What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-07-22 compared with 2024-07-30 · 259 added, 298 removed, 320 unchanged (64% of the section changed)

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Critical Accounting Policies and Estimates

Research and Development

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 other entities that conduct certain research and development activities on behalf of our

We have acquired and may continue

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

The upfront payments to acquire license,

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

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

Stock-Based Compensation.

We maintain a stock-based compensation plan as a long-term incentive for employees, non-employee directors and consultants.

plan allows for the issuance of incentive stock options, non-qualified stock options, restricted stock units, and other forms of equity

maintain a stock-based compensation plan as a long-term incentive for employees, non-employee directors and consultants.

The plan allows

for the issuance of incentive stock options, non-qualified stock options, restricted stock units, and other forms of equity awards.

We recognize stock-based compensation

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

Treasury zero

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

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

· Expected Volatility.

Because we do not have an extensive trading history for our common

stock, the expected volatility was estimated based on the average volatility for comparable publicly traded life sciences companies over

a period equal to the expected term of the stock option grants.

Comparable companies were chosen based on the similar size, stage in life

cycle or area of specialty.

We will continue to apply this process until a sufficient amount of historical information regarding the volatility

of our own stock price becomes available;

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

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

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

The comparable companies were chosen based

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

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

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

· Expected Term.

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

to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual

term), as we do not have sufficient historical data to use any other method to estimate expected term;

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

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

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

· Expected Dividend Yield.

We have never paid dividends on our common stock and have no plans

to pay dividends on our common stock.

We have never paid dividends on our Common Stock and have

no plans to pay dividends on our Common Stock.

Therefore, we used an expected dividend yield of zero.

Certain of such assumptions

involve inherent uncertainties and the application of significant judgment.

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

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

Certain of these assumptions involve inherent uncertainties and the

application of significant judgment.

As a result, if factors or expected outcomes change and we use significantly different assumptions

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

Income Taxes.

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potentially mitigating the regulatory burden for safety data.

On May 5, 2022, we initiated

a multiple-dose, steady-state, double-blind, ascending dose safety, tolerability, pharmacokinetic clinical trial of AL001 in patients

with mild to moderate Alzheimer’s and healthy subjects.

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

topline data in June 2023.

May 5, 2022, we initiated a multiple-dose, steady-state, double-blind, ascending dose safety, tolerability, pharmacokinetic clinical trial

of AL001 in patients with mild to moderate Alzheimer’s and healthy subjects.

We completed the Phase IIA clinical trial in March

2023 and announced positive topline data in June 2023.

announced that we successfully identified a maximum tolerated dose (“MTD”) for development of AL001 from a multiple-ascending

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Lithium is a commonly prescribed

drug for manic episodes in BP type 1 as well as maintenance therapy of BP in patients with a history of manic episodes.

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

Lithium is also

prescribed off-label for MDD, BP and treatment of PTSD, among other disorders.

Lithium was the first mood stabilizer approved by the FDA

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

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

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

Excursions above this

range can be toxic, and below can impair effectiveness.

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

dementia of the Alzheimer’s type.

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

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

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

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

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

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

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

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

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

relative increased lithium levels in the brain compared to a marketed lithium salt for Alzheimer’s, BD, MDD and PTSD, based on published

mouse studies that predict that lithium can be given at lower doses for equivalent therapeutic benefit when treating with AL001.

the goal is to replace a 300 mg TID lithium carbonate dose for treatment of BD with a 240 mg TID AL001 lithium equivalent, which represents

a daily decrease of 20% of lithium given to a patient.

prescribed off-label for MDD, BD and treatment of PTSD, among other disorders.

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

Food and Drug Administration (“FDA”) and is still a first-line treatment option (considered the “gold standard”)

but is underutilized perhaps because of the need for TDM.

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

labelling because the effective and safe range of therapeutic drug blood concentrations is narrow and well defined for treatment of BD

when using lithium salts.

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

Existing lithium drugs suffer

from chronic toxicity, poor physicochemical properties, and poor brain bioavailability.

Alzamend’s novel AL001 formulation, a lithium-salicylate/L-proline

engineered ionic cocrystal, is designed to overcome the toxicities associated with conventional lithium salts, promising a next-generation

lithium treatment with an enhanced safety profile and advantageous distribution to brain and brain structures.

on the results from our Phase IIA MAD study, we plan to initiate five clinical trials to determine relative increased lithium levels in

the brain compared to a marketed lithium salt for healthy subject and patients diagnosed with mild to moderate Alzheimer’s, BD,

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

when treating with AL001.

