What changed in this filing

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Item 1. Financial Statements

2021-09-01 compared with 2021-06-10 · 599 added, 715 removed, 310 unchanged (81% of the section changed)

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CONSOLIDATED BALANCE SHEETS

Current assets:

Cash and cash

Short-term investments

and cash equivalents

expenses and other current assets

Total current assets

Operating lease right-of-use asset

LIABILITIES AND

Current liabilities:

Accounts payable

Accrued expenses

current assets

lease right-of-use asset

lease liability

current liabilities

Commitments and contingencies (Note 10)

Shareholders’

Preferred stock, par value

$100 per share;

and contingencies (Note 10)

Shareholders’

stock, par value $ 100 per share;

19,860 shares authorized;

no shares issued or outstanding

Series A convertible preferred

stock, par value $100 per share;

A convertible preferred stock, par value $ 100 per share;

140 shares authorized;

no shares issued or outstanding

Common stock, par value

$.01 per share;

stock, par value $ .01 per share;

100,000,000 shares authorized;

29,949,905 and 24,248,695 shares issued and outstanding, respectively

Additional paid-in capital

paid-in capital

( 200,776,749 )

( 191,835,618 )

Total shareholders’

shareholders’ equity

Noncontrolling

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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended

Six Months Ended

For the Three Months Ended

For the Nine Months Ended

Operating costs and expenses:

Inventor royalties, contingent

legal fees, litigation and

licensing expenses

Research and development

expenses (including non-cash share-based compensation expenses of $447,176, $458,132, $737,382 and $855,655, respectively)

and administrative expenses (including non-cash share-based compensation expenses of $604,096, $651,954, $1,299,989 and $1,275,765,

Inventor royalties, contingent legal fees, litigation and licensing expenses

Research and development expenses (including non-cash share-based compensation expenses

of $ 1,687,754 ,

and $ 1,250,497 ,

respectively)

operating costs and expenses

General and administrative expenses (including non-cash share-based compensation

expenses of $ 1,499,572 ,

and $ 1,922,722 ,

respectively)

Total operating costs and expenses

Loss from operations

( 4,388,236 )

( 2,435,969 )

( 9,058,649 )

( 7,735,975 )

Other expense

Interest income

Net loss attributable

to noncontrolling interest

Net loss attributable

to common shareholders

( 4,387,610 )

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( 7,851,352 )

Net loss per common share attributable to common

shareholders:

Net loss attributable to noncontrolling interest

Net loss attributable to common shareholders

$ ( 4,333,989 )

$ ( 2,561,684 )

$ ( 8,941,131 )

$ ( 7,794,320 )

Net loss per common share attributable to common shareholders:

Weighted average common shares outstanding:

Basic and diluted

accompanying notes are an integral part of these condensed consolidated financial statements.

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’

EQUITY (UNAUDITED )

THE THREE MONTHS ENDED APRIL 30, 2021

Shareholders’

Balance, January 31, 2021

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED )

THE THREE MONTHS ENDED JULY 31, 2021

Paid-in Capital

Accumulated Deficit

Shareholders’ Equity

controlling Interest

Paid-in Capital

Accumulated Deficit

Shareholders’ Equity

controlling Interest

Balance, April 30, 2021

$ 233,742,019

$ ( 196,442,760 )

Stock option compensation to employees and

$ ( 559,107 )

Stock option compensation to employees and directors

Stock options issued to consultants

Common stock issued upon exercise of stock options

Common stock issued upon exercise of stock options, shares

Common stock issued in at-the-market offering, net of offering expenses

Common stock issued in at-the-market offering, net of offering expenses, shares

Common stock issued pursuant to employee stock purchase plan

Common stock issued pursuant to employee stock purchase plan, shares

Common stock issued in a public offering, net of offering expenses

Common stock issued in a public offering, net of offering expenses, shares

Expired restricted stock award to employee

( 1,500,000 )

