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Item 1. Financial Statements

2024-09-11 compared with 2024-03-25 · 522 added, 630 removed, 189 unchanged (86% of the section changed)

4 unchanged sentences

Prepaid expenses and other current assets

Prepaid expenses - related party

TOTAL CURRENT ASSETS

Property, plant and equipment, net

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES

Accounts payable and accrued liabilities

TOTAL CURRENT LIABILITIES

LONG-TERM LIABILITIES

Warrant liability

TOTAL LIABILITIES

TOTAL LIABILITIES, ALL CURRENT

COMMITMENTS AND CONTINGENCIES

MEZZANINE EQUITY

Series B Convertible Preferred Stock, $ 0.0001

stated value per share, 6,000

shares designated;

and nil 0 issued and outstanding as of January 31, 2024 and April 30, 2023, respectively

STOCKHOLDERS’ (DEFICIT) EQUITY

STOCKHOLDERS’ DEFICIT

Series A Convertible Preferred Stock, $ 0.0001

1 unchanged sentence

shares designated;

nil 0 issued and outstanding as of January 31, 2024 and April 30, 2023

and nil 0 issued and outstanding as of July 31, 2024 and April 30, 2024, respectively

Series B Convertible Preferred Stock, $ 0.0001 stated value per share, 6,000 designated;

2,100 issued and outstanding as of July

31, 2024 and April 30, 2024

Common stock, $ 0.0001 par value:

300,000,000 shares authorized;

6,618,766 and 6,462,675 issued and outstanding as of January 31, 2024 and April 30, 2023, respectively

861,332 and 687,999 issued and outstanding as of July 31, 2024

and April 30, 2024, respectively

Additional paid-in capital

Note receivable for common stock – related party

( 14,883,295 )

Subscription receivable for preferred stock – related party

Accumulated deficit

1 unchanged sentence

( 54,020,408 )

TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY

TOTAL STOCKHOLDERS’ DEFICIT

( 1,212,319 )

TOTAL LIABILITIES MEZZANINE AND STOCKHOLDERS’ (DEFICIT)

The accompanying notes are an integral part of these unaudited

condensed financial statements.

( 2,594,185 )

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Operations

For the Three Months Ended January 31,

For the Nine Months Ended January 31,

For the Three Months Ended July 31,

OPERATING EXPENSES

4 unchanged sentences

( 3,525,931 )

( 5,423,512 )

( 9,087,581 )

( 11,565,457 )

OTHER EXPENSE, NET

3 unchanged sentences

$ ( 3,527,766 )

$ ( 9,096,217 )

$ ( 11,572,639 )

Basic and diluted net loss per common share

Basic and diluted weighted average common shares outstanding

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’ Deficit

For the Three Months Ended January 31, 2024

Series A Convertible

Note Receivable for

Subscription Receivable

Preferred Stock

Common Stock -

for Preferred Stock -

Related Party

BALANCES, October 31, 2023

$ ( 14,876,293 )

$ ( 50,506,461 )

$ ( 2,682,493 )

Issuance of common stock for cash

Subscription receivable for issuance of preferred stock - related party

Return of common stock for note receivable - related party

( 14,876,227 )

Stock-based compensation to employees and consultants

( 2,662,418 )

BALANCES, January 31, 2024

$ ( 53,168,879 )

$ ( 4,263,821 )

The accompanying notes are an integral part of these unaudited

condensed financial statements.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’ Equity

For the Three Months Ended January 31, 2023

Condensed Statements of Stockholders’

For the Three Months Ended July 31, 2024

Series A Convertible

Note Receivable for

Series B Convertible

Preferred Stock

Common Stock -

Related Party

BALANCES, October 31, 2022

$ ( 14,883,295 )

$ ( 35,341,560 )

Issuance of common stock for related party payable

Stock-based compensation to employees and consultants

( 5,425,574 )

BALANCES, January 31, 2023

$ ( 14,883,295 )

$ ( 40,767,134 )