For example, the goal is to replace the amount of lithium needed for maintenance treatment of BD with a clinically

relevant, lower AL001 lithium carbonate equivalent lithium dose.

Such lithium dose mitigation could redefine the landscape of neuropsychiatric,

neurodegenerative, and neurological treatment practices.

In August 2024, we announced that we had partnered with Massachusetts General

Hospital to serve as the CRO for these clinical trials.

November 19, 2024, we announced a final full data set from a nonclinical study comparing brain and plasma lithium exposures between AL001

and lithium carbonate in Alzheimer’s transgenic mice.

The study was conducted at the University of South Florida and the bioanalytical

procedures for determination of lithium concentration in the brain and plasma samples were conducted under good laboratory practice standards

by Sannova Analytical LLC.

The study involved administering AL001, a good manufacturing practices-quality active pharmaceutical ingredient

(“API”) to 5XFAD mice, a recognized model for Alzheimer’s research, to compare its effects against lithium carbonate,

an FDA approved and marketed API.

Mice received either high or low doses scaled to humans of both AL001 and lithium carbonate over a 14-day

period to observe pharmacokinetic steady-state drug conditions.

On the 15 th day, the mice were analyzed to assess how the treatments

affected lithium concentrations in different brain regions and in their plasma.

Based on the study, both treatments

had no negative impact on the mice's body weight or clinical signs during the treatment period.

AL001 showed lower plasma lithium levels

than lithium carbonate, reducing the risk of adverse systemic effects, suggesting an expansion for safety of lithium’s therapeutic

Further, AL001 showed consistently higher lithium concentrations in brain tissues, particularly at lower doses, compared to lithium

Finally, the study found that different brain regions absorb and retain lithium differently.

This means treatments can potentially

be tailored to target specific brain areas, allowing for more precise treatment of various brain-related conditions when applied in human

results highlight the potential clinical advantages of AL001 for conditions like Alzheimer’s, BD, MDD and PTSD at low doses.

reducing the systemic burden, AL001 could lessen the risk of side effects such as thyroid and kidney complications often associated with

extant lithium therapies.

This positions AL001 as a promising candidate for safer long-term treatment options, without the need for TDM.

This innovation is specifically designed to address the needs of fragile populations, such as elderly and Alzheimer’s patients,

by offering a potentially more efficient and safer alternative to existing treatments.

The dosing level identified as optimal in this

robust nonclinical study will serve as the foundation for advancing the evaluation of AL001 in the comprehensive ‘Lithium in Brain’

Phase II clinical trials.

These trials, conducted in collaboration with Massachusetts General Hospital, will encompass a diverse cohort

of both healthy subjects and patients diagnosed with mild to moderate Alzheimer’s disease, BD, MDD and PTSD.

In May 2025, we began

the trial and dosed the first healthy subject.

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

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

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

the goal being to foster tolerance to treatment

to bolster the ability of the patient’s immune system to combat Alzheimer’s, with the goal being to foster tolerance to treatment

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

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the results of our operations for the years ended April 30, 2025 and 2024:

For the Year Ended April 30,

For the Years Ended April 30,

OPERATING EXPENSES

Research and development

$ (5,040,179 )

General and administrative

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Loss from operations

(14,870,466 )

OTHER EXPENSE, NET

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Total other expense, net

Deemed dividend on warrant modification issued with preferred

NET LOSS ATTRIBURED TO COMMON SHARES

$ (4,988,062 )

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research and development expenses:

For the Year Ended April 30,

For the Years Ended April 30,

Professional fees

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Total research and development expenses

$ (5,040,179 )

* Not meaningful

Professional Fees

During the years ended April

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

30, 2025 and 2024, we incurred professional fees of $656,000 and $2.9 million, respectively, which were primarily comprised of professional

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

The decrease relates to lower professional

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

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

fees incurred during the year ended April 30, 2025, compared to professional fees incurred for the preparation for clinical trials for

AL001 and ALZN002 during the year ended April 30, 2024.

Clinical Trial Fees

During the years ended April

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

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

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

During the years ended April 30, 2025 and

2024, we incurred clinical trial fees of $716,000 and $3.2 million, respectively.

