s employment, outstanding awards will immediately vest, become fully exercisable and may thereafter be exercised. Generally, under the 2021 Plan, a Change of Control occurs upon (i) the consummation of a reorganization, merger or consolidation of our company with or into another entity, pursuant to which our stockholders immediately prior to the transaction do not own more than 50% of the total combined voting power after the transaction, (ii) the consummation of the sale, transfer or other disposition of all or substantially all of our assets, (iii) certain changes in the majority of our Board from those in office on the effective date of the 2021 Plan, (iv) the acquisition of more than 50% of the total combined voting power in our outstanding securities by any person, or (v) we are dissolved or liquidated. Types of Awards Stock Options. Incentive stock options and non-statutory stock options are granted pursuant to award agreements adopted by our Compensation Committee. Our Compensation Committee determines the exercise price for a stock option, within the terms and conditions of the 2021 Plan; provided, that the exercise price of an incentive stock option cannot be less than 100% of the fair market value of our common stock on the date of grant. Options granted under the 2021 Plan vest at the rate specified by our Compensation Committee. The Compensation Committee determines the term of stock options granted under the 2021 Plan, up to a maximum of 10 years, except in the case of certain Incentive Stock Options, as described below. The Compensation Committee will also determine the length of period during which an optionee may exercise their options if an optionee’s relationship with us, or any of our affiliates, ceases for any reason; for incentive stock options, this period is limited by applicable law. The Compensation Committee may extend the exercise period in the event that exercise of the option following termination of service is prohibited by applicable securities laws. In no event, however, may an option be exercised beyond the expiration of its term unless the term is extended in accordance with applicable law. Acceptable consideration for the purchase of common stock issued upon the exercise of a stock option will be determined by the Compensation Committee and may include (a) cash or its equivalent, (b) delivering a properly executed notice of exercise of the option to us and a broker, with irrevocable instructions to the broker promptly to deliver to us the amount necessary to pay the exercise price of the option, (c) any other form of legal consideration that may be acceptable to the Compensation Committee or (d) any combination of (a), (b) or (c). Unless the Compensation Committee provides otherwise, options are generally transferable in accordance with applicable law, provided that any transferee of such options agrees to become bound by the terms of the 2021 Plan. An optionee may also designate a beneficiary who may exercise the option following the optionee’s death. Incentive or Non-statutory Stock Options. Incentive stock options may be granted only to our employees, and the employees of our parent or subsidiary corporations, if any. The Compensation Committee may grant awards of incentive or non-statutory stock options that are fully vested on the date made, to any of our employees, directors or consultants. Option awards are granted pursuant to award agreements adopted by our Compensation Committee. To the extent required by applicable law, the aggregate fair market value, determined at the time of grant, of shares of our common stock with respect to incentive stock options that are exercisable for the first time by an optionee during any calendar year may not exceed $100,000. To the extent required by applicable law, no incentive stock option may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates unless (a) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and (b) the term of the incentive stock option does not exceed five years from the date of grant. - 70 - Stock Appreciation Rights . An SAR is the right to receive stock, cash, or other property equal in value to the difference between the grant price of the SAR and the market price of our common stock on the exercise date. SARs may be granted independently or in tandem with an option at the time of grant of the related option. An SAR granted in tandem with an option will be exercisable only to the extent the underlying option is exercisable. An SAR confers on the grantee a right to receive an amount with respect to each share of common stock subject thereto, upon exercise thereof, equal to the excess of (A) the fair market value of one share of common stock on the date of exercise over (B) the grant price of the SAR (which in the case of an SAR granted in tandem with an option will be equal to the exercise price of the underlying option, and which in the case of any other SAR will be such price as the Compensation Committee may determine but in no event will be less than the fair market value of a share of common stock on the date of grant of such SAR). Restricted Stock and Restricted Stock Units . Restricted stock is common stock that we grant subject to transfer restrictions and vesting criteria. A restricted stock unit is a right to receive stock or cash equal to the value of a share of stock at the end of a specified period that we grant subject to transfer restrictions and vesting criteria. The grant of these awards under the 2021 Plan are subject to such terms, conditions and restrictions as the Compensation Committee determines consistent with the terms of the 2021 Plan. At the time of grant, the Compensation Committee may place restrictions on restricted stock and restricted stock units that will lapse, in whole or in part, only upon the attainment of performance goals; provided that such performance goals will relate to periods of performance of at least one fiscal year, and if the award is granted to a 162(m) officer, the grant of the award and the establishment of the performance goals will be made during the period required under Internal Revenue Code Section 162(m). Except to the extent restricted under the award agreement relating to the restricted stock, a grantee granted restricted stock will have all of the rights of a stockholder, including the right to vote restricted stock and the right to receive dividends. Unless otherwise provided in an award agreement, upon the vesting of a restricted stock unit, there will be delivered to the grantee, within 30 days of the date on which such award (or any portion thereof) vests, the number of shares of common stock equal to the number of restricted stock units becoming so vested. Other Stock-Based Awards. The 2021 Plan also allows the Compensation Committee to grant “Other Stock-Based Awards,” which means a right or other interest that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, common stock. Subject to the limitations contained in the 2021 Plan, this includes, without limitation, (i) unrestricted stock awarded as a bonus or upon the attainment of performance goals or otherwise as permitted under the 2021 Plan, and (ii) a right to acquire stock from us containing terms and conditions prescribed by the Compensation Committee. At the time of the grant of other stock-based awards, the Compensation Committee may place restrictions on the payout or vesting of other stock-based awards that will lapse, in whole or in part, only upon the attainment of performance goals; provided that such Performance Goals will relate to periods of performance of at least one fiscal year, and if the award is granted to a 162(m) Officer, the grant of the Award and the establishment of the performance goals will be made during the period required under Internal Revenue Code Section 162(m). Other Stock-Based Awards may not be granted with the right to receive dividend equivalent payments. Performance Awards . Performance awards provide participants with the opportunity to receive shares of our common stock, cash or other property based on performance and other vesting conditions. Performance awards may be granted from time to time as determined at the discretion of the Board, or the Compensation Committee (as applicable). Subject to the share limit and maximum dollar value set forth above under “ Limits per Participant ,” the Board, or the Compensation Committee (as applicable), has the discretion to determine (i) the number of shares of common stock under, or the dollar value of, a performance award and (ii) the conditions that must be satisfied for grant or for vesting, which typically will be based principally or solely on achievement of performance goals. Performance Criteria . With respect to awards intended to qualify as performance-based compensation under Code Section 162(m), a committee of “outside directors” ​(as defined in Code Section 162(m)) with authority delegated by our Board will determine the terms and conditions of such awards, including the performance criteria. The performance goals for restricted stock awards, restricted stock units, performance awards or other stock-based awards will be based on the attainment of specified levels of, among other metrics, the attainment of certain target levels of, or a specified percentage increase in, revenues, earnings, income before taxes and extraordinary items, net income, operating income, earnings before or after deduction for all or any portion of income tax, earnings before interest, taxes, depreciation and amortization or a combination of any or all of the foregoing. The performance goals may be based solely by reference to our performance or the performance of one or more of our subsidiaries, parents, divisions, business segments or business units, or based upon the relative performance of other companies or upon comparisons of any of the indicators of performance relative to other companies. The authorized committee of outside directors may also exclude under the terms of the performance awards, the impact of an event or occurrence that the committee determines should appropriately be excluded, including restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, or changes in generally accepted accounting principles or practices. - 71 - Director Compensation The Company pays each independent director an annual base amount of $25,000. Additionally, our Board makes recommendations for adjustments to an independent director’s compensation when the level of services provided are significantly above what was anticipated. The table below sets forth, for each non-employee director, the total amount of compensation related to his or her service during the year ended April 30, 2024: Name Fees earned or paid in cash ($) Stock awards ($) Options awards ($) All other compensation ($) Total ($) William B. Horne 50,000 - - - 50,000 Milton C. Ault III 8,333 - - - 8,333 Mark Gustafson 25,000 - - - 25,000 Lynne Fahey McGrath 25,000 - - - 25,000 Andy H. Woo 25,000 - - - 25,000 Jeffrey Oram 25,000 - - - 25,000 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table shows the beneficial ownership of our common stock as of July 29, 2024, held by (i) each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, (ii) each of our directors and director nominees, (iii) each of our executive officers, and (iv) all of our directors, director nominees and executive officers as a group. As of July 29, 2024, there were 841,240 