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’ (Deficit) Equity

For the Nine Months Ended January 31, 2024

Series A Convertible

Note Receivable for

Subscription Receivable

Preferred Stock

Common Stock -

for Preferred Stock -

Related Party

BALANCES, April 30, 2024

1 unchanged sentence

$ ( 54,020,408 )

Issuance of common stock for cash

Issuance of common stock for restricted stock awards

Subscription receivable for issuance of preferred stock –

related party

Subscription receivable payment received – related party

Return of common stock for note receivable – related party

$ ( 2,594,185 )

Issuance of preferred stock for cash

Conversion of note payable and interest to preferred stock

Conversion of preferred stock to common stock

Stock-based compensation to employees and consultants

( 9,096,217 )

BALANCES, July 31, 2024

$ 53,782,414 -

BALANCES, January 31, 2024

$ ( 54,994,819 )

$ ( 1,212,319 )

The accompanying notes are an integral part of these unaudited

condensed financial statements.

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Stockholders’ Equity

For the Nine Months Ended January 31, 2023

Condensed Statements of Stockholders’

Equity (Deficit)

For the Three Months Ended July 31, 2023

Series A Convertible

6 unchanged sentences

$ ( 44,072,662 )

Issuance of common stock for restricted stock awards

Stock-based compensation to employees and consultants

Issuance of common stock for related party payable

( 3,527,766 )

BALANCES, January 31, 2023

BALANCES, July 31, 2023

$ ( 14,883,295 )

$ ( 47,600,428 )

The accompanying notes are an integral part of these unaudited

condensed financial statements.

$ ( 112,883 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

Condensed Statements of Cash Flows

For the Nine Months Ended January 31,

For the Three Months Ended July 31,

Cash flows from operating activities:

3 unchanged sentences

Depreciation expense

Interest expense - debt discount

Stock-based compensation to employees and consultants

7 unchanged sentences

Cash flows from investing activities:

Purchase of machinery

Purchase of equipment

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from the issuance of common stock, net

Proceeds from the issuance of preferred stock - related party

Net proceeds from the issuance of preferred stock

Net cash provided by financing activities

Net decrease in cash

( 4,857,992 )

Net increase (decrease) in cash

( 3,445,443 )

3 unchanged sentences

Non-cash financing activities:

Return of common stock for note receivable – related party

$ ( 14,883,295 )

Issuance of preferred stock for subscription receivable - related party

Fair value of warrants issued in connection with preferred stock –

related party

Issuance of common stock for related party payable

The accompanying notes are an integral part of these unaudited

condensed financial statements.

Conversion of Series A convertible preferred stock

Fair value of warrants issued in connection with Series A convertible preferred stock

Conversion of note payable and accrued interest into Series B convertible preferred stock

The accompanying notes are an integral part of

these unaudited condensed financial statements.

Alzamend Neuro, Inc.

2 unchanged sentences

Alzamend Neuro, Inc.

(the “Company”

or “Alzamend”), is 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.

“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.

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

Reverse Stock Split

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 “Reverse Split”).

The 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 Reverse Split, each fifteen shares of Common

Stock issued and outstanding prior to the Reverse Split were converted into one share of Common Stock.

The Reverse Split became effective

in the State of Delaware on October 31, 2023.

All share amounts in these condensed financial statements have been updated for all periods

presented to reflect the Reverse Split.

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.

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.

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.

LIQUIDITY AND GOING CONCERN

The accompanying condensed financial statements

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

As of January 31, 2024, the Company had cash of $ 283,000 ,

a working capital deficiency of $ 3.2 million, an accumulated deficit of $ 53.2 million and stockholders’ deficit of $ 4.3 million.

For the three and nine months ended January 31, 2024, the Company had net losses of $ 2.7 million and $ 9.1 million, respectively.

nine months ended January 31, 2024, cash used in operating activities was $ 6.8 million.

Historically, the Company has financed its operations

principally through issuances of equity and debt instruments.

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

financial statements are issued.

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

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

The Company’s inability to continue as

a going concern could have a negative impact on the Company, including its ability to obtain needed financing.