Stock options and warrants issued to consultants

Common stock issued upon exercise of stock

Common stock issued pursuant to employee stock

purchase plan

Common stock issued in a public offering, net

offering expenses of $2,208,150

Common stock issued in at-the-market offering,

net of offering expenses of $156,265

Balance, April 30, 2021

( 4,333,989 )

THE THREE MONTHS ENDED APRIL 30, 2020

Shareholders’

Balance, January 31, 2020

( 4,387,610 )

Balance, July 31, 2021

$ 236,944,345

Stock option compensation to employees and

Stock options and warrants issued to consultants

Common stock issued upon exercise of stock

Common stock issued pursuant to employee stock

purchase plan

Common stock issued in at-the-market offering,

net of offering expenses of $57,324

$ ( 200,776,749 )

$ ( 612,728 )

THE THREE MONTHS ENDED July 31, 2020

Paid-in Capital

Accumulated Deficit

Shareholders’ Equity

controlling Interest

Balance, April 30, 2020

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$ ( 187,049,899 )

$ ( 464,904 )

Stock option compensation to employees and directors

Stock options issued to consultants

Common stock issued upon exercise of stock options

Common stock issued in at-the-market offering, net of offering expenses of $ 155,776

( 2,561,684 )

( 2,576,787 )

Balance, July 31, 2020

$ 197,993,060

$ ( 189,611,583 )

$ ( 480,007 )

accompanying notes are an integral part of these condensed consolidated financial statements.

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’

EQUITY (UNAUDITED )

THE SIX MONTHS ENDED APRIL 30, 2021

Shareholders’

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED )

THE NINE MONTHS ENDED JULY 31, 2021

Paid-in Capital

Accumulated Deficit

Shareholders’ Equity

controlling Interest

Balance, October 31, 2020

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$ ( 191,835,618 )

Stock option compensation to employees and

$ ( 496,983 )

Stock option compensation to employees and directors

Expired restricted stock award to employee

( 1,500,000 )

Stock options and warrants issued to consultants

Common stock issued upon exercise of stock

Common stock issued pursuant to employee stock

purchase plan

Common stock issued in a public offering, net

Common stock issued upon exercise of stock options

Common stock issued pursuant to employee stock purchase plan

Common stock issued in a public offering, net of

offering expenses of $ 2,208,150

Common stock issued in at-the-market offering,

net of offering expenses of $340,775

Balance, April 30, 2021

Common stock issued in at-the-market offering, net of offering expenses of $ 340,775

( 8,941,131 )

THE SIX MONTHS ENDED APRIL 30, 2020

Shareholders’

( 9,056,876 )

Balance, July 31, 2021

$ 236,944,345

$ ( 200,776,749 )

$ ( 612,728 )

THE NINE MONTHS ENDED JULY 31, 2020

Paid-in Capital

Accumulated Deficit

Shareholders’ Equity

controlling Interest

Balance, October 31, 2019

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$ ( 181,817,263 )

Stock option compensation to employees and

Stock options and warrants issued to consultants

Common stock issued upon exercise of stock

Common stock issued pursuant to employee stock

purchase plan

Common stock issued in at-the-market offering,

net of offering expenses of $158,296

Balance, April 30, 2020

$ ( 422,975 )

Stock option compensation to employees and directors

Stock options issued to consultants

Common stock issued upon exercise of stock options

Common stock issued pursuant to employee stock purchase plan

Common stock issued in at-the-market offering, net of offering expenses of $ 314,072

Common stock issued in at-the-market offering, net of offering expenses

( 7,794,320 )

( 7,851,352 )

Balance, July 31, 2020

$ 197,993,060

$ ( 189,611,583 )

$ ( 480,007 )

accompanying notes are an integral part of these condensed consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

the six months ended April 30,

For the nine months ended July 31,

Cash flows from operating activities:

Reconciliation of net loss

to net cash used in operating activities:

Reconciliation of net loss to net cash used in operating activities:

$ ( 9,056,876 )

$ ( 7,851,352 )