shares of our common stock issued and outstanding. Beneficial ownership is determined in accordance with the rules of the SEC, and generally includes voting power and/or investment power with respect to the securities held. Shares of our common stock subject to options and warrants currently exercisable or which may become exercisable within 60 days of the date of this Annual Report, are deemed outstanding and beneficially owned by the person holding such options or warrants for purposes of computing the number of shares and percentage beneficially owned by such person but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Except as indicated in the footnotes to this table, the persons or entities named have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them. Unless otherwise noted in the footnotes to the following table, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to their beneficially owned common stock. Unless otherwise indicated, the principal address of each of the persons below is c/o Alzamend Neuro, Inc., 3480 Peachtree Road NE, Second Floor, Suite 103, Atlanta, GA 30326. - 72 - Greater than 5% Beneficial Owners: Number of shares of Common Stock Beneficially Owned Percentage of Shares Beneficially Owned Ault Life Sciences, Inc. (1) 99,619 11.84 % Ault Lending, LLC (2) 780,922 50.55 % Ault Alliance, Inc. (3) 781,033 50.55 % Directors and Executive Officers Milton C. Ault, III (1) (2) (3) (4) 897,887 58.11 % Stephan Jackman (5) 20,303 2.36 % David J. Katzoff (6) 10,599 1.24 % Henry C.W. Nisser (7) 8,333 * Kenneth S. Cragun (8) 10,000 1.17 % William B. Horne (9) 18,333 2.15 % Mark Gustafson (10) 2,400 * Lynne Fahey McGrath, M.P.H., Ph.D. (11) 2,500 * Jeffrey Oram (12) 2,666 * Andrew H. Woo, M.D., Ph.D. (12) 2,666 * All directors and named executive officers as a group (10 persons) 975,688 60.45 % * Less than 1% of outstanding shares.​ (1) Milton C. (Todd) Ault, III, our Founder and Vice Chairman, has sole voting and investment power with respect to the shares held of record by ALSI. (2) Mr. Ault has voting and investment power with respect to the securities held by Ault Lending. Consists of (i) 77,169 shares of common stock and (ii) 703,753 shares of common stock issuable upon conversion of Series B Preferred Stock. Excludes (A) 210,000 shares of common stock underlying warrants that are not currently exercisable and (B) 22,222 shares of common stock underlying currently exercisable warrants due to a beneficial ownership blocker limitation provision contained therein. Notwithstanding the foregoing, Ault Lending is only permitted to cast a vote representing 240,549 shares of common stock, instead of the 703,753 shares of common stock issuable upon conversion of the Series B Preferred Stock, in accordance with the terms of the Amended and Restated Certificate of Designation of the Rights and Preferences of the Series B Preferred Stock. (3) Mr. Ault has voting and investment power with respect to the securities held by AULT. Ault Lending is a wholly owned subsidiary of AULT. Consists of (i) 111 shares of common stock underlying currently exercisable warrants, (ii) 99,619 shares of common stock held by ALSI and (iii) 703,753 shares of common stock issuable upon conversion of Series B Preferred Stock held by Ault Lending. Excludes (A) 210,000 shares of common stock underlying warrants held by Ault Lending that are not currently exercisable and (B) 22,222 shares of common stock underlying currently exercisable warrants held by Ault Lending due to a beneficial ownership blocker limitation provision contained therein. (4) Consists of (i) 16,686 shares of our common stock held by Mr. Ault, (ii) 77,169 shares of common stock held by Ault Lending, (iii) 703,753 shares of common stock issuable upon conversion of Series B Preferred Stock held by Ault Lending, (iv) 99,619 shares of common stock held by ALSI, (v) 549 shares of common stock held by Ault Life Sciences Fund, LLC (“ALSF”) and (vi) 111 shares of common stock underlying currently exercisable warrants held by Ault Alliance. Excludes (A) 210,000 shares of common stock underlying warrants held by Ault Lending that are not currently exercisable and (B) 22,222 shares of common stock underlying currently exercisable warrants held by Ault Lending due to a beneficial ownership blocker limitation provision contained therein. Mr. Ault has sole voting and investment power with respect to the securities held of record by ALSF. (5) Consist of (i) 303 shares of our common stock and (ii) 20,000 shares of our common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days. (6) Consists of (i) 540 shares of our common stock, (ii) 60 shares of our common stock issuable upon the exercise of warrants and (iii) 9,999 shares of our common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days. (7) Represents shares of our common stock issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days. Mr. Nisser’s address is 122 East 42 nd Street, 50 th Floor, Suite 5000, New York, New York 10168. - 73 - (8) Represents shares of our common stock issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days. (9) Consists of (i) 6,666 shares of our common stock and (ii) 11,666 shares of our common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days. (10) Consists of (i) 400 shares of our common stock and (ii) 2,000 shares of our common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days. (11) Consists of (i) 500 shares of our common stock owned by Dr. McGrath and (ii) 2,000 shares of our common stock issuable upon the exercise of stock options owned by Dr. McGrath that are currently exercisable or exercisable within 60 days. (12) Consists of (i) 666 shares of our common stock and (ii) 2,000 shares of our common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days. Equity Compensation Information The following table summarizes information about our equity compensation plans as of April 30, 2024: Number of securities Number of securities Weighted- remaining available for to be issued average future issuance under upon exercise exercise price equity compensation plans of outstanding of outstanding (excluding securities options, warrants and rights options, warrants and rights reflected in column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by stockholders 98,000 189.60 62,000 Equity compensation plans not approved by stockholders 32,333 230.60 - Total 130,333 199.60 62,000 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE Certain Relationships Milton C. (Todd) Ault, III, our Founder and Vice Chairman, has significant influence over our Company, directly and through his controlling interests in AULT, Ault Lending and ALSI. Mr. Ault is also the Chairman, Chief Executive Officer and single largest beneficial stockholder (through Ault & Co.) of AULT. The Board and executive officers of our company and the board of directors and executive officers of AULT contain some of the same individuals. William B. Horne, the Chairman of the Board of our company, is the Chief Executive Officer and a director of AULT, Henry Nisser, our Executive Vice President, General Counsel and a director of our company, is the President, General Counsel and a director of AULT, and Kenneth S. Cragun, our Senior Vice President of Finance is the Chief Financial Officer of AULT. Transactions with Related Persons To the best of our knowledge, during our most recent fiscal year end on April 30, 2024, other than as set forth below, there were no material transactions, or series of similar transactions, or any currently proposed transactions, or series of similar transactions, to which we were or are to be a party, in which the amount involved exceeds $32,736, or 1% of the average total assets at year-end for the last two completed fiscal years, and in which any director or executive officer, or any security holder who is known by us to own of record or beneficially more than 5% of any class of our common stock, or any member of the immediate family of any of the foregoing persons, has an interest (other than compensation to our officers and directors in the ordinary course of business). On April 30, 2019, we entered into a securities purchase agreement with ALSF for the sale of 66,666 shares of common stock, plus 33,333 warrants with a five-year term and an exercise price of $450.00 per share and vesting upon issuance (the “ALSF Warrants”). The total purchase price of $15,000,000 was in the form of the ALSF Note. The ALSF Note balance as of April 30, 2020 was reduced by $16,800 reflecting payments made during the year ended April 30, 2020. The ALSF Note balance as of April 30, 2021 was reduced by $99,905 reflecting payments made during the year ended April 30, 2021. As of April 30, 2023, the ALSF Note balance was $14,883,295. The ALSF Note was due December 31, 2023. The control person of ALSF is Mr. Ault. ALSF is wholly owned by ALSI. ALSI is almost entirely wholly owned by Ault & Co., of which MCKEA, of which Mr. Ault’s spouse is the managing member, is the majority owner. As such, MCKEA is indirectly the majority owner of ALSF. The ALSF Note was secured by a stock pledge agreement dated June 11, 2019 (the “Pledge Agreement”). - 74 - On January 19, 2024, we entered into a settlement agreement with ALSF, pursuant to which ALSF returned 66,117 shares and the ALSF Warrants to us, in full settlement of the ALSF Note and the Pledge Agreement, as well as disputes and claims between the parties. In May 2021, the Board and Mr. Ault, agreed to certain arrangements with regard to our Board composition and other matters. Contemporaneously with the consummation of the initial public offering, and in consideration for (i) the conversion of 750 shares of our series A convertible preferred stock beneficially owned by Mr. Ault through ALSI into 100,000 shares of common stock, (ii) the extension of the maturity date of the ALSF Note to December 31, 2023, and (iii) the resignation of Mr. Ault as a director and executive officer of our company, the Board agreed that William B. Horne be named our Chairman of the Board and remain in that position for so long as Mr. Ault beneficially owns no less than 5% of the outstanding shares of common stock (for which Mr. Horne will be paid $50,000 per year for his services), and Mr. Nisser remains a member of our Board for so long as Mr. Ault beneficially owns no less than 5% of the outstanding shares of common stock (for no additional remuneration). Additionally, Mr. Ault will hold the position of Founder and Chairman Emeritus and, as such, have the right to nominate an observer to our Board for a period of five years after the closing date of the initial public offering. Immediately following the closing of the initial public offering in June 2021, we entered into a five-year consulting agreement with Mr. Ault under which he will provide strategic advisory and consulting services to us in consideration for annual fees of $50,000. Upon Mr. Ault’s reappointment to the Board in January 2024, the consulting agreement was terminated. In November 2022, we entered into a marketing and brand development agreement with AULT, effective August 1, 2022, whereby AULT provided various marketing services over twelve months valued at $1.4 million. We had the right to pay the fee in cash or shares of common stock with a value of $225.00 per share. On November 11, 2022, we elected to pay the fee with 6,222 shares of common stock. On the January 31, 2024, we entered