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

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

In order to continue as a going concern,

the Company will need to raise additional funds.

The Company has raised funds subsequent to the quarter end through an “at-the-market”

offering, and plans to seek additional funding through public equity, including the “at-the-market” offering, private equity

and debt financings.

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

The terms of any additional financing

may adversely affect the holdings or rights of the Company’s stockholders.

If the Company is unable to obtain funding, it could

be required to delay, reduce or eliminate research and development programs and planned clinical trials which could adversely affect the

Company’s business operations.

As previously disclosed the Company had anticipated beginning Phase II clinical trials for AL001

additional indications in the first quarter of calendar 2024.

Due to the Company’s inability to obtain significant additional financing,

the Company has been unable to initiate those clinical trials and reduce its capital deficiency.

the period between February 1, 2024 through March 22, 2024, the Company sold an aggregate of 248,080 shares of Common Stock pursuant

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

1933, as amended (the “Securities Act”), for gross proceeds of $ 266,000 (Note 9).

The accompanying condensed

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

As of July 31, 2024, the Company

had cash of $ 1.2 million, a working capital deficiency of $ 1.5 million, an accumulated deficit of $ 55.0 million and a stockholders’

deficit of $ 1.2 million.

For the three months ended July 31, 2024, the Company had a net loss of $ 1.0 million.

For the three months ended

July 31, 2024, cash used in operating activities was $ 1.1 million.

Historically, the Company has financed its operations principally through

issuances of equity and debt instruments.

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

statements are issued.

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

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

The Company’s inability to

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

needed financing.

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

and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should it be unable to

continue as a going concern.

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 July 31, 2024, together with the anticipated receipt of funds from the sale of its

Series A and Series B Convertible Preferred Stock pursuant to the securities purchase agreements related thereto, 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 Quarterly Report.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed financial statements

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

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

as a smaller reporting company.

These condensed financial statements should be read in conjunction with the audited financial statements

and notes thereto contained in the Company’s Report on Form 10-K for the year ended April 30, 2023, filed with the SEC on July 27,

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

to make the condensed financial statements not misleading.

The results of operations for interim periods are not necessarily indicative

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

Certain notes to the condensed financial statements that would

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

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

The accompanying condensed balance sheet at April 30, 2023 has been derived from

the audited balance sheet at April 30, 2023 contained in such Form 10-K.

The accompanying condensed

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

of America (“U.S.

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

reports of companies filing as a smaller reporting company.

These condensed financial statements should be read in conjunction with the

audited financial statements and notes thereto contained in the Company’s Report on Form 10-K for the year ended April 30, 2024,

filed with the SEC on July 30, 2024.

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

adjustments necessary in order to make the condensed financial statements not misleading.

The results of operations for interim periods

are not necessarily indicative of the results to be expected for the full year or any other future period.

Certain notes to the condensed

financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent

fiscal year as reported in the Company’s Report on Form 10-K have been omitted.

The accompanying condensed balance sheet at April

30, 2024 has been derived from the audited balance sheet at April 30, 2024 contained in such Form 10-K.

Accounting Estimates

The preparation of condensed 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 condensed financial statements and the reported

amounts of expenses during the reporting period.

The Company’s significant accounting policies that involve significant judgment

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

Actual results could differ

from those estimates.

The preparation of condensed

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 condensed financial statements and the

reported amounts of expenses during the reporting period.

The Company’s significant accounting policies that involve significant

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

Actual results could

differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid

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

As of January 31, 2024 and April 30,

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:

Quoted prices in active markets

for identical assets or liabilities.

Inputs other than Level 1 that

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

quoted prices in markets that

are not active;

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

the assets or liabilities.

The Company considers all

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

As of July 31, 2024

and April 30, 2024, the Company had no cash equivalents.

Fair Value of Financial

Financial Accounting Standards

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

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

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

Valuation techniques

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

The fair value hierarchy

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

is considered unobservable:

Quoted prices in

active markets for identical assets or liabilities.