Stock option compensation

to employees and directors

Stock options and warrants

issued to consultants

Depreciation of property

and equipment

Stock option compensation to employees and directors

Stock options and warrants issued to consultants

Depreciation of property and equipment

Loss on disposal of property and equipment

Gain on sale of equipment

Amortization of operating

lease right-of-use asset

Change in operating assets

and liabilities:

Prepaid expenses and other

current assets

Amortization of operating lease right-of-use asset

Change in operating assets and liabilities:

Prepaid expenses and other current assets

Accounts payable

Accrued expenses

lease liability

cash used in operating activities

Operating lease liability

Net cash used in operating activities

( 3,892,707 )

( 4,761,589 )

Cash flows from investing activities:

Disbursements to acquire

short-term investments

Disbursements to acquire short-term investments

( 10,399,784 )

Proceeds from maturities

of short-term investments

Purchase of property and

from sale of equipment

cash used in investing activities

( 5,510,000 )

Proceeds from maturities of short-term investments

Purchase of property and equipment

Proceeds from sale of equipment

Net cash used in investing activities

( 6,724,337 )

Cash flows from financing activities:

Gross proceeds from sale

of common stock in a public offering

Expenses of the public

Gross proceeds from sale

of common stock in an at-the-market offering

Expenses of the at-the-market

Proceeds from sale of common

stock pursuant to employee stock purchase

from exercise of stock options

cash provided by financing activities

Net increase (decrease)in cash and cash equivalents

Cash and cash equivalents

at beginning of period

Cash and cash equivalents

at end of period

Supplemental cash flow

proceeds from interest income

Supplemental disclosure

of non-cash financing activity:

value of warrants issued in connection with the public offering

Gross proceeds from sale of common stock in a public offering

Expenses of the public offering

( 2,208,150 )

Gross proceeds from sale of common stock in an at-the-market offering

Expenses of the at-the-market offering

Proceeds from sale of common stock pursuant to employee stock purchase plan

Proceeds from exercise of stock options

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental cash flow information:

Cash proceeds from interest income

Supplemental disclosure of non-cash financing activity:

Fair value of warrants issued in connection with the public offering

accompanying notes are an integral part of these condensed consolidated financial statements.

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS AND FUNDING

used herein, “we,”

“us,”

“our,”

the “Company”

or “Anixa”

means Anixa Biosciences,

used herein, “we,” “us,” “our,” the “Company” or “Anixa” means Anixa Biosciences,

and its consolidated subsidiaries.

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Our therapeutics programs include the development of a chimeric endocrine receptor T-cell

technology, a novel form of chimeric antigen receptor T-cell (“CAR-T”) technology, initially focused on treating ovarian

cancer, and discovery and ultimately development of anti-viral drug candidates for the treatment of COVID-19 focused on inhibiting certain

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Our vaccine programs include the development of a vaccine against breast cancer, specifically triple

negative breast cancer (“TNBC”), the most lethal form of the disease, and a vaccine against ovarian cancer.

subsidiary, Certainty Therapeutics, Inc.

(“Certainty”), is developing immuno-therapy drugs against cancer.

Certainty holds

an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Wistar Institute (“Wistar”)

relating to Wistar’s CAR-T technology.

an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Wistar Institute (“Wistar”)

relating to Wistar’s CAR-T technology.

We have initially focused on the development of a treatment for ovarian cancer, but we may

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Certainty to make certain cash and equity payments to Wistar upon achievement of specific development milestones.

With respect to Certainty’s

equity obligations to Wistar, Certainty issued to Wistar shares of its common stock equal to five percent ( 5 %) of the common stock of

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Lee Moffitt Cancer Center and Research Institute, Inc.

(“Moffitt”), is advancing toward human

clinical testing its CAR-T technology for treating ovarian cancer.

We submitted an Investigational New Drug (“IND”) application

Food and Drug Administration (“FDA”) in March 2021.

We submitted an Investigational New Drug (“IND”) application

Food and Drug Administration (“FDA”) in March 2021.