Clinical trial fees for the year ended April 30, 2025

were for our Phase IIA clinical trial for AL001.

Clinical trial fees for the year ended April 30, 2024 were $1.9 million for our Phase

IIA clinical trial for AL001 and $1.3 million for our Phase I clinical trial for ALZN002.

Stock-Based Compensation Expense

During the years ended April

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

to stock option grants to consultants.

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

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

During the year ended April

30, 2024, we incurred $214,000 in research and development stock-based compensation expense related to stock option grants to consultants.

No such expense was incurred during the fiscal year ended April 30, 2025.

The decrease in research and development stock-based compensation

expense for the year ended April 30, 2025, was a result of all vested stock options grants having been expensed.

Other Research and Development Expenses

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

stock-based compensation expense;

and benefits;

salary and benefits;

professional fees;

stock-based compensation expense;

marketing fees;

travel and entertainment;

as well as Board fees.

and Board fees.

For the years ended April 30, 2025 and 2024, the remaining general and

administrative expenses of $347,000 and $381,000, respectively, primarily consisted of payments for advertising and promotion, transfer

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

For the Years Ended April 30,

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

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

For the Year Ended April 30,

Salary and benefits

Stock-based compensation expense

Professional fees

Stock-based compensation expense

Marketing fees

Board of director fees

Other general and administrative expenses

Total general and administrative expenses

$ (3,942,071 )

Salary and Benefits

During the years ended April

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

30, 2025 and 2024, we incurred $1.0 million and $836,000, respectively, in employee-related expenses.

As of April 30, 2025, we had four

full-time and three part-time employees.

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

ended April 30, 2024.

Stock-based Compensation Expense

During the years ended April

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

related to stock option grants to executives, employees and consultants.

The decrease in stock-based compensation expense for the year

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

The increase in salary and benefits expense was a result of higher bonuses earned during the

year ended April 30, 2025.

Professional Fees

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During the year ended April 30, 2025, we incurred

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

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

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

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

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

$243,000 in legal fees, $221,000 in audit and tax fees, $149,000 in investor relations and $5,000 in other professional fees.

year ended April 30, 2024, we incurred $341,000 in audit and tax fees, $192,000 in investor relations, $104,000 in legal fees, $33,000

in related party consulting, $28,000 in Sarbanes-Oxley compliance fees and $38,000 in other professional fees.

Insurance Expense

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30, 2025 and 2024, we incurred insurance expense of $259,000 and $382,000, respectively, which was primarily directors and officers insurance.

The decrease in insurance expense was due to lower negotiated pricing with the same amount of coverage.

Stock-based Compensation Expense

During the years ended April

30, 2025 and 2024, we incurred stock-based compensation expense of $325,000 and $741,000, respectively, related to stock option grants

to executives, employees and consultants.

The decrease in stock-based compensation expense for the year ended April 30, 2025 was a result

of fewer stock options vesting during the period compared to the prior year period.

Marketing Fees

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30, 2025 and 2024, we incurred marketing fees of $347,000 and $247,000, respectively, which was primarily expenses related to the marketing

and brand development agreement with AULT.

and branding of our company.

Current and Deferred Income Taxes

As of April 30, 2024 and 2023,

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

The ultimate realization of deferred tax assets is

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

carryovers are deductible.

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

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

Based on available evidence, management

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

Accordingly, we have established

a 100% valuation allowance.

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

30, 2024 and 2023.

As of April 30, 2025 and 2024, we had deferred

tax assets totaling $15.2 million and $15.8 million, respectively.

The ultimate realization of deferred tax assets is dependent upon the

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

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

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

Based on available evidence, management believes it is

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

Accordingly, we have established a 100% valuation

As a result of the full valuation allowance, we did not record an income tax benefit for the years ended April 30, 2025 and

Liquidity and Capital Resources

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

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

As of April 30, 2025, we had cash of $3.9 million and an accumulated deficit of $58.5 million.

We have incurred recurring losses

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

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

quarter of calendar 2024.

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

those clinical trials and reduce the working capital deficiency.

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

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On September 8, 2023, we entered

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

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

(the “ATM Offering”) as defined in Rule 415 under the Securities Act.