Inputs other than

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

quoted prices in

markets that are not active;

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

full term of the assets or liabilities.

Level 3 assumptions:

Unobservable inputs

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

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

The fair values of warrants are determined

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

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

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

on the implied yield available on U.S.

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

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

The fair values of warrants

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

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

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

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

Treasury Securities with a maturity equivalent to the warrants’ contractual life.

Property and Equipment, Net

Property and equipment are stated at cost,

net of accumulated depreciation.

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

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

Research and Development Expenses

Research and development costs are expensed

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

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

The Company has acquired and may continue

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

The upfront payments to acquire license,

products or rights, as well as any future milestone payments, are immediately recognized as research and development expense provided

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

Property and Equipment,

Property and equipment

are stated at cost, net of accumulated depreciation.

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

useful life of 5 five years.

Significant additions and improvements are capitalized, while repairs and maintenance are charged to

expense as incurred.

Research and Development

Research and development costs

are expensed as incurred.

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

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

The Company has acquired and

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

The upfront payments to acquire

license, products or rights, as well as any future milestone payments, are immediately recognized as research and development expenses,

provided that there is no alternative future use of the rights in other research and development projects.

Stock-Based Compensation

The Company recognizes stock-based compensation

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

The Company’s

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

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

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

of the reporting date.

The Company recognizes stock-based compensation

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

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

The Black-Scholes option pricing model utilizes

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

Certain of such assumptions involve inherent

uncertainties and the application of significant judgment.

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

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

The Company accounts for stock warrants as either equity instruments,

derivative liabilities, or liabilities in accordance with FASB ASC 480, Distinguishing Liabilities from Equity and FASB ASC

815, Derivatives and Hedging (“ASC 815”) , depending on the specific terms of the warrant agreement.

The Company recognizes stock-based

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

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

option pricing model.

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

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

conditions as of the reporting date.

The Company recognizes stock-based

compensation expense for restricted stock units on a straight-line basis over the requisite service period and account for forfeitures

as they occur.

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

The Black-Scholes option pricing

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

Certain of such assumptions

involve inherent uncertainties and the application of significant judgment.

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

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

The Company accounts for stock

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

Liabilities from Equity and FASB ASC 815, Derivatives and Hedging (“ASC 815”) , depending on the

specific terms of the warrant agreement.

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 260, Earnings

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

shares outstanding.

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

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

common shares were dilutive.

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

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

of the entity.

Since the effects of outstanding stock options,

restricted stock units and warrants are anti-dilutive in the periods presented, shares of Common Stock underlying these instruments have

been excluded from the computation of loss per common share.

The following sets forth the number of shares

of Common Stock underlying outstanding stock options, restricted stock units and warrants that have been excluded from the computation

of loss per common share:

Schedule of antidilutive securities excluded

from computation of earnings per share

For the Nine Months Ended January 31,

The Company utilizes FASB

ASC 260, Earnings per Share .

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

number of common shares outstanding.

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

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

and if the additional common shares were dilutive.

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

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

shared in the earnings of the entity.

Since the effects of outstanding

stock options, restricted stock units and warrants are anti-dilutive in the periods presented, shares of Common Stock underlying these

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

The following sets forth the

number of shares of Common Stock underlying outstanding stock options, restricted stock units and warrants that have been excluded from

the computation of loss per common share:

Schedule of antidilutive securities excluded from computation of earnings per share

For the Three Months Ended July 31,

Stock options (1)

Restricted stock units

(1) The Company has excluded 100,000 stock options for the nine months ended January 31, 2024 and 2023, with

(1) The Company has excluded 10,000 stock options for the three months ended July 31, 2024 and 2023, 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

2 unchanged sentences

Recent Accounting Standards

From time to time, new accounting pronouncements

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

Unless otherwise discussed, the impact of recently

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

of operations upon adoption.