In April 2021, the FDA informed us that they needed additional

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In May 2021, the FDA provided us with the details of their information

request, and we are currently working with Moffitt to address the FDA’s request.

We anticipate submitting our response to the FDA

in June 2021, after which the FDA will have approximately 30 days to respond.

Assuming the FDA finds our response acceptable, we anticipate

beginning the human clinical trials in the fourth quarter of 2021.

April 2020, we entered into a collaboration with OntoChem GmbH (“OntoChem”), to discover and ultimately develop anti-viral

Through an iterative process with the FDA, we responded to their information requests and in August 2021, we received authorization

from the FDA to commence enrollment and treatment of patients in a Phase 1 clinical trial.

We are performing the activities necessary

to prepare for treatment of patients in the Phase 1 clinical trial, and we anticipate treating the first enrolled patient in early 2022.

April 2020, we entered into a collaboration with OntoChem GmbH (“OntoChem”), to discover and ultimately develop anti-viral

drug candidates against COVID-19.

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modeling techniques to perform in silico screening of over 1.2 billion compounds in chemical libraries (including publicly available

compounds and OntoChem’s proprietary libraries) to evaluate if any of these compounds could disrupt one of two key enzymes of SARS-CoV-2,

the virus that causes the disease COVID-19.

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In these animal studies, the two compounds were compared

to Remdesivir, which is the only anti-viral drug approved by the FDA for COVID-19.

The data showed that administration of the drugs to

infected hamsters did not cause any noticeable adverse effects, and monitoring of weight and general animal behavior demonstrated comparable

efficacy of both compounds as well as Remdesivir.

Based on this promising data in the animal study, we are proceeding to the next stage

of drug development and have selected one of the compounds around which we have now begun performing combinatorial synthetic medicinal

to Remdesivir, which is the only anti-viral drug authorized by the FDA for COVID-19.

The data showed that administration of the

drugs to infected hamsters did not cause any noticeable adverse effects, and monitoring of weight and general animal behavior demonstrated

comparable efficacy of both compounds as well as Remdesivir.

Based on this promising data in the animal study, we proceeded to the next

stage of drug development and selected one of the compounds around which we are currently performing combinatorial synthetic medicinal

chemistry to evaluate whether we can increase potency and optimize pharmacokinetics.

We anticipate completing this process by early fourth

quarter of 2021.

In addition, we have added chemical structures

which we feel, based on our data and recently published data, could be potent anti-virals.

May 2021, after completion of the aforementioned animal studies, OntoChem assigned its rights and obligations related to this collaboration

to MolGenie GmbH (“MolGenie”), a company spun-out from OntoChem focused on drug discovery and development.

August 2021, in an attempt to evaluate whether our compounds might be effective against the Delta variant of SARS-CoV-2, we undertook

an analysis of certain enzyme mutations in the Delta variant.

We note that the Delta variant is characterized by mutations in the

spike protein of the virus.

Corresponding to the mutations in the spike protein, we found some of the Delta variants exhibited a mutation

in the enzyme that is our target.

Sequence analysis of several Delta variant samples demonstrated that the resultant enzyme mutation

indicates that our novel compounds could be stronger inhibitors of the Delta variant that the original version of the virus.

hold an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Cleveland Clinic

Foundation (“Cleveland Clinic”) relating to certain breast cancer vaccine technology developed at Cleveland Clinic.

working in collaboration with Cleveland Clinic to develop a method to vaccinate women against contracting breast cancer, focused specifically

A specific protein, alpha-lactalbumin, has been identified that is only expressed during lactation in a healthy woman’s

mammary tissue.

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We are performing the activities necessary

to prepare for treatment of patients in the Phase 1a clinical trial, and we anticipate being prepared to treat the first enrolled patient

in July 2021.

to prepare for treatment of patients in the Phase 1a clinical trial, and we anticipate treating the first enrolled patient in September

November 2020, we executed a license agreement with Cleveland Clinic pursuant to which the Company was granted an exclusive worldwide,

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This technology pertains to the use of vaccines for the treatment or prevention of ovarian cancers which express

the anti-Mullerian hormone receptor II protein containing an extracellular domain (“AMHR2-ED”).