On September 8, 2023, we filed a prospectus supplement

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

into an At-the-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC (“Ascendiant”), as sales agent to sell

shares of our Common Stock, having an aggregate offering price of up to approximately $9.8 million from time to time, through an “at

the market offering” (the “ATM Offering”) as defined in Rule 415 under the Securities Act.

On September 8, 2023, we

filed a prospectus supplement with the SEC relating to the offer and sale of up to approximately $9.8 million in shares of Common Stock

in the ATM Offering.

During the year ended April

30, 2024, we sold an aggregate of 11,964 shares of Common Stock pursuant to the ATM Offering for proceeds of $1.3 million.

On May 6, 2024,

we terminated our ATM Offering.

On October 3, 2024, we entered

into a new At-the-Market Issuance Sales Agreement with Ascendiant, as sales agent to sell shares of our Common Stock, having an aggregate

offering price of up to approximately $6.5 million from time to time, through an “at the market offering” (the “New

ATM Offering”) as defined in Rule 415 under the Securities Act.

On October 3, 2024, we filed a prospectus supplement with the SEC

relating to the offer and sale of up to approximately $6.5 million in shares of Common Stock in the New ATM Offering.

During the year ended April

30, 2025, we sold an aggregate of 235,904 shares of Common Stock pursuant to the New ATM Offering for proceeds of $2.7 million.

7, 2025, we terminated our New ATM Offering.

Series B Preferred Financing

On January 31, 2024, we entered into a securities

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

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

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

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

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

“Termination Date”).

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

On January 31, 2024, we sold

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

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

The purchase price was paid by the cancellation

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

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

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

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

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

On January 31, 2024, we 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 66,667 shares of Common Stock.

The AL SPA provided that Ault Lending

could have purchased up to $6 million of Series B Convertible Preferred Stock in one or more closings.

Ault Lending had 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 final closing

did not occur prior to the Termination Date and the AL SPA automatically terminated.

Between January 31, 2024 and

April 29, 2024, we sold an aggregate of 2,100 shares of Series B Convertible Preferred Stock and warrants to purchase 23,333 shares of

common stock with an exercise price of $108.00, for a total purchase price of $2.1 million.

purchase price was paid by the cancellation of $1.15 million of cash advances made by Ault Lending to us between November 9, 2023 and

January 31, 2024 and a subscription receivable of $70,000 and further cash proceeds of $8 80,000.

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

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

For the period ended January

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

On March 21, 2024,

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

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

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

Series A Preferred Financing

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and warrants to purchase shares up to 277,778 shares of common stock in several tranche closings.

On May 10, 2024, we sold 100

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

for a total purchase price of $1.0 million.

The purchase price was paid by the surrender and cancellation

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

discount and net cash of $588,644.

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

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

purchase price was paid in cash.

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

below (the “Milestones”):

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

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

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

Notwithstanding

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

Milestones shall have been met.

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

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

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

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

Between May 10, 2024 and September

11, 2024, we sold an aggregate of 800 shares of Series A Convertible Preferred Stock and warrants to purchase an aggregate of 71,109 shares

of Common Stock with an exercise price of $112.50, for a total purchase price of $8.0 million.

purchase price was paid by the surrender and cancellation of a term note issued by us to Orchid of $311,356, consisting of $310,000 of

principal and $1,356 of accrued and unpaid interest, $200,000 discount and net cash of $7.5 million.

to the Orchid SPA, Orchid had agreed to purchase the remaining 1,700 Preferred Shares on each monthly anniversary of the effectiveness

of a registration statement until all remaining 1,700 Preferred Shares had been sold (“Milestones”).

Orchid had the ability

to invest any amount in its sole discretion in advance of the Milestone dates.

In the event that the average closing price of the Common

Stock during the three trading days preceding the date of a tranche closing was not equal to or greater than $22.50 a share (the “Floor

Price”), then the applicable closing would be delayed until such time as the price meet the required threshold.

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.

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

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

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

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

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

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

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

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

date of the Orchid SPA.

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

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

in excess of the “Nasdaq Limit”.

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

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

and on the closing which occurred on August 21, 2024.

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

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

shares, in Orchid’s sole discretion.

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

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

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

of Common Stock determined by dividing the Series A Stated Value by (y)

the greater of (i) the Floor Price and (ii) the lesser of (A) $135.00 and (B) 80% of the lowest closing price of our Common Stock during

1 unchanged sentence

A Conversion Price”).