The Company has considered all other recently

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

NOTE RECEIVABLE FOR COMMON STOCK, RELATED PARTY

On April 30, 2019, the Company and Ault

Life Sciences Fund, LLC (“ALSF”) entered into a securities purchase agreement for the purchase of 666,666 shares of Common

Stock for a total purchase price of $ 15,000,000 , or $22.50 per share with 333,333 warrants with a 5 -year life and an exercise price of

$ 45.00 per share and vesting upon issuance (“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, a related party.

In November 2019, the term of the note receivable

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

The note was secured

by a pledge of the purchased shares.

As the note receivable from ALSF was related to the issuance of Common Stock, it was recorded as

an offset to additional paid-in capital.

ALSF is wholly owned by Ault Life Sciences, Inc.

ALSI is majority owned

by Ault & Company, Inc.

(“Ault & Co.”).

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 661,168 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 .

PREPAID EXPENSES AND OTHER CURRENT ASSETS

From time to time, new accounting

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

Unless otherwise discussed, the impact

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

or results of operations upon adoption.

Management has considered

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

condensed financial statements.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

were as follows:

Prepaid expenses and other

current assets were as follows:

Schedule of prepaid expenses and other current assets

January 31, 2024

July 31, 2024

April 30, 2024

Prepaid clinical trial fees

Prepaid insurance

1 unchanged sentence

Total prepaid expenses and other current assets

Prepaid clinical trial fees at January 31,

2024 and April 30, 2023 represented the unused portion of the prepaid clinical trial fees.

On June 14, 2023, the Company purchased directors’

and officers’ insurance for 12 months in the amount of $ 337,000 .

Prepaid insurance at January 31, 2024 represented the unamortized

portion of directors’ and officers’ insurance.

On June 14, 2024, the Company

purchased directors’ and officers’ insurance for 12 months in the amount of $ 227,000 .

Prepaid insurance at July 31, 2024 represented

the unamortized portion of directors’ and officers’ insurance.

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 833,333

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 500,000 shares to be available for issuance under the Plan.

Options granted under the Plan have an

exercise price equal to or greater than the fair value of the underlying Common Stock at the date of grant and become exercisable based

on a vesting schedule determined at the date of grant.

The options expire between five and 10 years from the date of grant.

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

2016 Stock Incentive

On April 30, 2016, the Company’s

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

The Plan provides for the issuance of a

maximum of 83,333 shares of Common Stock to be offered to the Company’s directors, officers, employees, and consultants.

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

In February 2021, the Company’s

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

2021 Stock Incentive Plan

In February 2021, the Company’s board

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

2021 Stock Incentive Plan (the

“2021 Plan”).

(the “2021 Plan”).

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

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

Stock Subject to the 2021 Plan.

maximum number of shares of Common Stock that may be issued under the 2021 Plan is 666,667 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

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

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

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

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

All options that the Company grants are

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

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

The Company has valued

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

As of the date of issuance of these options, there

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

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

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

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

Treasury issues with an equivalent

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

The expected life of the options used was

based on the contractual life of the option granted.

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

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

A summary of stock option activity for the

nine months ended January 31, 2024 is presented below:

Schedule of share-based payment arrangement,

option, activity

Stock Subject to the 2021

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

Restricted Stock.

May 2021, the Company issued restricted stock awards pursuant to the 2021 Plan to one employee.

The restricted stock award vests over

The award requires 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.

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.

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

Treasury issues with an equivalent term approximating the expected life of the options as calculated using the simplified method.

The expected life of the options used was based on the contractual life of the option granted.

Stock-based compensation is a non-cash

expense because the Company settles these obligations by issuing shares of Common Stock from its authorized shares instead of settling

such obligations with cash payments.