In healthy tissue, this protein

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agreement with Cleveland Clinic, to advance this vaccine technology toward human clinical testing.

May 2021, Cleveland Clinic was granted an award for our ovarian cancer vaccine technology by the National Cancer Institute’s (“NCI”)

PREVENT program.

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This work will be performed at

NCI facilities, by NCI scientific staff and with NCI financial resources.

NCI facilities, by NCI scientific staff and with NCI financial resources and will require no material financial expenditures by the Company,

nor the transfer of any rights to the Company’s assets.

the next several quarters, we expect the development of our breast and ovarian cancer vaccines, our COVID-19 therapeutic program and

Certainty’s CAR-T technology to be the primary focus of the Company.

As part of our legacy operations, the Company remains engaged

in limited patent licensing activities regarding the Cchek™

liquid biopsy platform (operations for which were suspended in July

in limited patent licensing activities regarding the Cchek™ liquid biopsy platform (operations for which were suspended in July

2020), as well as in the area of encrypted audio/video conference calling.

We do not expect these activities to be a significant part

of the Company’s ongoing operations, nor do we expect these activities to require material financial resources or attention of

senior management.

the past several years, our revenue was derived from technology licensing and the sale of patented technologies, including revenue from

the settlement of litigation.

the past several years, our revenue, if any, was derived from technology licensing and the sale of patented technologies, including revenue

from the settlement of litigation.

We have not generated any revenue to date from our therapeutics or vaccine programs.

In addition, while

we pursue our therapeutics and vaccine programs, we may also make investments in and form new companies to develop additional emerging

while we pursue our therapeutics and vaccine programs, we may also make investments in and form new companies to develop additional emerging

technologies.

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of any of our technologies may take several years, if it is to occur at all, and may depend on positive results from human clinical trials.

and Management’s Plans

on currently available information as of June 10, 2021, we believe that our existing cash, cash equivalents, short-term investments and

expected cash flows will be sufficient to fund our activities for at least the next twelve months.

We have implemented a business model

that conserves funds by collaborating with third parties to develop our technologies.

However, our projections of future cash needs and

cash flows may differ from actual results.

If current cash on hand, cash equivalents, short-term investments and cash that may be generated

from our business operations are insufficient to continue to operate our business, or if we elect to invest in or acquire a company or

companies or new technology or technologies that are synergistic with or complementary to our technologies, we may be required to obtain

more working capital.

During the six months ended April 30, 2021, we raised approximately $20,292,000, net of expenses, through a public

offering in which we sold an aggregate of 4,285,715 shares of common stock and approximately $10,834,000, net of expenses, through our

at-the-market equity program in which we sold an aggregate of 2,806,410 shares of common stock.

Under our at-the-market equity program

which is currently effective and may remain available for us to use in the future, as of April 30, 2021, we may sell an additional approximately

$29.6 million of common stock.

We may seek to obtain working capital during our fiscal year 2021 or thereafter through sales of our equity

securities or through bank credit facilities or public or private debt from various financial institutions where possible.

be certain that additional funding will be available on acceptable terms, or at all.

If we do identify sources for additional funding,

the sale of additional equity securities or convertible debt will result in dilution to our stockholders.

We can give no assurance that

we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future operations, or that other

sources of funding, such as sales of equity or debt, would be available or would be approved by our security holders, if needed, on favorable

terms or at all.

If we fail to obtain additional working capital as and when needed, such failure could have a material adverse impact

on our business, results of operations and financial condition.

Furthermore, such lack of funds may inhibit our ability to respond to

competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would significantly harm the

business and development of operations.

and Management’s Plans

on currently available information as of September 1, 2021, we believe that our existing cash, cash equivalents, short-term investments

and expected cash flows will be sufficient to fund our activities for at least the next twelve months.