The Series A Conversion Price is subject to adjustment

The Series A Conversion Price was subject to adjustment

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

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

The holders of the Series

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

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

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

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

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

The Series A Voting Floor Price shall be adjusted

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

The warrants have an exercise

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

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

The warrants had an exercise

price of $112.50 (the “ Series A Exercise Price”) and were exercisable upon issuance

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

The Series A Exercise

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

Price were subject to adjustment in the event of an issuance of Common Stock at a price per share lower than the Series

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

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

were exercisable on a cashless basis in the event that there is not then an effective resale registration statement for the Common Stock

issuable upon exercise of the warrants.

During the year ended April

30, 2025, Orchid converted 712.0133 shares of Series A Convertible Preferred Stock into 420,809 shares of Common Stock.

On February 28, 2025, we and

Orchid terminated the Orchid SPA and entered into the Securities Purchase and Exchange Agreement (the “Orchid SPEA”).

the termination, 97.7511 shares of Series A Convertible Preferred Stock were converted to 97.7511 shares of Series C Convertible Preferred

Stock and warrants to purchase 71,111 shares of common stock with an exercise price of $112.50 issued were cancelled.

Series C Preferred Financing

February 28, 2025, we and Orchid entered into the Orchid SPEA for the purchase of up to 500 shares of Series C Convertible Preferred

Stock in several tranche closings and warrants to purchase shares up to 111,111 shares of Common Stock with an exercise price of $8.29

(the “ Series C Exercise Price”) and are exercisable upon issuance and have a

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

The Series C Exercise Price

is subject to adjustment in the event of an issuance of Common Stock at a price per share lower than the Series

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

97.7511 shares of Series A Convertible Preferred Stock were converted to 97.7511 shares of Series C Convertible Preferred Stock.

Between April 28, 2025 and

June 13, 2025, we sold an aggregate of 500 shares of Series C Convertible Preferred Stock for an aggregate purchase price of $5 million.

Effective June 13, 2025, the Orchid SPEA was terminated as all the shares of Series C Convertible Preferred Stock were sold.

registration statement registering for resale the shares of Common Stock issuable upon conversion of the Series C Convertible Preferred

Stock and exercise of the warrants was declared effective on April 8, 2025.

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

of our stockholders within 90 days of the execution date of the Orchid SPEA for purposes of seeking stockholder approval of the issuance

of all the shares of Common Stock issuable upon conversion of the Series C Convertible Preferred Stock and the exercise of the warrants

in excess of the “Nasdaq Limit”, which is 19.99% of the shares of Common Stock issued and outstanding on the execution date

of the Orchid SPEA.

We held our annual meeting of stockholders on April 25, 2025, at which time, the stockholders approved the issuance

of all the shares of Common Stock issuable upon conversion of the Series C Convertible Preferred Stock and the exercise of the warrants

in excess of the “Nasdaq Limit”.

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

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

shares, in Orchid’s sole discretion.

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

Common Stock determined by dividing the Series C Stated Value by (y)

the greater of (i) $0.90 per share (“Series C Floor Price”) and (ii) the lesser of (A) $135.00 and (B) 80% of the lowest closing

price of our Common Stock during the three trading days immediately prior to the date of conversion into conversion shares (the “ Series

C Conversion Price”).

The Series C Conversion Price was subject to adjustment

in the event of an issuance of Common Stock at a price per share lower than the Series C Conversion

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

The holders of the Series

C Convertible Preferred Stock were entitled to vote with the Common Stock as a single class on an as-converted basis, subject to applicable

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

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

cast, shall not be lower than $7.5375 (the “Series C Voting Floor Price”), which represents the closing sale price of the

Common Stock on the trading day immediately prior to the date of execution of the Orchid SPEA.

The Series C Voting Floor Price shall be

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

During the year ended April 30, 2025, Orchid

converted 23.9712 shares of Series C Convertible Preferred Stock into 44,444 shares of Common Stock.

From May 1, 2025 to July 22, 2025,

subsequent to our fiscal year end, Orchid converted 575.7176 shares of Series C Convertible Preferred Stock into 2,117,699 shares of Common

The following table summarizes our cash flows for

the years ended April 30, 2025 and 2024:

For the Year Ended April 30,

For the Years Ended April 30,

Net cash provided by (used in):

4 unchanged sentences

Financing activities

Net decrease in cash and cash equivalents

$ (4,764,811 )

Net increase (decrease) in cash and cash equivalents

$ (4,764,811 )

2 unchanged sentences

30, 2025, net cash used in operating activities was $6.6 million.