A summary of stock option

activity for the three months ended July 31, 2024 is presented below:

Schedule of share-based payment arrangement, option, activity

Outstanding Options

4 unchanged sentences

Options expired

Balance at January 31, 2024

Options vested and expected to vest at January 31, 2024

Options exercisable at January 31, 2024

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

Restricted stock unit activity for the nine

months ended January 31, 2024 is presented below:

Balance at July 31, 2024

Options vested and expected to vest at July 31, 2024

Options exercisable at July 31, 2024

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 three months ended July 31, 2024 is presented below:

Schedule of nonvested restricted stock units activity

2 unchanged sentences

Unvested at April 30, 2024

Unvested at January 31, 2024

Performance Contingent Stock Options

Granted to Employee

On November 26, 2019, the Board granted

283,333 performance- and market-contingent awards to certain key employees and a director.

These grants were made outside of the Plan.

Unvested at July 31, 2024

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

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 tiered target closing prices on a national securities exchange for 90 consecutive trading days later

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

for a change in control transaction.

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 $150 per share to $300 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

performance options will be reduced by 25%.

Due to the significant risks and uncertainties associated with achieving the market-contingent

awards, as of January 31, 2024, the Company believed that the achievement of the requisite performance conditions was 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 133,333 performance-based stock option to the Chief Executive Officer at an exercise price of $17.55 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 I/IIA

clinical trial of ALZN002 within four years from the grant date.

During the three months ended January 31, 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 January 31, 2024, the Company

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

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 July 31, 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 three months ended July 31, 2023,

management 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 July 31, 2024, management

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 certain team members at TAMM Net, Inc.

(“TAMM Net”) to purchase an aggregate of 30,000 shares of Common Stock

at a per share exercise price of $22.50 per share, of which 50% would vest upon the completion of Phase I of AL001 by March 31, 2022,

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

The performance goal of completing Phase

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

AL001 over the implied service period to complete this milestone.

On January 19, 2023, the Board modified

the performance criteria for these awards.

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

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

Due to the significant risks and uncertainties

associated with achieving the completion of Phase I/IIA for ALZN002, as of January 31, 2024, the Company believed that the achievement

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

Performance Contingent Stock Options

Granted to Consultants

On October 14, 2021, the Company issued

performance-based stock options to two consultants to purchase an aggregate of 13,333 shares of Common Stock with an exercise price of

$36.30 per share, of which 3,333 vest upon completion of each of the Phase II clinical trials of AL001 for a BD indication, AL001 for

Performance Contingent

Stock Options Granted to TAMM Net

On March 23, 2021, the Company

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

(“TAMM Net”) to purchase an aggregate of

3,000 shares of Common Stock at a per share exercise price of $225.00 per share, of which 50% would vest upon the completion of Phase

I of AL001 by March 31, 2022, and the remaining 50% would vest upon completion of Phase I/IIA of ALZN002 by December 31, 2022.

On January 19, 2023, the Board

modified the performance criteria for these awards.

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

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

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 – bipolar

(ii) AL001- major depressive disorder;

(iii) AL001 – post-traumatic stress disorder;

On January 19, 2023, the Board

modified the performance criteria for these awards.

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

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

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

Food and Drug Administration

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

(ii) AL001- MDD;

(iii) AL001 – PTSD;

and (iv) ALZN002 – Alzheimer’s.

During the nine months ended January 31,

2024, the Company filed INDs for BD and MDD and received a “Study May Proceed” letter for BD in October 2023 and MDD in November

As a result, 50% of the performance grant vested and the Company recognized stock-based compensation related to the vesting and

the probability of achieving the MDD criteria.

During the three months ended January 31, 2024, the Company filed an IND for PTSD and received

a “Study May Proceed” letter.

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 of achieving the PTSD criteria.

As of January 31, 2024, the Company believed that the achievement of the remaining

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

to ALZN002 – Alzheimer’s disease.

Stock-Based Compensation Expense

The Company’s results of operations

included expenses relating to stock-based compensation for three and nine months ended January 31, 2024 and 2023 comprised as follows:

Schedule of stock-based

For the Three Months Ended January 31,

For the Nine Months Ended January 31,

Research and development

related to the vesting.

As of July 31, 2024, management 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.