We have implemented a business

model that conserves funds by collaborating with third parties to develop our technologies.

However, our projections of future cash needs

and cash flows may differ from actual results.

If current cash on hand, cash equivalents, short-term investments and cash that may be

generated from our business operations are insufficient to continue to operate our business, or if we elect to invest in or acquire a

company or companies or new technology or technologies that are synergistic with or complementary to our technologies, we may be required

to obtain more working capital.

During the nine months ended July 31, 2021, we raised approximately $ 20,292,000 , net of expenses, through

a public offering in which we sold an aggregate of 4,285,715 shares of common stock and approximately $ 10,834,000 , net of expenses, through

our at-the-market equity program in which we sold an aggregate of 2,806,410 shares of common stock.

Our at-the-market equity program

was terminated on June 16, 2021.

We may seek to obtain working capital during our fiscal year 2021 or thereafter through sales of our

equity securities or through bank credit facilities or public or private debt from various financial institutions where possible.

cannot be certain that additional funding will be available on acceptable terms, or at all.

If we do identify sources for additional

funding, the sale of additional equity securities or convertible debt will result in dilution to our stockholders.

We can give no assurance

that we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future operations, or that

other sources of funding, such as sales of equity or debt, would be available or would be approved by our security holders, if needed,

on favorable terms or at all.

If we fail to obtain additional working capital as and when needed, such failure could have a material

adverse impact on our business, results of operations and financial condition.

Furthermore, such lack of funds may inhibit our ability

to respond to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would significantly

harm the business and development of operations.

of Presentation

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting

principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form

10-Q and Rule 8-03 of Regulation S-X.

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include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of our financial

position as of April 30, 2021, and results of operations and cash flows for the interim periods represented.

position as of July 31, 2021, and results of operations and cash flows for the interim periods represented.

The results of operations

for the six months ended April 30, 2021 are not necessarily indicative of the results to be expected for the entire year.

for the nine months ended July 31, 2021 are not necessarily indicative of the results to be expected for the entire year.

Noncontrolling

interest represents Wistar’s equity ownership in Certainty and is presented as a component of equity.

The following table sets

forth the changes in noncontrolling interest for the six months ended April 30, 2021:

forth the changes in noncontrolling interest for the nine months ended July 31, 2021:

OF CHANGES IN NONCONTROLLING INTEREST

Balance, October 31, 2020

Net loss attributable

to noncontrolling interest

Balance, April 30, 2021

$ ( 496,983 )

Net loss attributable to noncontrolling interest

Balance, July 31, 2021

$ ( 612,728 )

revenue has been derived solely from technology licensing and the sale of patented technologies.

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reflects the consideration we expect to receive.

follow the accounting guidance of Accounting Standards Codification 606 (“ASC 606”), Revenue from Contracts with Customers.

In accordance with ASC 606 we are required to make certain judgments and estimates in connection with the accounting for revenue.

judgments and estimates may include determining the existence of a contract and identifying each party’s rights and obligations

to transfer goods and services, identifying the performance obligations in the contract, determining the transaction price and allocating

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These costs are

included under the caption “Operating costs and expenses”

in the accompanying condensed consolidated statements of operations.

included under the caption “Operating costs and expenses” in the accompanying condensed consolidated statements of operations.

and Development Expenses

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candidates for COVID-19, are expensed in the accompanying condensed consolidated financial statements in the period incurred.

PUBLIC OFFERING

March 25, 2021, the Company completed a public offering in which we sold an aggregate of 4,285,715 shares of its common stock, which

represented 15.8% of the Company’s outstanding shares at the time of the offering, at a public offering price of $5.25 per share.

represented 15.8 % of the Company’s outstanding shares at the time of the offering, at a public offering price of $ 5.25 per share.

The Company realized net proceeds of approximately $ 20,292,000 from the public offering, after deducting underwriting discounts and deal

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expiring on March 22, 2026 , to purchase 300,000 shares of common stock at $ 6.5625 per share.

