Alzamend Neuro, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following management’s discussion and analysis of financial condition and results of operations in conjunction with our unaudited condensed financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or the SEC, on July 22, 2025. NOTE ABOUT FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This section should be read in conjunction with our unaudited condensed financial statements and related notes included in Part I, Item 1 of this report. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. In this Quarterly Report, unless the context requires otherwise, references to the “Company,” “Alzamend,” “we,” “our company” and “us” refer to Alzamend Neuro, Inc., a Delaware corporation. Overview We were incorporated on February 26, 2016, as Alzamend Neuro, Inc. under the laws of the State of Delaware. We were formed to acquire and commercialize patented intellectual property and know-how to prevent, treat and potentially cure the crippling and deadly Alzheimer’s disease (“Alzheimer’s”). With our two product candidates, we aim to bring treatment or cures not only for Alzheimer’s, but also bipolar disorder (“BD”), major depressive disorder (“MDD”) and post-traumatic stress disorder (“PTSD”). Existing Alzheimer’s treatments only temporarily relieve symptoms but do not, to our knowledge, slow or halt the underlying progression of the disease. We have developed a novel approach to combat Alzheimer’s through immunotherapy. Critical Accounting Policies and Estimates Stock-Based Compensation. We 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 expense for stock options on a straight-line basis over the requisite service period and account for forfeitures as they occur. Our 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 Black-Scholes option pricing model utilizes inputs which are highly subjective assumptions and generally require significant judgment. These assumptions include: · Risk-Free Interest Rate. 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. · Expected Volatility. Because we do not have a sufficient trading history for our common stock (“Common Stock”), the expected volatility was estimated based on the average volatility for comparable publicly traded life sciences companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on the similar size, stage in life cycle or area of specialty. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available. 20 · 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. Therefore, we used an expected dividend yield of zero. 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. Preferred Stock Classification. We analyze the terms of our preferred stock using Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity , to determine whether our preferred stock should be classified as a liability or equity, and if classified as equity, permanent or temporary. Common criteria we consider are redemption provisions, conversion options, cumulative of mandatory fixed dividends, discretionary dividends based on earnings, voting rights and collateral requirements. Plan of Operations We intend to develop and commercialize therapeutics and vaccines that are better than existing treatments and have the potential to significantly improve the lives of individuals afflicted by Alzheimer’s, BD, MDD and PTSD. To achieve these goals, we are pursuing the following key business strategies: · Advance clinical development of AL001 for Alzheimer’s, BD, MDD and PTSD treatment; · Advance clinical development of ALZN002 for Alzheimer’s treatment; · Expand our pipeline of pharmaceuticals to include additional indications for AL001 and delivery methods; · Focus on translational and functional endpoints to efficiently develop product candidates; and · Optimize the value of AL001 and ALZN002 in major markets. Our pipeline consists of two novel therapeutic drug candidates: · AL001 - A patented ionic cocrystal technology delivering a therapeutic combination of lithium, salicylate and proline through three royalty-bearing exclusive worldwide licenses from the University of South Florida Research Foundation, Inc., as licensor (the “Licensor”); and · ALZN002 - A patented method using a mutant peptide sensitized cell as a cell-based therapeutic vaccine that seeks to restore the ability of a patient’s immunological system to combat Alzheimer’s through a royalty-bearing exclusive worldwide license from the Licensor. Our most advanced product candidate (lead product) licensed and in clinical development in humans is AL001, an ionic cocrystal of lithium for the treatment of Alzheimer’s, BD, MDD and PTSD. Based on our preclinical data involving mice models, AL001 treatment prevented cognitive deficits, depression and irritability and is superior in improving associative learning and memory and irritability compared with lithium carbonate treatments, supporting the potential of this lithium formulation for the treatment of Alzheimer’s, BD, MDD and PTSD in humans. Lithium has been marketed for more than 35 years and human toxicology regarding lithium use has been well characterized, potentially mitigating the regulatory burden for safety data. On May 5, 2022, we initiated a multiple-dose, steady-state, double-blind, ascending dose safety, tolerability, pharmacokinetic clinical trial of AL001 in patients with mild to moderate Alzheimer’s and healthy subjects. We completed the Phase IIA clinical trial in March 2023 and announced positive topline data in June 2023, followed by the full data set in October 2024. We announced that we successfully identified a maximum tolerated dose (“MTD”) for development of AL001 from a multiple-ascending dose study as assessed by an independent safety review committee. This dose, providing lithium at a lithium carbonate equivalent dose of 240 mg 3-times daily, is designed to be unlikely to require lithium therapeutic drug monitoring (“TDM”). Also, this MTD is risk-mitigated for the purpose of treating fragile populations, such as Alzheimer’s patients. 