into the SPA with Ault Lending, pursuant to which we agreed to sell to Ault Lending up to 6,000 shares of Series B Preferred Stock and Series B Warrants to purchase up to 600,000 shares of common stock in one or more closings. On the Execution Date, we sold 1,220 shares of Series B Preferred Stock and Series B Warrants to purchase 122,000 shares of common stock to Ault Lending, for a total purchase price of $1.22 million, which was paid by the cancellation of $1.22 million of cash advances made by Ault Lending to us between November 9, 2023 and the Execution Date. Each share of Series B Preferred Stock is convertible into such number of Conversion Shares determined by dividing the Stated Value by the Conversion Price. The Series B Preferred Stock votes with the common stock, on an “as-converted” basis, subject to certain limitations as set forth in the Series B Certificate of Designations. The Series B Warrants grant Ault Lending the right to purchase Warrant Shares at the Exercise Price of $12.00 for a period of five years from the Initial Exercise Date. On March 26, 2024, we sold 780 shares of Series B Convertible Preferred Stock and Series B Warrants to purchase 78,000 shares of common stock with an exercise price of $12.00, for a total purchase price of $780,000. On April 29, 2024, we sold 100 shares of Series B Convertible Preferred Stock and Series B Warrants to purchase 10,000 shares of common stock with an exercise price of $12.00, for a total purchase price of $100,000. Our accounting and finance department use shared office space within the Costa Mesa offices of AULT. Future Transactions Our Board has adopted a policy whereby any future transactions between our company and any of our subsidiaries, affiliates, officers, directors, principal stockholders or any affiliates of the foregoing will be on terms no less favorable to us than could reasonably be obtained in “arm’s length” transactions with independent third parties, and any such transactions will also be approved by a majority of our disinterested and independent outside directors. Director Independence Independent Audit Committee Nominating and Governance Committee Compensation Committee Director Stephan Jackman No William B. Horne Yes Milton C. Ault No Henry Nisser No Mark Gustafson Yes C X Lynne Fahey McGrath Yes X C Jeffrey Oram Yes X C X Andrew H. Woo Yes X X ____________ C – Chairman of committee X – Member of committee - 75 - ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Baker Tilly US, LLP (“Baker Tilly”) served as our independent registered public accounting firm for the year ended April 30, 2023. On May 6, 2024, our audit committee dismissed Baker Tilly and appointed Haskell & White LLP as our independent registered public accounting firm for the year ended April 30, 2024. Fees and Services The following table shows the aggregate fees paid to us for professional services by Baker Tilly for the years ended April 30, 2024 and 2023: 2024 2023 Audit Services $ 263,160 $ 140,779 Audit Related Services 48,600 — Tax Services — 6,811 All Other Services — — Total $ 311,760 $ 147,590 Audit Fee. This category includes the aggregate fees paid for professional services rendered for the audits of our financial statements during the years ended April 30, 2024 and 2023, for the reviews of the interim financial statements during the years ended April 30, 2024 and 2023, and for other services that are normally provided by the independent auditors in connection with statutory and regulatory filings or engagements for the relevant years. We have not paid Haskell & White LLP for any audit services as they were not engaged prior to April 30, 2024. Audit-Related Fees. This category includes the aggregate fees paid in each of the last two years for assurance and related services by the independent auditors that are reasonably related to the performance of the audits or reviews of the financial statements and are not reported above under “Audit Fees,” and generally consist of fees for other engagements under professional auditing standards, accounting and reporting consultations, internal control-related matters, and audits of employee benefit plans. Tax Fees . This category includes the aggregate fees paid in each of the last two years for professional services rendered by the independent auditors for tax compliance, tax planning and tax advice. All Other Fees. This category includes the aggregate fees paid in each of the last two years for products and services provided by the independent auditors that are not reported above under “Audit Fees,” “Audit-Related Fees,” or “Tax Fees.” The Audit Committee’s policy is to pre-approve all services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The Audit Committee may also pre-approve particular services on a case-by-case basis. Our independent auditors are required to report periodically to the Audit Committee regarding the extent of services they provide in accordance with such pre-approval. - 76 - PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Exhibit No. Exhibit Description 3.1 Certificate of Incorporation (incorporated by reference to Exhibit 2.1 of Form DOS filed with the SEC on August 19, 2016). 3.2 Certificate of Amendment to the Certificate of Incorporation, filed with the Delaware Secretary of State on June 10, 2016 (incorporated by reference to Exhibit 3.2 of the Quarterly Report on Form 10-Q filed with the SEC on December 15, 2023). 3.3 Certificate of Amendment to the Certificate of Incorporation, filed with the Delaware Secretary of State on December 22, 2020 (incorporated by reference to Exhibit 3.3 of the Quarterly Report on Form 10-Q filed with the SEC on December 15, 2023). 3.4 Certificate of Amendment to the Certificate of Incorporation, filed with the Delaware Secretary of State on October 27, 2023 (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed with the SEC on October 30, 2023). 3.5 Amended and Restated Certificate of Designations of Preferences, Rights and Limitations of Series B Convertible Preferred Stock, filed with the Delaware Secretary of State on March 1, 2024 (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed with the SEC on March 7, 2024). 3.6 Certificate of Amendment to the Amended and Restated Certificate of Designations of Preferences, Rights and Limitations of Series B Convertible Preferred Stock, filed with the Delaware Secretary of State on March 21, 2024 (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed with the SEC on March 22, 2024). 3.7 Certificate of Designations of Preferences and Rights of Series A Preferred Stock, as filed with the Delaware Secretary of State on May 9, 2024 (incorporated by reference to Exhibit 3.1 of the amended Current Report on Form 8-K/A filed with the SEC on May 10, 2024). 3.8 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the registration statement on Form S-1 filed with the SEC on May 10, 2021). 4.1 Form of Warrant issued to Ault Lending, LLC (formerly, Digital Power Lending, LLC), dated March 9, 2021 (incorporated by reference to Exhibit 3.1 of Form 1-U filed with the SEC on March 12, 2021). 4.2 Form of Warrant (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the SEC on February 2, 2024). 4.3 Form of Warrant (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the SEC on May 9, 2024). 4.4* Description of Capital Stock. 10.1 Standard Exclusive License Agreement with Sublicensing Terms with the University of South Florida Research Foundation, Inc., dated May 1, 2016 (incorporated by reference to Exhibit 6.1 of Form DOS/A filed with the SEC on September 29, 2016). 10.2 Standard Exclusive License Agreement with Sublicensing Terms Number LIC18110 with the University of South Florida Research Foundation, Inc., dated July 2, 2018 (incorporated by reference to Exhibit 6.3 of Form 1-K filed with the SEC on February 21, 2019). 10.3 Standard Exclusive License Agreement with Sublicensing Terms Number LIC18111 with the University of South Florida Research Foundation, Inc., dated July 2, 2018 (incorporated by reference to Exhibit 6.4 of Form 1-K filed with the SEC on February 21, 2019). 10.4 Standard Exclusive License Agreement with Sublicensing Terms Number LIC19050 with the University of South Florida Research Foundation, Inc., dated June 10, 2020 (incorporated by reference to Exhibit 6.6 of Form 1-K filed with the SEC on August 28, 2020). 10.5 Standard Exclusive License Agreement with Sublicensing Terms Number LIC19051 with the University of South Florida Research Foundation, Inc., dated June 10, 2020 (incorporated by reference to Exhibit 6.7 of Form 1-K filed with the SEC on August 28, 2020). 10.6+ 2016 Amended and Restated Stock Incentive Plan (incorporated by reference to Exhibit 99.1 of Form S-8 filed with the SEC on July 13, 2021). 10.7+ 2021 Stock Incentive Plan (incorporated by reference to Exhibit 99.2 of Form S-8 filed with the SEC on July 13, 2021). 10.8 Form of Amendment to Standard Exclusive License Agreement with Sublicensing Terms with the University of South Florida Research Foundation, Inc., dated April 16, 2023 (incorporated by reference to Exhibit 10.13 of annual report on Form 10-K filed with the SEC on July 27, 2023). 10.9 Form of Amendment to Standard Exclusive License Agreement with Sublicensing Terms Number LIC19050 with the University of South Florida Research Foundation, Inc., dated April 16, 2023 (incorporated by reference to Exhibit 10.14 of annual report on Form 10-K filed with the SEC on July 27, 2023). 10.10 Form of Amendment to Standard Exclusive License Agreement with Sublicensing Terms Number LIC19051 with the University of South Florida Research Foundation, Inc., dated April 16, 2023 (incorporated by reference to Exhibit 10.15 of annual report on Form 10-K filed with the SEC on July 27, 2023). - 77 - 10.11 Form of Amendment to Standard Exclusive License Agreement with Sublicensing Terms Number LIC18110 with the University of South Florida Research Foundation, Inc., dated June 8, 2023 (incorporated by reference to Exhibit 10.16 of annual report on Form 10-K filed with the SEC on July 27, 2023). 10.12 Form of Amendment to Standard Exclusive License Agreement with Sublicensing Terms Number LIC18111 with the University of South Florida Research Foundation, Inc., dated June 8, 2023 (incorporated by reference to Exhibit 10.17 of annual report on Form 10-K filed with the SEC on July 27, 2023). 10.13 Securities Purchase Agreement, dated January 31, 2024 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the SEC on February 2, 2024). 10.14 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the SEC on May 9, 2024). 10.15 Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the SEC on May 9, 2024). 21.1 List of Subsidiaries (incorporated by reference to Exhibit 21.1 of the registration statement on Form S-1 filed with the SEC on June 3, 2024). 23.1* Consent of Haskell & White LLP, Independent Registered Public Accounting Firm. 23.2* Consent of Baker Tilly US, LLP, Independent Registered Public Accounting Firm. 24.1* Power of Attorney. Reference is made to the signature page hereto. 31.1* Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). 31.2* Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). 32.1** Certification of Chief Executive and Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code. 97.1* Alzamend Neuro, Inc., Clawback Policy. 