STOCK BASED COMPENSATION

BASED COMPENSATION

Company maintains stock equity incentive plans under which the Company grants incentive stock options, non-qualified stock options, stock

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We recorded stock-based compensation expense related to service-based

stock options granted to employees and directors of approximately $881,000 and $1,055,000 during the three months ended April 30, 2021

and 2020, respectively, and approximately $1,756,000 and $2,019,000 during the six months ended April 30, 2021 and 2020, respectively.

stock options granted to employees and directors that vest based on market conditions, such as the trading price of the Company’s

stock options granted to employees and directors of approximately $ 1,066,000 and $ 997,000 during the three months ended July 31, 2021

and 2020, respectively, and approximately $ 2,822,000 and $ 3,016,000 during the nine months ended July 31, 2021 and 2020, respectively.

stock options granted to employees and directors that vest based on market conditions, such as the trading price of the Company’s

common stock exceeding certain price targets, we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize

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trading days.

The second and third tranches did not vest as of May 31, 2021.

We did not record any market condition stock-based compensation

expense during the six months ended April 30, 2021 and 2020.

The remaining tranches did not vest as of May 31, 2021 and expired.

June 1, 2021, our Chairman, President and Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer were awarded

options for 2,000,000

shares and 100,000

shares of common stock, respectively, that vest

in four equal installments upon the Company’s share price achieving targets ranging from $ 5.00

per share, with implied service periods of three

to fifteen months.

The assumptions used in the Monte Carlo Simulation for the June 1, 2021 grants were stock price on date of grant of

contract term of 10

years, expected volatility of 75 %

and risk-free interest rate of 1.62 %.

We recorded stock-based compensation expense related to market condition stock options of approximately $ 1,981,000

for both the three and nine month periods

ended July 31, 2021.

We did not record any market condition stock-based compensation expense for these grants during the three and nine

month periods ended July 31, 2020.

As of July 31, 2021, the unrecognized compensation cost related to market condition stock options

was approximately $ 4,528,000

which will be recognized over future periods

through the fourth quarter of fiscal 2022.

compensation cost for service-based stock options granted to consultants is measured at the grant date, based on the fair value of the

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We recorded stock-based consulting expense related to stock options granted

to consultants of approximately $132,000 and $55,000 during the three months ended April 30, 2021 and 2020, respectively, and approximately

$186,000 and $112,000 during the six months ended April 30, 2021 and 2020, respectively.

the six months ended April 30, 2021, we had two stock option plans:

to consultants of approximately $ 139,000 and $ 45,000 during the three months ended July 31, 2021 and 2020, respectively, and approximately

$ 326,000 and $ 157,000 during the nine months ended July 31, 2021 and 2020, respectively.

the nine months ended July 31, 2021, we had two stock option plans:

the Anixa Biosciences, Inc.

2010 Share Incentive Plan (the “2010

Share Plan”) and the Anixa Biosciences, Inc.

2018 Share Incentive Plan (the “2018 Share Plan”), which were adopted

2010 Share Incentive Plan (the “2010

Share Plan”) and the Anixa Biosciences, Inc.

2018 Share Incentive Plan (the “2018 Share Plan”), which were adopted

by our Board of Directors on July 14, 2010 and January 25, 2018, respectively.

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the Anixa Biosciences, Inc.

2003 Share Incentive Plan (the “2003

Share Plan”), under which all outstanding options expired during the six months ended April 30, 2020.

2003 Share Incentive Plan (the “2003

Share Plan”), under which all outstanding options expired during the nine months ended July 31, 2020.