21 Lithium is a commonly prescribed drug for manic episodes in BD type 1 as well as maintenance therapy of BD in patients with a history of manic episodes. Lithium is also prescribed off label for MDD, BD and treatment of PTSD, among other disorders. Lithium was the first mood stabilizer approved by the U.S. Food and Drug Administration (“FDA”) and is still a first-line treatment option (considered the “gold standard”) but is underutilized perhaps because of the need for TDM. Lithium was the first drug that required TDM by regulatory authorities in product labelling because the effective and safe range of therapeutic drug blood concentrations is narrow and well defined for treatment of BD when using lithium salts. 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. Based 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 contract research organization (“CRO”) for these clinical trials. On 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 15th 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, neither treatments had a 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 index. Further, AL001 showed consistently higher lithium concentrations in brain tissues, particularly at lower doses, compared to lithium carbonate. 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 studies. These results highlight the potential clinical advantages of AL001 for conditions like Alzheimer’s, BD, MDD and PTSD at low doses. By 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. In November 2025, we announced that we completed the clinical portion of the Phase II study in healthy human subjects and expect to report topline data in the first quarter of 2026. On September 28, 2022, we submitted an IND application to the FDA for ALZN002 and received a “study may proceed” letter on October 31, 2022. The product candidate is an immunotherapy vaccine designed to treat mild to moderate dementia of the Alzheimer’s type. ALZN002 is a proprietary “active” immunotherapy product, which means it is produced by each patient’s immune system. It consists of autologous dendritic cells (“DCs”) that are activated white blood cells taken from each individual patient so that they can be engineered outside of the body to attack Alzheimer’s-related amyloid-beta proteins. These DCs are pulsed with a novel amyloid-beta peptide, E22W, designed to bolster the ability of the patient’s immune system to combat Alzheimer’s, 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 Alzheimer’s signs and symptoms. Compared to passive immunization treatment approaches that use foreign blood products (such as monoclonal antibodies), active immunization with ALZN002 is anticipated to offer a more robust and long-lasting effect on the clearance of amyloid. This could provide a safer approach due to its reliance on autologous immune components, using each individual patient’s own white blood cells rather than foreign cells and/or blood products. On April 3, 2023, we announced the initiation of a Phase I/IIA clinical trial for ALZN002 to treat mild to moderate dementia of the Alzheimer’s type. The purpose of this trial is to assess the safety, tolerability, and efficacy of multiple ascending doses of ALZN002 compared with that of a placebo in 20-30 subjects with mild to moderate morbidity. The primary goal of this clinical trial is to determine an appropriate dose of ALZN002 for treatment of patients with Alzheimer’s in a larger Phase IIB efficacy and safety clinical trial. On February 13, 2024, we received notice from the company we engaged as CRO, Biorasi, LLC (“Biorasi”) that Biorasi was terminating our contract with them. We are currently pursuing the engagement of a replacement CRO. 22 The continuation of our current plan of operations with respect to initiating and conducting the series of human clinical trials for each of our therapeutics requires us to raise additional capital to fund our operations. Because our working capital requirements depend upon numerous factors, including the progress of our preclinical and clinical testing, timing and cost of obtaining regulatory approvals, changes in levels of resources that we devote to the development of manufacturing and marketing capabilities, competitive and technological advances, status of competitors, and our ability to establish collaborative arrangements with other organizations, we will require additional financing to fund future operations. Results of Operations Results of Operations for the Three Months Ended January 31, 2026 and 2025 The following table summarizes the results of our operations for the three months ended January 31, 2026 and 2025: For the Three Months Ended January 31, 2026 2025 $ Change % Change OPERATING EXPENSES Research and development $ 1,278,629 $ 447,111 $ 831,518 189 % General and administrative 919,025 590,304 328,721 56 % Total operating expenses 2,197,654 1,037,415 1,160,239 112 % Loss from operations (2,197,654 ) (1,037,415 ) (1,160,239 ) 112 % OTHER INCOME (EXPENSE), NET Interest expense (1,337 ) (2,019 ) 682 -34 % Total other expense, net (1,337 ) (2,019 ) 682 -34 % NET LOSS (2,198,991 ) (1,039,434 ) (1,159,557 ) 112 % Dividends on preferred shares - (33,728 ) 33,728 * NET LOSS AVAILABLE TO COMMON SHARES (2,198,991 ) (1,073,162 ) (1,125,829 ) 105 % Basic and diluted net loss per common share $ (0.58 ) $ (1.75 ) $ 1.18 * Basic and diluted weighted average common shares outstanding 3,804,741 611,978 * * Not meaningful Revenue We currently have only two product candidates, AL001 and ALZN002. These products are in the clinical stage of development and will require extensive clinical study, review and evaluation, regulatory review and approval, significant marketing efforts and substantial investment before either or both of them, and any respective successors, will provide us with any revenue. We did not generate any revenues during the three months ended January 31, 2026 and 2025, and we do not anticipate that we will generate revenue for the foreseeable future. 23 Research and Development Expenses Research and development expenses for the three months ended January 31, 2026 and 2025 were $1.3 million and $447,000, respectively. As reflected in the table below, research and development expenses primarily consisted of professional fees and clinical trial fees: For the Three Months Ended January 31, 2026 2025 $ Change % Change Professional fees $ 255,057 $ 134,904 $ 120,153 89 % Clinical trial fees 1,016,465 298,005 718,460 241 % Other research and development expenses 7,107 14,202 (7,095 ) -50 % Total research and development expenses $ 1,278,629 $ 447,111 $ 831,518 186 % * Not meaningful Professional Fees During the three months ended January 31, 2026 and 2025, we incurred professional fees of $255,000 and $135,000, respectively, which were primarily comprised of professional fees attributed to various types of scientific services, including FDA consulting services. The increase relates to higher professional fees required to support the upcoming clinical trial activities. Clinical Trial Fees During the three months ended January 31, 2026 and 2025, we incurred clinical trial fees of $1.0 million and $298,000, respectively. The increase in clinical trial fees relates to the AL001 Phase IIB clinical study on healthy human subjects conducted with Massachusetts General Hospital, which was completed in November 2025. Other Research and Development Expenses During the three months ended January 31, 2026 and 2025, we incurred other fees of $7,000 and $14,000, respectively, which were primarily comprised of scientific materials required for our clinical trials. General and Administrative Expenses General and administrative expenses for the three months ended January 31, 2026 and 2025 were $919,000 and $590,000, respectively. As reflected in the table below, general and administrative expenses primarily consisted of the following expense categories: salaries and benefits; professional fees; insurance; stock-based compensation expense; marketing fees; and board of director fees. For the three months ended January 31, 2026 and 2025, the remaining general and administrative expenses of $111,000 and $116,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, travel and entertainment and other office expenses, none of which was significant individually. For the Three Months Ended January 31, 2026 2025 $ Change % Change Salary and benefits $ 309,726 $ 226,792 $ 82,934 37 % Professional fees 336,676 61,966 274,710 443 % Insurance 58,917 60,374 (1,457 ) -2 % Stock-based compensation expense 9,300 81,277 (71,977 ) -89 % Marketing fees 50,000 - 50,000 * Board of director fees 43,750 43,750 - 0 % Other general and administrative expenses 110,656 116,145 (5,489 ) -5 % Total general and administrative expenses $ 919,025 $ 590,304 $ 328,721 56 % * Not meaningful 24 Salaries and Benefits During the three months ended January 31, 2026 and 2025, we incurred salaries and benefits of $310,000 and $227,000, respectively. The increase in salaries and benefits was due mainly to higher bonuses paid. As of January 31, 2026, we had four full-time and two part-time employees. Professional Fees During the three months ended January 31, 2026 and 2025, we incurred professional fees of $337,000 and $62,000, respectively. During the three months ended January 31, 2026, we incurred $295,000 in legal fees, $24,000 in audit fees, $16,000 in investor relation fees and $1,000 in consulting fees. During the three months ended January 31, 2025, we incurred $35,000 in legal fees, $22,000 in audit fees and $5,000 in investor relations fees. The increase in professional fees was due mainly to higher legal fees, which was a result of litigation against the CRO from the termination of our ALZN002 clinical trial. Insurance Expense During the three months ended January 31, 2026 and 2025, we incurred insurance expense of $59,000 and $60,000, respectively, which was primarily directors’ and officers’ insurance. Stock-Based Compensation Expense During the three months ended January 31, 2026 and 2025, we incurred general and administrative stock-based compensation expense of $9,000 and $81,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the three months ended January 31, 2026, was a result of fewer stock options vesting during the period compared to the prior year period. Marketing Fees During the three months ended January 31, 2026, we incurred marketing fees of $50,000, related to the marketing and branding of our company. We did not incur any marketing fees for the three months ended January 31, 2025. Results of Operations for the Nine Months Ended January 31, 2026 and 2025 The following table summarizes the results of our operations