101.INS* Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). *Filed herewith. ** This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing. + Indicates management contract or compensatory plan. ITEM 16. FORM 10–K SUMMARY None. - 78 - SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALZAMEND NEURO, INC. Date: July 30, 2024 By: /s/ Stephan Jackman Stephan Jackman Chief Executive Officer (principal executive officer) Date: July 30, 2024 By: /s/ David J. Katzoff David J. Katzoff Chief Financial Officer (principal financial and accounting officer) POWER OF ATTORNEY KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stephan Jackman and David J. Katzoff, and each of them, as his or her true and lawful attorneys-in-fact and agents, each with the full power of substitution, for him or her and in his or her name, place or stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on in the capacities and on the dates indicated. Name Title Date By: /s/ Stephan Jackman Stephan Jackman Chief Executive Officer and Director (principal executive officer) July 30, 2024 By: /s/ David J. Katzoff David J. Katzoff Chief Financial Officer (principal financial and accounting officer) July 30, 2024 By: /s/ William B. Horne William B. Horne Chairman of the Board July 30, 2024 By: /s/ Henry Nisser Henry Nisser Executive Vice President, General Counsel and Director July 30, 2024 By: /s/ Mark Gustafson Mark Gustafson Director July 30, 2024 By: /s/ Lynne Fahey McGrath, M.P.H., Ph.D. Lynne Fahey McGrath, M.P.H., Ph.D. Director July 30, 2024 By: /s/ Andrew H. Woo, M.D., Ph.D. Andrew H. Woo, M.D., Ph.D Director July 30, 2024 By: /s/ Jeffrey Oram Jeffrey Oram Director July 30, 2024 - 79 - INDEX TO FINANCIAL STATEMENTS ALZAMEND NEURO, INC. Report of Independent Registered Public Accounting Firm (PCAOB ID 200 ) F-2 Report of Independent Registered Public Accounting Firm (PCAOB ID 23) F-3 Balance Sheets as of April 30, 2024 and 2023 F-4 Statements of Operations for the years ended April 30, 2024 and 2023 F-5 Statements of Changes in Stockholders’ Equity for the years ended April 30, 2024 and 2023 F-6 Statements of Cash Flows for the years ended April 30, 2024 and 2023 F-7 Notes to Financial Statements F-8 – F-20 - F- 1 - REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders Alzamend Neuro, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheet of Alzamend Neuro, Inc. (the “Company”) as of April 30, 2024, and the related statements of operations, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of April 30, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has recurring losses from operations, negative cash flow from operations and is dependent on additional financing to fund current and future operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2 to the financial statements. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. HASKELL & WHITE LLP We have served as the Company’s auditor since 2024. Irvine, California July 30, 2024 - F- 2 - REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Alzamend Neuro, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheet of Alzamend Neuro, Inc. (the "Company") as of April 30, 2023, the related statements of operations, stockholders' equity, and cash flows, for the year ended April 30, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2023, and the results of its operations and its cash flows for the year ended April 30, 2023, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has recurring losses from operations, negative cash flow from operations and is dependent on additional financing to fund current and future operations. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BAKER TILLY US, LLP We served as the Company’s auditor from 2019 to 2024 San Diego, California July 27, 2023, except for the effects of the reverse stock splits described in Note 1, as to which the date is July 30, 2024 - F- 3 - ALZAMEND NEURO, INC. Balance Sheets April 30, 2024 April 30, 2023 ASSETS CURRENT ASSETS Cash $ 376,048 $ 5,140,859 Prepaid expenses and other current assets 79,194 447,589 Prepaid expenses - related party - 247,334 TOTAL CURRENT ASSETS 455,242 5,835,782 Property, plant and equipment, net 176,346 79,843 TOTAL ASSETS $ 631,588 $ 5,915,625 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 2,925,059 $ 2,870,122 Note payable 300,714 - TOTAL LIABILITIES, ALL CURRENT 3,225,773 2,870,122 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ (DEFICIT) EQUITY Series B Convertible Preferred Stock, $ 0.0001 stated value per share, 6,000 designated; 2,100 and nil 0 issued and outstanding as of April 30, 2024 and April 30, 2023, respectively - - Common stock, $ 0.0001 par value: 300,000,000 shares authorized; 687,999 and 646,267 issued and outstanding as of April 30, 2024 and April 30, 2023, respectively 69 65 Additional paid-in capital 51,426,154 62,001,395 Note receivable for common stock – related party - ( 14,883,295 ) Accumulated deficit ( 54,020,408 ) ( 44,072,662 ) TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY ( 2,594,185 ) 3,045,503 TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY $ 631,588 $ 5,915,625 The accompanying notes are an integral part of these financial statements. - F- 4 - ALZAMEND NEURO, INC. Statements of Operations For the Year Ended April 30, 2024 2023 OPERATING EXPENSES Research and development $ 6,455,107 $ 7,445,857 General and administrative 3,482,538 7,424,609 Total operating expenses 9,937,645 14,870,466 Loss from operations ( 9,937,645 ) ( 14,870,466 ) OTHER INCOME (EXPENSE), NET Interest expense ( 10,101 ) ( 7,701 ) Total other income (expense), net ( 10,101 ) ( 7,701 ) NET LOSS $ ( 9,947,746 ) $ ( 14,878,167 ) Basic and diluted net loss per common share $ ( 14.70 ) $ ( 22.89 ) Basic and diluted weighted average common shares outstanding 676,565 650,126 The accompanying notes are an integral part of these financial statements. - F- 5 - ALZAMEND NEURO, INC. Statements of Changes in Stockholders’ Equity (Deficit) For the Years Ended April 30, 2024 and April 30, 2023 Series B Convertible Additional Note Receivable for Preferred Stock Common Stock Paid-In Common Stock - Accumulated Shares Amount Shares Amount Capital Related Party Deficit Total BALANCES, April 30, 2022 - $ - 636,545 $ 64 $ 57,429,237 $ ( 14,883,295 ) $ ( 29,194,495 ) $ 13,351,511 Issuance of common stock for restricted stock awards - - 167 - - - - - Stock-based compensation to employees and consultants - - - - 3,582,625 - - 3,582,625 Proceeds from stock option exercise - - 3,333 - 200 - - 200 Issuance of common stock for related party payable - - 6,222 1 989,333 - - 989,334 Net loss - - - - - - ( 14,878,167 ) ( 14,878,167 ) BALANCES, April 30, 2023 - $ - 646,267 $ 65 $ 62,001,395 $ ( 14,883,295 ) $ ( 44,072,662 ) $ 3,045,503 Issuance of common stock for cash - - 107,682 11 1,252,414 - - 1,252,425 Issuance of common stock for restricted stock awards - - 167 - - - - - Issuance of preferred stock for cash 2,100 - - - 2,100,000 - - 2,100,000 Subscription receivable payment received - - - - ( 7,002 ) 7,002 - - Return of common stock for subscription receivable - - ( 66,117 ) ( 7 ) ( 14,876,286 ) 14,876,293 - - Stock-based compensation to employees and consultants - - - - 955,633 - - 955,633 Net loss - - - - - - ( 9,947,746 ) ( 9,947,746 ) BALANCES, April 30, 2024 2,100 $ - 687,999 $ 69 $ 51,426,154 $ - $ ( 54,020,408 ) $ ( 2,594,185 ) The accompanying notes are an integral part of these financial statements. - F- 6 - ALZAMEND NEURO, INC. Statements of Cash Flows For the Year Ended April 30, 2024 2023 Cash flows from operating activities: Net loss $ ( 9,947,746 ) $ ( 14,878,167 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 50,740 23,066 Interest expense - debt discount 714 - Stock-based compensation to employees and consultants 955,633 3,582,625 Changes in operating assets and liabilities: Prepaid expenses and other current assets 368,395 ( 97,866 ) Prepaid expenses related party 247,334 739,918 Accounts payable and accrued liabilities 54,937 1,707,272 Net cash used in operating activities ( 8,269,993 ) ( 8,923,152 ) Cash flows from investing activities: Purchase of equipment ( 147,243 ) - Net cash used in investing activities ( 147,243 ) - Cash flows from financing activities: Proceeds from the issuance of common stock, net 1,252,425 - Proceeds from stock option exercise - 200 Proceeds from the issuance of note payable 300,000 - Proceeds from the issuance of preferred stock - related party 2,100,000 - Net cash provided by financing activities 3,652,425 200 Net decrease in cash ( 4,764,811 ) ( 8,922,952 ) Cash at beginning of period 5,140,859 14,063,811 Cash at end of period $ 376,048 $ 5,140,859 Supplemental disclosures of cash flow information: Non-cash financing activities: Return of common stock for cancellation of subscription receivable $ ( 14,883,295 ) $ - Debt discount from issuance of note payable $ 10,000 $ - Fair value of warrants issued in connection with preferred stock related party $ 1,902,140 $ - Issuance of common stock for related party payable $ - $ 989,334 The accompanying notes are an integral part of these financial statements. - F- 7 - ALZAMEND NEURO, INC. NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS Organization Alzamend Neuro, Inc. (the “Company” or “Alzamend”), is a clinical-stage biopharmaceutical company focused on developing novel products for the treatment of Alzheimer’s disease (“Alzheimer’s”), bipolar disorder (“BD”), major depressive disorder (“MDD”) and post-traumatic stress disorder (“PTSD”). With two current product candidates, Alzamend aims to bring treatments or cures to market at a reasonable cost as quickly as possible. The Company’s current pipeline consists of two novel therapeutic drug candidates: (i) a patented ionic cocrystal technology delivering a therapeutic combination of lithium, proline and salicylate, known as AL001, through two royalty-bearing exclusive worldwide licenses from the University of South Florida Research Foundation, Inc., as licensor (the “Licensor”); and (ii) a patented method using a mutant peptide sensitized cell as a cell-based therapeutic vaccine that seeks to restore the ability of a patient’s immunological system to combat Alzheimer’s, known as ALZN002, through a royalty-bearing exclusive worldwide license from the same Licensor. The Company is devoting substantially all its efforts towards research and development of its two product candidates and raising capital. The Company has not generated any product revenue to date. The Company has financed its operations to date primarily through debt financings and through the sale of its common stock, par value $ 0.0001 per share (“Common Stock”) and its preferred stock, par value $ 0.0001 per share. The Company expects to continue to incur net losses in the foreseeable future. Reverse Stock Splits On October 27, 2023, pursuant to the authorization provided by the Company’s stockholders at a special meeting of stockholders, the Company filed an amendment to the Certificate of Incorporation to effectuate a reverse stock split of the Company’s issued and outstanding Common Stock by a ratio of one-for-fifteen (the “First Reverse Split”). The First Reverse Split did not affect the number of authorized shares of Common Stock, preferred stock or their respective par value per share. As a result of the First Reverse Split, each fifteen shares of Common Stock issued and outstanding prior to the First Reverse Split were converted into one share of Common Stock. The First Reverse Split became effective in the State of Delaware on October 31, 2023. All share amounts in these financial statements have been updated for all periods presented to reflect the First Reverse Split. On July 10, 2024, pursuant to the authorization provided by the Company’s stockholders at its annual meeting of stockholders, the Company filed an amendment to the Certificate of Incorporation to effectuate a reverse stock split of the Company’s issued and outstanding Common Stock by a ratio of one-for-ten (the “Second Reverse Split”). The Second Reverse Split did not affect the number of authorized shares of Common Stock, preferred stock or their respective par value per share. As a result of the Second Reverse Split, each ten shares of Common Stock issued and outstanding prior to the Second Reverse Split were converted into one share of Common Stock. The Second Reverse Split became effective in the State of Delaware on July 16, 2024. All share amounts in these financial statements have been updated for all periods presented to reflect the Second Reverse Split. 