Stock-Based Compensation

The Company’s results

of operations included expenses relating to stock-based compensation for three months ended July 31, 2024 and 2023, were comprised as

Schedule of stock-based compensation

For the Three Months Ended July 31,

General and administrative

As of January 31, 2024, total unamortized

stock-based compensation expense related to unvested employee and non-employee awards that are expected to vest was $ 418,000 .

The weighted-average

period over which such stock-based compensation expense will be recognized was approximately 1.6 years.

On January 31, 2024, the Company issued a warrant to purchase 1,220,000

shares of Common Stock at an exercise price of $1.20 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 a liability.

The following table summarizes information

about Common Stock warrants outstanding and exercisable at January 31, 2024:

common stock warrants outstanding

As of July 31, 2024, total

unamortized stock-based compensation expense related to unvested employee and non-employee awards that are expected to vest was $ 287,000 .

The weighted-average period over which such stock-based compensation expense will be recognized was approximately 1.1 years.

During the three months ended

July 31, 2024, the Company issued warrants to purchase an aggregate of 200,000 shares of common stock at an exercise price of $ 12.50 per

(i) On May 10, 2024, the Company issued a warrant to purchase 80,000 shares of Common Stock at an exercise

price of $ 12.50 in connection with the sale of convertible preferred stock to Orchid Finance, LLC (“Orchid”) for $1,000,000.

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 June 25, 2024, the Company issued a warrant to purchase 120,000 shares of Common Stock at an exercise

price of $ 12.50 in connection with the sale of convertible preferred stock to Orchid for $ 1,500,000 .

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.

Warrant activity for the three

months ended July 31, 2024 is presented below:

Schedule of warrant activity

Weighted Average

Exercise Price

Outstanding at April 30, 2024

Cancelled/Expired

Outstanding at July 31, 2024

The following table summarizes

information about Common Stock warrants outstanding and exercisable at July 31, 2024:

Schedule of common stock warrants outstanding

$ 12.00 - $ 12.50

$ 12.00 - $ 937.50

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

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.

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 of the license fees.

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 148,528 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.

The ALZN002 License

Agreement requires the Company to pay royalty payments of 4% on net sales of products developed from the licensed technology

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.

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 of the license fees.

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 240,120 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

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

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”).

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.

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.

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:

Minimum royalties for November AL001 License Agreements are $ 40,000 on the first anniversary of the first commercial sale, $ 80,000 on

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

year thereafter, for the life of the November AL001 License Agreements.

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

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

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

Under the various

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

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

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

Additionally,

the Company is required to complete milestones and make 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:

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8 years from the effective date of the agreement

Upon FDA approval

* Milestone met and completed

Upon FDA new drug application approval

* Milestone met and payment made

ALZN002 License:

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Upon first commercial sale

* Milestone met and completed

* Milestone met and payment made

AL001 Licenses:

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Preferred Stock

As of January 31, 2024, there

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

May 8, 2024, the Company and 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 2,000,000 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.

Series B Convertible

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On January 31, 2024, the

Company and 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 6,000,000 shares of the Company’s Common Stock.

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

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

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

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 the Company’s 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.

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

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receivable of $ 70,000 .

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 $1.00 (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 $0.873 (the “Voting

Floor Price”), which represents the closing sale price of the Common Stock on the trading day immediately prior to the Execution

The Voting Floor Price shall be adjusted for stock dividends, stock splits, stock combinations and other similar transactions.

a liquidation event the holders of Series B Convertible Preferred Stock receive a liquidation preference ahead of Common Stock holders.

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 .

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

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.

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 holders of Common Stock.

The warrants have an exercise

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

ALSF Investment

On April 30, 2019, the Company

and ALSF entered into a securities purchase agreement (the “SPA”) for the purchase of 666,667 shares of Common Stock for a

total purchase price of $ 15,000,000 , or $ 22.50 per share with 333,333 warrants with a 5 -year life and an exercise price of $ 45.00 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.

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

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

19, 2024, the Company and ALSF entered into a settlement agreement and release of claims whereby ALSF returned to the Company 661,168

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

base prospectus contained therein (Registration Statement No.

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

by the SEC on August 10, 2023.