This consisted primarily of a net loss of $4.5 million and a decrease

in our net operating assets and liabilities of $2.4 million, partially offset by stock-based compensation of $325,000.

The decrease in

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

prepaid expenses.

During the year ended April

30, 2024, net cash used in operating activities was $8.3 million.

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

2 unchanged sentences

and a decrease in prepaid expenses.

During the year ended April

30, 2023, net cash used in operating activities was $8.9 million.

This consisted primarily of a net loss of $14.9 million, partially offset

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

$2.3 million.

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

liabilities and a decrease in prepaid expenses – related party.

Investing Activities

During the year ended April

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

I/IIA clinical trial.

30, 2025, net cash used in investing activities was $300,000, from the purchase of equipment and machinery being used in our AL001 Phase

II clinical trials.

Financing Activities

During the year ended April

30, 2025, net cash provided by financing activities was $7.7 million from the sale of convertible preferred stock and $2.7 million from

proceeds from the New ATM Offering.

During the year ended April

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

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

During the year ended April 30, 2023, net cash

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

Contractual Obligations

On July 2, 2018, we entered

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

South Florida (the “AL001 Licenses”), pursuant to which the Licensor granted us a royalty bearing exclusive worldwide licenses

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

(i) 9,840,521, entitled “Organic Anion Lithium Ionic

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

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

On February 1, 2019, we

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

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

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

The AL001 License Agreements

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

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 our common stock.

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

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

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

On May 1, 2016, we entered

into a Standard Exclusive License Agreement with Sublicensing Terms for ALZN002 with the Licensor (the “ALZN002 License”),

pursuant to which the Licensor granted us a royalty bearing exclusive worldwide license limited to the field of Alzheimer’s Immunotherapy

and Diagnostics, under United States Patent No.

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

7, 2009 and granted May 29, 2012.

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

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

January 24, 2020, we entered into the Fourth Amendment to the ALZN002 License, on March 30, 2021, we entered into the Fifth Amendment

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

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

The Seventh Amendment to

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

The ALZN002 License Agreement

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

We have already

paid an initial license fee of $200,000 for ALZN002.

As an additional licensing fee for the license of ALZN002, the Licensor received

24,012 shares of our common stock.

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

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

thereafter, for the life of the ALZN002 License Agreement.

On November 19, 2019, we entered

into two Standard Exclusive License Agreements with Sublicensing Terms for two additional indications of AL001 with the Licensor (the

“November AL001 License”), pursuant to which the Licensor granted us a royalty bearing exclusive worldwide licenses limited

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

2021, we entered into the First Amendments to the November AL001 License and on April 17, 2023, we entered into the Second Amendments

to the November AL001 License (collectively, the “November AL001 License Agreements”).

The Second Amendments to the November

AL001 License modified the timing of the payments for the license fees.

The November AL001 License

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

We 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 licensee’s obligations to pay royalties expire under the applicable license agreement.

Under our various license agreements,

if we fail to meet a milestone by its specified date, Licensor may terminate the license agreement.

The Licensor was also granted a preemptive

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

of any equity securities of our company.

Additionally, we are required

to pay milestone payments on the due dates to the Licensor for the license of the AL001 technologies and for the ALZN002 technology, as

Original AL001 Licenses:

Completed September 2019

Pre-IND meeting

Completed June 2021

IND application filing

Completed December 2021

Upon first dosing of patient in a clinical trial

Completed March 2022

Upon completion of first clinical trial

Upon first patient treated in a Phase III clinical trial

8 years from the effective date of the agreement

Upon FDA NDA approval

* Milestone met and completed

ALZN002 License:

Upon IND application - completed January 2022

Upon first dosing of patient in first Phase I clinical trial

Upon completion of first Phase IIB clinical trial

Upon first patient treated in a Phase III clinical trial

Upon first commercial sale

* Milestone met and completed

Additional AL001 Licenses:

Upon first patient treated in a Phase III clinical trial

August 1, 2029

First commercial sale

See the “Intellectual Property and Licensing

Agreements” sub-section under Item 1.

Business of this Annual Report.

Recent Accounting Standards

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

What changed 10-K

Item 7. Management’s Discussion and Analysis