for the nine months ended January 31, 2026 and 2025: For the Nine Months Ended January 31, 2026 2025 $ Change % Change OPERATING EXPENSES Research and development $ 3,195,779 $ 964,771 $ 2,231,008 231 % General and administrative 2,700,185 2,393,117 307,068 13 % Total operating expenses 5,895,964 3,357,888 2,538,076 76 % Loss from operations (5,895,964 ) (3,357,888 ) (2,538,076 ) 76 % OTHER EXPENSE, NET Interest expense (6,469 ) (17,520 ) 11,051 -63 % Total other expense, net (6,469 ) (17,520 ) 11,051 -63 % NET LOSS (5,902,433 ) (3,375,408 ) (2,527,025 ) 75 % Dividends on preferred shares - (87,379 ) 87,379 * NET LOSS AVAILABLE TO COMMON SHARES (5,902,433 ) (3,462,787 ) (2,439,646 ) 70 % Basic and diluted net loss per common share $ (1.89 ) $ (9.45 ) $ 7.56 * Basic and diluted weighted average common shares outstanding 3,122,090 362,863 * * Not meaningful 25 Revenue We currently have only two product candidates, AL001 and ALZN002. These products are in the clinical stage of development and will require extensive clinical study, review and evaluation, regulatory review and approval, significant marketing efforts and substantial investment before either or both of them, and any respective successors, will provide us with any revenue. We did not generate any revenues during the nine months ended January 31, 2026 and 2025, and we do not anticipate that we will generate revenue for the foreseeable future. Research and Development Expenses Research and development expenses for the nine months ended January 31, 2026 and 2025 were $3.2 million and $1.0 million, respectively. As reflected in the table below, research and development expenses primarily consisted of professional fees and clinical trial fees: For the Nine Months Ended January 31, 2026 2025 $ Change % Change Professional fees $ 459,907 $ 500,302 $ (40,395 ) -8 % Clinical trials 2,717,191 422,129 2,295,062 544 % Other research and development expenses 18,681 42,340 (23,659 ) -56 % Total research and development expenses $ 3,195,779 $ 964,771 $ 2,231,008 231 % Professional Fees During the nine months ended January 31, 2026 and 2025, we incurred professional fees of $460,000 and $500,000, 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 required to support the previous and upcoming clinical trial activities. Clinical Trial Fees During the nine months ended January 31, 2026 and 2025, we incurred clinical trial fees of $2.7 million and $422,000, respectively. The increase in clinical trial fees relates to our AL001 Phase IIB clinical study on healthy human subjects conducted with Massachusetts General Hospital, which was completed in November 2025. Other Research and Development Expenses During the nine months ended January 31, 2026 and 2025, we incurred other fees of $19,000 and $42,000, respectively, which were primarily comprised of scientific materials required for our clinical trials. General and Administrative Expenses General and administrative expenses for the nine months ended January 31, 2026 and 2025 were $2.7 million and $2.4 million, respectively. As reflected in the table below, general and administrative expenses primarily consisted of the following expense categories: salaries and benefits; professional fees; insurance; stock-based compensation expense; marketing fees; and board of director fees. For the nine months ended January 31, 2026 and 2025, the remaining general and administrative expenses of $297,000 and $262,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, travel and entertainment and other office expenses, none of which was significant individually. For the Nine Months Ended January 31, 2026 2025 $ Change % Change Salaries and benefits $ 761,438 $ 780,350 $ (18,912 ) -2 % Professional fees 1,049,102 433,062 616,040 142 % Insurance 177,362 199,008 (21,646 ) -11 % Stock-based compensation expense 83,716 243,831 (160,115 ) -66 % Marketing fees 200,000 344,000 (144,000 ) -42 % Board of director fees 131,250 131,250 - 0 % Other general and administrative expenses 297,317 261,616 35,701 14 % Total general and administrative expenses $ 2,700,185 $ 2,393,117 $ 307,068 13 % 26 Salaries and Benefits During the nine months ended January 31, 2026 and 2025, we incurred salaries and benefits of $761,000 and $780,000, respectively. The decrease in salaries and benefits was due mainly to lower bonuses. As of January 31, 2026, we had four full-time and two part-time employees. Professional Fees During the nine months ended January 31, 2026 and 2025, we incurred professional fees of $1.0 million and $433,000, respectively. During the nine months ended January 31, 2026, we incurred $818,000 in legal fees, $126,000 in audit fees, $66,000 in investor relation fees, $32,000 in tax preparation fees and $9,000 in consulting fees. During the nine months ended January 31, 2025, we incurred $173,000 in audit fees, $144,000 in legal fees, $92,000 in investor relation fees, $22,000 in tax preparation fees and $2,000 in consulting fees. The increase in professional fees was due mainly to higher legal and tax preparation fees, partially offset by lower audit and investor relations fees. The increase in legal fees, which accounted for a significant proportion of the increase, was a result of litigation against the CRO from the termination of our ALZN002 clinical trial. Insurance Expense During the nine months ended January 31, 2026 and 2025, we incurred insurance expense of $177,000 and $199,000, respectively, which was primarily directors’ and officers’ insurance. Stock-Based Compensation Expense During the nine months ended January 