During the nine months ended January 31,

2024, the Company sold an aggregate of 816,426 shares of Common Stock pursuant to the ATM Offering for gross proceeds of $1.0 million

and net proceeds of $ 983,000 .

In accordance with Nasdaq

listing rule 5810(c)(3)(A), the Company has 180 calendar days, or until July 30, 2024, to regain compliance.

The Deficiency Letter states

that to regain compliance, the bid price for the Common Stock must close at $1.00 per share or more (the “Minimum Bid Price”)

for a minimum of 10 consecutive business days during the compliance period ending July 30, 2024.

In the event that the Company does not

regain compliance within this 180-day period, the Company may be eligible to seek an additional compliance period of 180 calendar days

if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for the

Nasdaq Capital Market, with the exception of the Minimum Bid Price, and provides written notice to Nasdaq of its intent to cure the deficiency

during this second compliance period, by effecting a reverse stock split, if necessary.

However, if it appears to the Nasdaq Staff that

the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq will provide notice to the Company

that its Common Stock will be subject to delisting.

At that time, the Company may appeal any such delisting determination to a Nasdaq

hearings panel.

The Deficiency Letter has

no immediate effect on the listing of the Common Stock, and the Common Stock continues to trade on the Nasdaq Capital Market under the

symbol “ALZN.”

The Company intends to actively

monitor the closing bid price for the Common Stock between now and July 30, 2024, and may, if appropriate, evaluate available options

to resolve the deficiency and regain compliance with the Minimum Bid Price requirement.

While the Company is exercising diligent efforts

to maintain the listing of its Common Stock on Nasdaq, there can be no assurance that the Company will be able to regain compliance with

the Minimum Bid Price or maintain compliance with the other Nasdaq listing standards.

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 will provide various marketing services over twelve months valued at $1.4 million.

The Company had the right to pay the fee in cash

or shares of its common stock with a value of $22.50 per share.

On November 11, 2022, the Company elected to pay the fee with 62,222 shares

of its common stock.

The Company recorded the value of the agreement using the closing price of the Company’s common stock on November

11, 2022, and amortizes the expense over twelve months beginning in August 2022.

At January 31, 2024, the balance of related party prepaid

expenses was zero.

During the three months ended

July 31, 2024, Orchid converted 62.477 shares of Series A Convertible Preferred Stock into 173,333 shares of Common Stock.

RELATED PARTY TRANSACTIONS

In connection with the Orchid

SPA, the Company agreed to pay Ault Lending an origination fee of five percent (5%) of the total

gross proceeds we receive from Orchid upon each purchase of Series A Convertible Preferred Stock.

During the three months ended July 31,

2024, origination fees due to Ault Lending were $ 125,000 .

SUBSEQUENT EVENTS

the period between February 1, 2024 through March 22, 2024, the Company sold an aggregate of 248,080 shares of Common Stock pursuant

to the ATM Offering for gross proceeds of $ 266,000 .

On March 21, 2024, the Company amended its Amended and Restated Certificate

of Designations for its Series B Convertible Preferred Stock to remove certain change of control language.

On March 21, 2024, the Company and Ault Lending amended the warrant

issued to Ault Lending as part of the AL SPA to remove certain anti-dilution language.

On August 19, 2024, the Company

sold 200 shares of Series A Convertible Preferred Stock and warrants to purchase 160,000 shares of Common Stock with an exercise price

of $ 12.50 to Orchid, for a total purchase price of $ 2.0 million.

The purchase price was paid in

On August 21, 2024, the Company

sold 250 shares of Series A Convertible Preferred Stock and warrants to purchase 200,000 shares of Common Stock with an exercise price

of $ 12.50 to Orchid, for a total purchase price of $ 2.5 million less $ 100,000 discount.

price was paid in cash.

From August 1, 2024 to September 10, 2024, Orchid converted 632.4909

shares of Series A Convertible Preferred Stock into 3,196,825 shares of Common Stock.

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

What changed 10-Q

Item 1. Financial Statements