2. LIQUIDITY, GOING CONCERN AND MANAGEMENT’S PLANS The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern. As of April 30, 2024, the Company had cash of $ 376,000 and an accumulated deficit of $ 54.0 million. For the year ended April 30, 2024, the Company had a net loss of $ 9.9 million and cash used in operating activities of $ 8.3 million. The Company had cash as of April 30, 2023, totaling $ 5.1 million and accumulated deficit of $ 44.1 million. In the past, the Company has financed its operations principally through issuances of equity and debt instruments. On January 31, 2024, the Company and Ault Lending, LLC (“Ault Lending”), entered into a securities purchase agreement (the “AL SPA”) for the purchase of up to 6,000 shares of Series B Convertible Preferred Stock and warrants to purchase shares up to 600,000 shares of Common Stock. 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 Date. On January 31, 2024, the Company 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 the Company between November 9, 2023 and January 31, 2024 and a subscription receivable of $ 70,000 . - F- 8 - On March 26, 2024, the Company 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 . On April 29, 2024, the Company 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 . On May 8, 2024, the Company 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 and warrants to purchase shares up to 2,500,000 shares of Common Stock in several tranche closings. On May 10, 2024, the Company 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 the Company 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, the Company 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. The purchase price was paid in cash. The Company expects to continue to incur losses for the foreseeable future and needs to raise additional capital until it is able to generate revenues from operations sufficient to fund its development and commercial operations. These factors create substantial doubt about our ability to continue as a going concern . However, based on the Company’s current business plan, management believes that the Company’s cash and cash equivalents at April 30, 2024, together with the anticipated receipt of funds from its Series A and Series B Convertible Preferred Stock securities purchase agreements, will be sufficient to meet the Company’s anticipated cash requirements during the twelve-month period subsequent to the issuance of the financial statements included in this Annual Report. 3. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). Accounting Estimates The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s critical accounting policies that involve significant judgment and estimates include research and development, stock-based compensation, warrant valuation, and valuation of deferred income taxes. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with a remaining maturity of three months or less when purchased to be cash equivalents. As of April 30, 2024 and 2023, the Company had no cash equivalents. Fair Value of Financial Instruments Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement , defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last is considered unobservable: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. - F- 9 - Level 3 assumptions: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including liabilities resulting from imbedded derivatives associated with certain warrants to purchase common stock. The fair values of warrants issued in connection with equity or debt issuance are determined using the Black-Scholes valuation model, a “Level 3” fair value measurement, based on the estimated fair value of the underlying common stock, volatility based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities, the expected life based on the remaining contractual term of the conversion option and warrants and the risk free interest rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the warrants’ contractual life. Income Taxes The Company determines its income taxes under the asset and liability method. Under the asset and liability approach, deferred income tax assets and liabilities are calculated and recorded based upon the future tax consequences of temporary differences by applying enacted statutory tax rates applicable to future periods for differences between the financial statements carrying amounts and the tax basis of existing assets and liabilities. Generally, deferred income taxes are classified as current or non-current in accordance with the classification of the related asset or liability. Those not related to an asset or a liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. Valuation allowances are provided for significant deferred income tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized. As of April 30, 2024, the Company had fully reserved the net deferred income tax assets by taking a full valuation allowance against these assets. The Company recognizes tax liabilities by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized and also provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. To the extent that the final tax outcome of these matters is different than the amount recorded, such differences impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. U.S. GAAP also requires management to evaluate tax positions taken by the Company and recognize a liability if the Company has taken uncertain tax positions that more likely than not would not be sustained upon examination by applicable taxing authorities. Management of the Company has evaluated tax positions taken by the Company and has concluded that as of April 30, 2024, there were no uncertain tax positions taken, or expected to be taken, that would require recognition of a liability that would require disclosure in the financial statements. Research and Development Expenses Research and development costs are expensed as incurred. Research and development costs consist of scientific consulting fees and lab supplies, as well as fees paid to clinical research organizations that conduct certain research and development activities on behalf of the Company. The Company has acquired and may continue to acquire the rights to develop and commercialize new product candidates from third parties. The upfront payments to acquire licenses, products or rights, as well as any future milestone payments, are immediately recognized as research and development expense provided that there is no alternative future use of the rights in other research and development projects. Stock-Based Compensation The Company recognizes stock-based compensation expense for stock options on a straight-line basis over the requisite service period and accounts for forfeitures as they occur. The Company’s stock-based compensation costs are based upon the grant date fair value of options estimated using the Black-Scholes option pricing model. To the extent any stock option grants are made subject to the achievement of a performance-based milestone, management evaluates when the achievement of any such performance-based milestone is probable based on the satisfaction of the performance conditions as of the reporting date. The Company recognizes stock-based compensation expense for restricted stock on a straight-line basis over the requisite service period and accounts for forfeitures as they occur. The Company’s stock-based compensation for restricted stock is based upon the estimated fair value of the Common Stock on the date of grant. The Black-Scholes option pricing model utilizes inputs which are highly subjective assumptions and generally requires significant judgment. Certain of such assumptions involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and the Company uses significantly different assumptions or estimates, the Company’s stock-based compensation could be materially different. - F- 10 - Warrants The Company accounts for stock warrants as either equity instruments, derivative liabilities, or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”) , depending on the specific terms of the warrant agreement. During the year ended April 30, 2024, based on the terms of the Company’s warrant agreements, the Company accounted for the warrants as equity instruments as the warrants were indexed to the Common Stock, required settlement in shares and would be classified as equity under ASC 815. Loss per Common Share The Company utilizes FASB ASC Topic No. 260, Earnings per Share . Basic loss per share is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similarly to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the additional common shares had been issued and if such common shares were dilutive. Diluted loss per common share reflects the potential dilution that could occur if options, restricted stock units and warrants were to be exercised or converted or otherwise resulted in the issuance of Common Stock that then shared in the earnings of the entity. Since the effects of outstanding options, restricted stock units and warrants are anti-dilutive in the periods presented, shares of Common Stock underlying these instruments have been excluded from the computation of loss per common share. The following sets forth the number of shares of Common Stock underlying outstanding options and warrants that have been excluded from the computation of loss per common share: Schedule of antidilutive securities excluded from computation of earnings per share For the Year Ended April 30, 2024 2023 Stock options (1) 120,333 121,055 Restricted stock units 167 333 Warrants 240,449 67,665 360,949 189,053 (1) The Company has excluded 10,000 stock options for the years ended April 30, 2024 and 2023, respectively, with an exercise price of $0.06, from its anti-dilutive securities as these shares have been included in our determination of basic loss per share as they represent shares issuable for little or no cash consideration upon the satisfaction of certain conditions pursuant to ASC 260-10-45-14. Preferred Stock Classification The Company analyzes the terms of its preferred stock using ASC Topic No. 480, Distinguishing Liabilities from Equity , to determine whether the Company’s preferred stock should be classified as a liability or equity, and if classified as equity, permanent or temporary. Common criteria the Company considers are redemption provisions, conversion options, cumulative of mandatory fixed dividends, discretionary dividends based on earning, voting rights and collateral requirements. 