31, 2026 and 2025, we incurred general and administrative stock-based compensation expense of $84,000 and $244,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the nine months ended January 31, 2026, was a result of fewer stock options vesting during the period compared to the prior year period. Marketing Fees During the nine months ended January 31, 2026 and 2025, we incurred marketing fees of $200,000 and $344,000, respectively, related to the marketing and branding of our company. Liquidity and Capital Resources The accompanying condensed financial statements have been prepared assuming that we will continue as a going concern. We have incurred recurring net losses and our operations have not provided any cash flows. We believe that we will continue to incur operating and net losses each quarter until at least the time we begin significant deliveries of our products. We believe our current cash on hand is insufficient to fund our planned operations through one year after the date the condensed financial statements are issued. These factors create substantial doubt about our ability to continue as a going concern for at least one year after the date that our condensed financial statements are issued. Our inability to continue as a going concern could have a negative impact on our company, particularly if we are unable to obtain needed financing. We intend to finance our future development activities and our working capital needs largely through the sale of equity securities with some additional funding from other sources, including debt financing, until such time as funds provided by operations are sufficient to fund working capital requirements. Our 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 we be unable to continue as a going concern. As of January 31, 2026, we had cash of $2.7 million, working capital of $1.8 million, stockholders’ equity of $2.2 million and an accumulated deficit of $64.4 million. We incurred recurring losses and reported losses for the three and nine months ended January 31, 2026 totaling $2.2 million and $5.9 million, respectively. In the past, we have financed our operations principally through sales of equity securities and debt instruments. We will need to obtain substantial additional funding in the future for our clinical development activities and continuing operations. If we are unable to raise capital when needed or on favorable terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts. Our future capital requirements will depend on many factors, including: · successful enrollment in and completion of clinical trials; · our ability to establish agreements with third-party manufacturers for clinical supply for our clinical trials and, if our product candidates are approved, commercial production; 27 · our ability to maintain our current research and development programs and establish new research and development programs; · addition and retention of key research and development personnel; · our efforts to enhance operational, financial, and information management systems, and hire additional personnel, including personnel to support development of our product candidates; · negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter and performing our obligations in such collaborations; · the timing and amount of milestone and other payments we may receive under our collaboration arrangements; · our eventual commercialization plans for our product candidates; · the costs involved in prosecuting, defending, and enforcing patent claims and other intellectual property claims; and · the costs and timing of regulatory approvals. A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans. Series C Preferred Financing See Note 8 Equity Transactions in the notes to the financial statements for a description of our latest fundraising activities. At-the-Market Offering See Note 9 Subsequent Events in the notes to the financial statements for a description of our latest fundraising activities. Cash Flows The following table summarizes our cash flows for the nine months ended January 31, 2026 and 2025: For the Nine Months Ended January 31, 2026 2025 Net cash provided by (used in): Operating activities $ (5,270,519 ) $ (5,879,481 ) Investing activities - (90,000 ) Financing activities 4,035,000 8,951,568 Net (decrease) increase in cash and cash equivalents $ (1,235,519 ) $ 2,982,087 Operating Activities During the nine months ended January 31, 2026, net cash used in operating activities was $5.3 million. This consisted primarily of a net loss of $5.9 million, partially offset by an increase in our net operating assets and liabilities of $465,000 and by non-cash charges of $167,000. The non-cash charges consisted of stock-based compensation expense and depreciation expense. The increase in our net operating assets and liabilities was due to an increase in accounts payable and accrued liabilities and an increase in prepaid expenses and other current assets. Investing Activities During the nine months ended January 31, 2026, there was no net cash used in investing activities. Financing Activities During the nine months ended January 31, 2026, net cash provided by financing activities was $4.0 million from the sale of Series C Convertible Preferred Stock. 28 Contractual Obligations See Note 7 Commitments and Contingencies in the notes to the financial statements for a description of our contractual obligations. Recent Accounting Standards None. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Because we are a smaller reporting company, this section is not applicable.