4. NOTE RECEIVABLE, RELATED PARTY, NET On April 30, 2019, the Company and Ault Life Science Fund, LLC (“ALSF”), a related party, entered into a securities purchase agreement for the purchase of 66,667 shares of Common Stock for a total purchase price of $ 15,000,000 , or $225.00 per share with 33,333 warrants with a 5 -year life and an exercise price of $ 450.00 per share and vesting upon issuance (the “ALSF Warrants”). The total purchase price of $15,000,000 was in the form of a non-interest-bearing note receivable with a 12 -month term from ALSF. In November 2019, the term of the note receivable was extended to December 31, 2021, and in May 2021, the term of the note receivable was extended to December 31, 2023. The note was secured by a pledge of the purchased shares. As the note receivable from ALSF was related to the issuance of Common Stock, it is recorded as an offset to additional paid-in capital. ALSF is wholly owned by Ault Life Sciences, Inc. (“ALSI”). ALSI is majority owned by Ault & Company, Inc. (“Ault & Co.”). Messrs. Ault, Horne and Nisser, directors of the Company, are also directors of Ault & Co. On January 19, 2024, the Company and ALSF entered into a settlement agreement and release of claims whereby ALSF returned to the Company 66,117 shares of Common Stock and the ALSF Warrants for settlement of the outstanding balance of the note receivable in the amount of $ 14,876,293 . - F- 11 - 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets were as follows: Schedule of prepaid expenses and other current assets April 30, 2024 April 30, 2023 Prepaid clinical trial fees $ - $ 352,635 Prepaid insurance 60,522 92,154 Other prepaid expenses 18,672 2,800 Total prepaid expenses and other current assets $ 79,194 $ 447,589 On June 14, 2023, the Company purchased directors’ and officers’ insurance for 12 months in the amount of $ 337,000 . Prepaid insurance at April 30, 2024 represented the unamortized portion of directors’ and officers’ insurance. 6. INCOME TAXES The following is a geographical breakdown of the Company’s loss before the provision for income taxes: Schedule of Income before income tax, domestic and foreign April 30, 2024 April 30, 2023 Pre-tax loss: Federal $ ( 9,947,746 ) $ ( 14,878,167 ) Total pre-tax loss $ ( 9,947,746 ) $ ( 14,878,167 ) Significant components of the Company’s deferred tax assets were as follows: Schedule of deferred tax assets and liabilities April 30, 2024 April 30, 2023 Deferred income tax asset: Accruals $ - $ 241,500 Capitalized research expenditures 2,321,972 1,426,779 Net operating loss carryover 10,838,412 6,885,428 Stock-based compensation 2,638,820 2,276,109 Total deferred tax asset 15,799,204 10,829,816 Fixed assets ( 32,400 ) ( 16,767 ) Valuation allowance ( 15,766,804 ) ( 10,813,049 ) Deferred income tax asset, net of allowance $ - $ - A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate for the years ended April 30, 2024 and 2023, is as follows: Schedule of effective income tax rate reconciliation 2024 2023 Tax benefit at U.S. Federal statutory tax rate 21.0 % 21.0 % State income tax, net of federal benefit 28.9 % - 18.3 % Increase (decrease) in tax rate resulting from: Change in valuation allowance - 49.8 % - 4.8 % Stock-based compensation - 0.1 % 0.3 % Other 0.0 % 2.0 % Effective tax rate 0.0 % 0.0 % In assessing the realization of deferred tax assets, management considers whether it is more likely than not the Company’s deferred tax assets will be realized. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making such assessments. Given historical generation of and expected future taxable losses, management determined it is more likely than not that some or all of the deferred tax assets will not be realized. Therefore, a full valuation allowance was maintained, as of the years ended April 30, 2024 and 2023, of $ 15,766,804 and $ 10,813,049 , respectively. At April 30, 2024, the Company maintained U.S. Federal and state net operating loss (“NOL”) carryovers of approximately $ 38,716,141 and $ 190,584,088 respectively. Federal and state NOLs begin to expire in various years depending on relevant jurisdiction. In accordance with Internal Revenue Code §382 (“IRC §382”), the future deductibility of the Company’s NOL’s may be subject to an annual limitation in the event of a change in control as defined by applicable regulations. The Company has yet to complete a formal study to confirm NOL’s are not limited in utilization per IRC §382 and may reduce applicable deferred tax assets upon completion of such a study, in future periods. - F- 12 - The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company had no uncertain tax positions as of April 30, 2024. The Company’s policy is to recognize interest and penalties related to income tax matters in the provision for income taxes. As of April 30, 2024, no interest or penalties have been recorded pertaining to uncertain tax positions. The Company is subject to taxation in the United States and various U.S. state jurisdictions. All tax years remain open to examination by the Internal Revenue Service and relevant state authorities. On December 27, 2020, the Consolidated Appropriations Act, 2021 (“CAA 2021”), which included a number of provisions including, but not limited to, the extension of numerous employment tax credits, the extension of the Section 179D deduction, enhanced business meals deductions, and the deductibility of expenses paid with Paycheck Protection Program loan funds that are forgiven, was signed into law. Accordingly, the effects of the CAA 2021 have been incorporated into the income tax provision for the year ended April 30, 2024. These provisions did not have a material impact on the income tax provision. 7. STOCK-BASED COMPENSATION 2016 Stock Incentive Plan On April 30, 2016, the Company’s stockholders approved the Company’s 2016 Stock Incentive Plan (the “Plan”). The Plan provides for the issuance of a maximum of 83,333 shares of common stock to be offered to the Company’s directors, officers, employees, and consultants. On March 1, 2019, the Company’s stockholders approved an additional 50,000 shares to be available for issuance under the Plan. Options granted under the Plan have an exercise price equal to or greater than the fair value of the underlying common stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. The options expire between five and 10 years from the date of grant. Restricted stock awards granted under the Plan are subject to a vesting period determined at the date of grant. 2021 Stock Incentive Plan In February 2021, the Company’s board of directors (the “Board”) adopted, and the stockholders approved, the Alzamend Neuro, Inc. 2021 Stock Incentive Plan (the “2021 Plan”). The 2021 Plan authorizes the grant to eligible individuals of (1) stock options (incentive and non-statutory), (2) restricted stock, (3) stock appreciation rights, or SARs, (4) restricted stock units, and (5) other stock-based compensation. Stock Subject to the 2021 Plan. The maximum number of shares of common stock that may be issued under the 2021 Plan is 66,667 shares, which number will be increased to the extent that compensation granted under the 2021 Plan is forfeited, expires or is settled for cash (except as otherwise provided in the 2021 Plan). Substitute awards (awards made or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company that the Company acquires or any subsidiary of the Company or with which the Company or any subsidiary combines) will not reduce the shares authorized for grant under the 2021 Plan, nor will shares subject to a substitute award be added to the shares available for issuance or transfer under the 2021 Plan. Restricted Stock. In May 2021, the Company issued restricted stock awards pursuant to the 2021 Plan to one employee and four independent Board members. The restricted stock awards vest over 48 months for the employee and 12 months for the independent Board members. The awards require continued service to the Company during the vesting period. The vesting provisions of individual awards may vary as approved by the Board. Compensation expense for restricted stock is generally recorded based on its market value on the date of grant and recognized ratably over the associated service and performance period. Stock Options. All options that the Company grants are granted at the per share fair value on the grant date. Vesting of options differs based on the terms of each option. The Company has valued the options at their date of grant utilizing the Black Scholes option pricing model. As of the date of issuance of these options, there was not an active public market for the Company’s shares. Accordingly, the fair value of the underlying options was determined based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options as calculated using the simplified method. The expected life of the options used was based on the contractual life of the option granted. Stock-based compensation is a non-cash expense because the Company settles these obligations by issuing shares of common stock from its authorized shares instead of settling such obligations with cash payments. - F- 13 - A summary of stock option activity for the year ended April 30, 2024, is presented below: Schedule of share-based payment arrangement, option, activity Outstanding Options Shares Available for Grant Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value Balance at April 30, 2023 61,278 98,722 $ 182.31 6.18 $ 819,900 Options granted - - $ - Options exercised - - $ - Options cancelled/forfeited 722 ( 722 ) $ 750.00 Balance at April 30, 2024 62,000 98,000 $ 178.12 5.22 $ 70,500 Options vested and expected to vest at April 30, 2024 91,334 $ 178.31 4.98 $ 70,500 Options exercisable at April 30, 2024 90,208 $ 177.51 4.94 $ 70,500 The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e., the difference between the estimated fair value on the respective date and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their options. Restricted stock unit activity for the year ended April 30, 2024 is presented below: Schedule of nonvested restricted stock units activity Shares Weighted Average Grant Date Fair Value Unvested at April 30, 2023 333 $ 375.00 Granted - - Vested ( 166 ) 375.00 Cancelled - - Unvested at April 30, 2024 167 $ 375.00 Stock Options Granted to Employees and Consultants The estimated fair value of stock options granted to employees and consultants during the year ended April 30, 2023 were calculated using the Black-Scholes option-pricing model using the following assumptions: Schedule of stock options granted to employees and consultants For the Year Ended April 30, 2023 Expected term (in years) 6.25 Volatility 88.94 % Risk-free interest rate 3.89 % Dividend yield 0.0 % Expected Term: The expected term represents the period that the options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term). Expected Volatility: The Company uses an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company only has a limited trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available. Risk-Free Interest Rate: The Company based the risk-free interest rate over the expected term of the options based on the constant maturity rate of U.S. Treasury securities with similar maturities as of the date of the grant. Expected Dividend: The Company has not paid and does not anticipate paying any dividends in the near future. Therefore, the expected dividend yield was zero. There were no stock options granted during the year ended April 30, 2024. For the year ended April 20, 2024 and 2023, stock-based compensation related to restricted stock grants and stock options were $ 956,000 and $ 3.6 million, respectively, for employees and directors. - F- 14 - Performance Contingent Stock Options Granted to Employee On November 26, 2019, the Board granted 28,333 performance and market contingent awards to certain key employees and a director. These grants were made outside of the Plan. These awards have an exercise price of $225.00 per share. These awards have multiple separate market triggers for vesting based upon either (i) the successful achievement of stepped target closing prices on a national securities exchange for 90 consecutive trading days later than 180 days after the Company’s initial public offering (“IPO”) for its common stock, or (ii) stepped target prices for a change in control transaction. The target prices ranged from $1,500 per share to $6,000 per share. In the event any of the stock price milestones are not achieved within three years , the unvested portion of the performance options will be reduced by 25%. On November 22, 2022, the Compensation Committee of the Board modified the performance criteria for these awards. The target price range is now $1,500 per share to $3,000 per share. Additionally, if the stock price milestones are now not achieved by November 27, 2026, as opposed to within three years, the unvested portion of the portion of the performance options will be reduced by 25%. Due to the significant risks and uncertainties associated with achieving the market-contingent awards, as of April 30, 2024, the Company believes that the achievement of the requisite performance conditions is not probable and, as a result, no compensation cost has been recognized for these awards. On November 29, 2022, the Compensation Committee of the Board granted 13,333 performance-based stock option to the Chief Executive Officer at an exercise price of $175.50 per share, of which 50% vest upon the completion and announcement of topline data from the Company’s Phase II clinical trial of AL001 within three years from grant date and the remaining 50% vest upon the completion and announcement of topline data from the Company’s Phase II clinical trial of ALZN002 within four years from the grant date. During the year ended April 30, 2023, the Company believed that it was probable that the performance condition of the completion and announcement of topline data from the Company’s Phase II clinical trial of AL001 would be achieved and had recognized the related stock-based compensation. As of April 30, 2024, the Company believed that the achievement of the second performance condition was not probable and, as a result, no compensation cost has been recognized related to Phase I/IIA of ALZN002. Performance Contingent Stock Options Granted to TAMM Net On March 23, 2021, the Company issued performance-based stock options to the certain team members at TAMM Net, Inc. (“TAMM Net”) to purchase an aggregate of 3,000 shares of common stock at a per share exercise price of $225.00 per share, of which 50% vest upon the completion of Phase I of AL001 by March 31, 2022, and the remaining 50% vest upon completion of Phase I of ALZN002 by December 31, 2022. The performance goal of completing Phase I of AL001 was achieved on March 22, 2022. On January 19, 2023, the Board modified the performance criteria for these awards. The remaining 50% of the grant would have vested upon the completion and announcement of topline data of the first cohort from a Phase I/IIA clinical trial of ALZN002 on/or before March 31, 2024. The modified performance criteria was not met on or before March 31, 2024 and, as a result, the remaining unvested stock options were cancelled and no compensation cost has been recognized for these awards related to ALZN002. Performance Contingent Stock Options Granted to Consultants On October 14, 2021, the Company issued performance-based stock options to two consultants to purchase an aggregate of 1,334 shares of Common Stock with an exercise price of $363.00 per share, of which 333 vest upon completion of each of the Phase II clinical trials of AL001 for a BD indication, AL001 for a PTSD indication, AL001 for an MDD indication and ALZN002 for an Alzheimer’s indication. On January 19, 2023, the Board modified the performance criteria for these awards. The revised grant will vest 25% if the Company (a) completes and announces topline data from a Phase II clinical trial of AL001 and ALZN002, as applicable, that would support a new drug application for the drug candidate and the indication listed below, and (b) obtained a “Study May Proceed” letter from the U.S. Food and Drug Administration (“FDA”) for the additional Investigational New Drug (“IND”) on/or before December 31, 2023, as follows: (i) AL001 – BD; (ii) AL001- MDD; (iii) AL001 – PTSD; and (iv) ALZN002 – Alzheimer’s. During the year ended April 30, 2024, the Company filed INDs for BD, MDD and PTSD and received a “Study May Proceed” letter for BD in October 2023, MDD in November 2023 and PTSD in December 2023. As a result, 75% of the performance grant vested and the Company recognized stock-based compensation related to the vesting. As of April 30, 2024, the Company believed that the achievement of the remaining requisite performance condition was not probable and, as a result, no compensation cost has been recognized for these awards related to ALZN002 – Alzheimer’s. - F- 15 - Stock-Based Compensation Expense The Company’s results of operations include expenses relating to stock-based compensation for the years ended April 30, 2024 and 2023, were comprised as follows: Schedule of stock-based compensation For the Year Ended April 30, 2024 2023 Research and development $ 213,905 $ ( 42,589 ) General and administrative 741,728 3,625,214 Total $ 955,633 $ 3,582,625 As of April 30, 2024, total unamortized stock-based compensation expense related to unvested employee and non-employee awards that are expected to vest was $ 353,000 . The weighted-average period over which such stock-based compensation expense will be recognized is approximately 1.3 years. 8. WARRANTS Warrant Issuances During 2024 During the year ended April 30, 2024, the Company issued warrants to purchase an aggregate of 210,000 shares of common stock at an exercise price of $ 12.00 per share. (i) On January 31, 2024, the Company issued a warrant to purchase 122,000 shares of Common Stock at an exercise price of $ 12.00 in connection with the sale of convertible preferred stock to Ault Lending for $ 1,220,000 . Based on the terms of the Company’s warrant agreement, the Company accounted for the warrant as an equity instrument as the warrant is indexed to the common stock, requires settlement in shares and would be classified as equity under ASC 815. (ii) On March 26, 2024, the Company issued a warrant to purchase 78,000 shares of Common Stock at an exercise price of $ 12.00 in connection with the sale of convertible preferred stock to Ault Lending for $ 780,000 . Based on the terms of the Company’s warrant agreement, the Company accounted for the warrant as an equity instrument as the warrant is indexed to the common stock, requires settlement in shares and would be classified as equity under ASC 815. (iii) On April 29, 2024, the Company issued a warrant to purchase 10,000 shares of Common Stock at an exercise price of $ 12.00 in connection with the sale of convertible preferred stock to Ault Lending for $ 100,000 . Based on the terms of the Company’s warrant agreement, the Company accounted for the warrant as an equity instrument as the warrant is indexed to the common stock, requires settlement in shares and would be classified as equity under ASC 815. The following table summarizes information about common stock warrants at April 30, 2024: Schedule of common stock warrants outstanding Outstanding Exercisable Weighted Average Weighted Weighted Remaining Average Average Exercise Number Contractual Exercise Number Exercise Price Outstanding Life (years) Price Exercisable Price $12.00 210,000 5.3 $ 12.00 - - $262.50 1,076 0.5 $ 262.50 1,076 $ 262.50 $450.00 28,965 1.9 $ 450.00 28,965 $ 450.00 $937.50 408 2.1 $ 937.50 408 $ 937.50 $ 12.00 - $ 937.50 240,449 4.9 $ 67.45 30,449 $ 449.91 Warrant activity for the year ended April 30, 2024 is presented below: Schedule of warrant activity Number Outstanding Weighted Average Exercise Price Outstanding at April 30, 2023 67,662 $ 435.18 Granted 210,000 $ 12.00 Cancelled/Expired ( 37,213 ) $ 423.13 Outstanding at April 30, 2024 240,449 $ 67.45 - F- 16 - The estimated fair value of warrants granted during the years ended April 30, 2024, were calculated using the Black-Scholes option-pricing model using the following assumptions: Schedule of assumptions used For the year ended April 30, 2024 Expected term (in years) 5.50 Volatility 92.9 % Risk-free interest rate 3.95 – 4.65 % Dividend yield 0.0 % Expected Term: The expected term represents the contractual life of the warrants granted. Expected Volatility: The Company uses an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company only has a limited trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available. Risk-Free Interest Rate: The Company based the risk-free interest rate over the expected term of the warrants based on the constant maturity rate of U.S. Treasury securities with similar maturities as of the date of the grant. Expected Dividend: The Company has not paid and does not anticipate paying any dividends in the near future. Therefore, the expected dividend yield was zero. 9. OTHER RELATED PARTY TRANSACTIONS In November 2022, the Company entered into a marketing and brand development agreement with Ault Alliance, Inc. (“AULT”), effective August 1, 2022, whereby AULT provided various marketing services over twelve months valued at $1.4 million. The Company had the right to pay the fee in cash or shares of Common Stock with a value of $225.00 per share. On November 11, 2022, the Company elected to pay the fee with 6,222 shares of Common Stock. The Company recorded the value of the agreement using the closing price of the Common Stock on November 11, 2022, and amortizes the expense over twelve months beginning in August 2022. At April 30, 2024, the balance of related party prepaid expenses was zero. 10. COMMITMENTS AND CONTINGENCIES Contractual Obligations On July 2, 2018, the Company entered into two Standard Exclusive License Agreements with Sublicensing Terms for AL001 with the Licensor and its affiliate, the University of South Florida (the “AL001 Licenses”), pursuant to which the Licensor granted the Company a royalty bearing exclusive worldwide licenses limited to the field of Alzheimer’s, under United States Patent Nos. (i) 9,840,521, entitled “Organic Anion Lithium Ionic Cocrystal Compounds and Compositions”, filed September 24, 2015 and granted December 12, 2017, and (ii) 9,603,869, entitled “Lithium Co-Crystals for Treatment of Neuropsychiatric Disorders”, filed May 21, 2016 and granted March 28, 2017. On February 1, 2019, the Company entered into the First Amendments to the AL001 Licenses, on March 30, 2021, the Company entered into the Second Amendments to the AL001 Licenses and on June 8, 2023, the Company entered into the Third Amendments to the AL001 Licenses (collectively, the “AL001 License Agreements”). The Third Amendments to the AL001 Licenses modified the timing of the payments for the license fees. The AL001 License Agreements require that the Company pay combined royalty payments of 4.5 % on net sales of products developed from the licensed technology for AL001. The Company has already paid an initial license fee of $ 200,000 for AL001. As an additional licensing fee for the license of the AL001 technologies, the Licensor received 14,853 shares of Common Stock. Minimum royalties for AL001 License Agreements are $ 40,000 on the first anniversary of the first commercial sale, $ 80,000 on the second anniversary of the first commercial sale and $ 100,000 on the third anniversary of the first commercial sale and every year thereafter, for the life of the AL001 License Agreements. On May 1, 2016, the Company entered into a Standard Exclusive License Agreement with Sublicensing Terms for ALZN002 with the Licensor (the “ALZN002 License”), pursuant to which the Licensor granted the Company a royalty bearing exclusive worldwide license limited to the field of Alzheimer’s Immunotherapy and Diagnostics, under United States Patent No. 8,188,046, entitled “Amyloid Beta Peptides and Methods of Use”, filed April 7, 2009 and granted May 29, 2012. On August 18, 2017, the Company entered into the First Amendment to the ALZN002 License, on May 7, 2018, the Company entered into the Second Amendment to the ALZN002 License, on January 31, 2019, the Company entered into the Third Amendment to the ALZN002 License, on January 24, 2020, the Company entered into the Fourth Amendment to the ALZN002 License, on March 30, 2021, the Company entered into the Fifth Amendment to the ALZN002 License, on April 17, 2023, the Company entered into the Sixth Amendment to the ALZN002 License and on December 11, 2023, the Company 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. - F- 17 - The ALZN002 License Agreement requires the Company to pay royalty payments of 4 % on net sales of products developed from the licensed technology for ALZN002. The Company has already paid an initial license fee of $ 200,000 for ALZN002. As an additional licensing fee for the license of ALZN002, the Licensor received 24,012 shares of Common Stock. Minimum royalties for ALZN002 are $ 20,000 on the first anniversary of the first commercial sale, $ 40,000 on the second anniversary of the first commercial sale and $ 50,000 on the third anniversary of the first commercial sale and every year thereafter, for the life of the ALZN002 License Agreement. On November 19, 2019, the Company entered into two Standard Exclusive License Agreements with Sublicensing Terms for two additional indications of AL001 with the Licensor (the “November AL001 License”), pursuant to which the Licensor granted the Company a royalty bearing exclusive worldwide licenses limited to the fields of (i) neurodegenerative diseases excluding Alzheimer’s and (ii) psychiatric diseases and disorders. On March 30, 2021, the Company entered into the First Amendments to the November AL001 License and on April 17, 2023, the Company entered into the Second Amendments to the November AL001 License (collectively, the “November AL001 License Agreements”). The Second Amendments to the November AL001 License modified the timing of the payments for the license fees. The November AL001 License Agreements require the Company to pay royalty payments of 3 % on net sales of products developed from the licensed technology for AL001 in those fields. The Company paid an initial license fee of $ 20,000 for the additional indications. Minimum royalties for November AL001 License Agreements are $ 40,000 on the first anniversary of the first commercial sale, $ 80,000 on the second anniversary of the first commercial sale and $ 100,000 on the third anniversary of the first commercial sale and every year thereafter, for the life of the November AL001 License Agreements. 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 Company’s obligations to pay royalties expire under the applicable license agreement. Under the various license agreements, if the Company fails to meet a milestone by its specified date, Licensor may terminate the license agreement. 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 the Company while the Licensor remains the owner of any equity securities of the Company. Additionally, the Company is required to pay milestone payments on the due dates to the Licensor for the license of the AL001 technologies and for the ALZN002 technology, as follows: Original AL001 Licenses: Schedule of contractual obligation, fiscal year maturity Payment Due Date Event $ 50,000 * Completed September 2019 Pre-IND meeting $ 65,000 * Completed June 2021 IND application filing $ 190,000 * Completed December 2021 Upon first dosing of patient in a clinical trial $ 500,000 * Completed March 2022 Upon completion of first clinical trial $ 1,250,000 March 2025 Upon first patient treated in a Phase III clinical trial $ 10,000,000 8 years from the effective date of the agreement Upon FDA approval * Milestone met and completed ALZN002 License: Payment Due Date $ 50,000 * Completed January 2022 $ 50,000 Upon first dosing of patient in first Phase I clinical trial $ 500,000 Upon completion of first Phase IIB clinical trial $ 1,000,000 Upon first patient treated in a Phase III clinical trial $ 10,000,000 Upon first commercial sale * Milestone met and completed - F- 18 - Additional AL001 Licenses: Payment Due Date Event $ 2,000,000 March 2026 Upon first patient treated in a Phase III clinical trial $ 16,000,000 August 1, 2029 First commercial sale 11. EQUITY TRANSACTIONS The Company is authorized to issue 10,000,000 shares of Preferred Stock, $ 0.0001 par value. The Board has designated 6,000 shares as Series B Convertible Preferred Stock. The rights, preferences, privileges and restrictions on the remaining authorized 9,994,000 shares of Preferred Stock have not been determined. The Board is authorized to create a new series of preferred shares and determine the number of shares, as well as the rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred shares. Series B Convertible Preferred Stock On January 31, 2024, the Company and Ault Lending entered into the AL SPA for the purchase of up to 6,000 shares of Series B Convertible Preferred Stock and warrants to purchase shares up to 600,000 shares of Common Stock. 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 Date. On January 31, 2024, the Company 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 the Company between November 9, 2023 and January 31, 2024 and a subscription receivable of $ 70,000 . On March 26, 2024, the Company 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 . On April 29, 2024, the Company 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 . The Series B Convertible Preferred Stock has a stated value of $1,000 per share (“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 Stated Value by $10.00 (the “Conversion Price”). The Conversion Price is subject to adjustment in the event of an issuance of Common Stock at a price per share lower than the Conversion Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events. The 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 Company 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 Execution Date. The Voting Floor Price shall be adjusted for stock dividends, stock splits, stock combinations and other similar transactions. Upon a liquidation event the holders of Series B Convertible Preferred Stock receive a liquidation preference ahead of Common Stockholders. The warrants have an exercise price of $12.00 (the “Exercise Price”) and become exercisable on the first business day after the six-month anniversary of issuance (the “Initial Exercise Date”) and have a five-year term, expiring on the fifth anniversary of the Initial Exercise Date. The Exercise Price is subject to adjustment in the event of an issuance of Common Stock at a price per share lower than the 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, the Company recorded the Series B Convertible Preferred Stock as mezzanine equity and the warrant as a liability. On March 21, 2024, the Company amended its Amended and Restated Certificate of Designations for the Series B Convertible Preferred Stock to remove certain change of control language. As a result, the Company reassessed the classification of both the Series B Convertible Preferred Stock and warrant and reclassified both the Series B Convertible Preferred Stock and warrant as permanent equity for the period ended April 30, 2024. - F- 19 - Common Stock ALSF Investment On April 30, 2019, the Company and ALSF entered into a securities purchase agreement (the “SPA”) for the purchase of 66,667 shares of Common Stock for a total purchase price of $ 15,000,000 , or $ 225.00 per share with 33,333 warrants with a 5 -year life and an exercise price of $ 450.00 per share and vesting upon issuance. The total purchase price of $ 15,000,000 was in the form of a non-interest bearing note receivable with a 12 -month term from ALSF, a related party. The note was secured by a pledge of the purchased shares. Pursuant to the SPA, ALSF was entitled to full ratchet anti-dilution protection, most-favored nation status, denying the Company the right to enter into a variable rate transaction absent its consent, a right to participate in any future financing the Company may consummate and to have all the shares of Common Stock to which it is entitled under the SPA registered under the Securities Act within 180 days of the final closing of the IPO. In May 2021, the term of the note receivable was extended to December 31, 2023. On January 19, 2024, the Company and ALSF entered into a settlement agreement and release of claims whereby ALSF returned to the Company 66,117 shares of Common Stock and the ALSF Warrants for settlement of the outstanding balance of the note receivable in the amount of $ 14,876,293 . At-the-Market Offering On September 8, 2023, the Company entered into an At-the-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC, as sales agent to sell shares of its Common stock, having an aggregate offering price of up to approximately $9.8 million (the “Shares”) from time to time, through the ATM Offering. On September 8, 2023, the Company filed a prospectus supplement with the SEC relating to the offer and sale of up to approximately $9.8 million in shares of Common Stock in the ATM Offering. The offer and sale of the Shares was made pursuant to the Company’s effective “shelf” registration statement on Form S-3 and an accompanying base prospectus contained therein (Registration Statement No. 333-273610) filed with the SEC on August 2, 2023 and declared effective by the SEC on August 10, 2023. During the year ended April 30, 2024, the Company sold an aggregate of 107,682 shares of Common Stock pursuant to the ATM Offering for proceeds of $ 1.3 million. The Company terminated its ATM Offering on May 6, 2024. 12. SUBSEQUENT EVENTS On May 8, 2024, the Company and Orchid entered into the Orchid SPA for the purchase of up to 2,500 shares of 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, the Company 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 the Company 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, the Company 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. The purchase price was paid in cash. - F- 20 -