Option Activity

the three months ended April 30, 2021 and 2020, we granted options to purchase 250,000 shares and -0- shares of common stock, respectively,

and during the six months ended April 30, 2021 and 2020, we granted options to purchase 1,380,000 shares and 800,000 shares of common

the three months ended July 31, 2021 and 2020, we granted options to purchase 2,990,000 shares and - 0 - shares of common stock, respectively,

and during the nine months ended July 31, 2021 and 2020, we granted options to purchase 4,370,000 shares and 800,000 shares of common

stock, respectively, to employees and consultants, with exercise prices ranging from $ 2.83 to $ 5.30 per share, pursuant to the 2018 Share

During the three months ended April 30, 2021 and 2020, stock options to purchase 77,571 shares, net of 7,937 shares withheld on

a cashless exercise, and 25,000 shares of common stock, respectively, were exercised with aggregate proceeds of approximately $189,000

and $75,000, respectively.

During the six months ended April 30, 2021 and 2020, stock options to purchase 107,451 shares, net of 7,937

shares withheld on a cashless exercise, and 43,900 shares of common stock, respectively, were exercised with aggregate proceeds of approximately

$294,000 and $104,000, respectively.

During the three months ended July 31, 2021 and 2020, stock options to purchase - 0 - shares and 7,200 shares of common stock, respectively,

were exercised with aggregate proceeds of approximately $- 0 - and $ 19,000 , respectively.

During the nine months ended July 31, 2021 and

2020, stock options to purchase 107,451 shares, net of 7,937 shares withheld on a cashless exercise, and 51,100 shares of common stock,

respectively, were exercised with aggregate proceeds of approximately $ 294,000 and $ 122,000 , respectively.

2003 Share Plan provided for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and

2 unchanged sentences

respect to the ability to grant future awards on April 21, 2013.

regarding the 2003 Plan for the six months ended April 30, 2020 is as follows:

regarding the 2003 Plan for the nine months ended July 31, 2020 is as follows:

SCHEDULE OF OPTION ACTIVITY

Average Exercise

2 unchanged sentences

Forfeited/Expired

Options outstanding

and exercisable at

April 30, 2020

Options outstanding and exercisable at

July 31, 2020

Options outstanding at July 31, 2020

Options exercisable at July 31, 2020

2010 Share Plan provided for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and

2 unchanged sentences

respect to the ability to grant future awards on July 14, 2020.

regarding the 2010 Share Plan for the six months ended April 30, 2021 is as follows:

regarding the 2010 Share Plan for the nine months ended July 31, 2021 is as follows:

SCHEDULE OF OPTION ACTIVITY

Average Exercise

2 unchanged sentences

Forfeited/Expired

Options outstanding and exercisable at July 31, 2021

following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of July 31, 2021:

SCHEDULE OF OUTSTANDING AND EXERCISABLE

Exercise Prices

Weighted Average

Contractual Life

Exercise Price

$ .67 - $ 2.30

regarding the 2010 Share Plan for the nine months ended July 31, 2020 is as follows:

Weighted Average Exercise Price Per Share

Options outstanding at October 31, 2019

Forfeited/Expired

Options outstanding at July 31, 2020

Options exercisable at July 31, 2020

The following table summarizes

information about stock options outstanding and exercisable under the 2010 Share Plan as of July 31, 2020:

Options Outstanding

at April 30, 2021

Options Exercisable

at April 30, 2021

following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of April 30, 2021:

Average Remaining Contractual Life

Exercise Price

Average Remaining Contractual Life

Exercise Price

Range of Exercise Prices

Number Outstanding

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Number Exercisable

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

0.67 - $ 2.30

1 unchanged sentence

3.46 - $ 5.75

regarding the 2010 Share Plan for the six months ended April 30, 2020 is as follows:

2018 Share Plan

The 2018 Share Plan provides

for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, performance awards and

stock units to employees, directors and consultants.

As of July 31, 2021, the 2018 Share Plan had 1,257,937

shares available for future grants.

Information regarding the 2018

Share Plan for the nine months ended July 31, 2021 is as follows:

SCHEDULE OF OPTION ACTIVITY

Average Exercise

Price Per Share

Options outstanding

at October 31, 2019

Aggregate Intrinsic Value

Options outstanding at October 31, 2020

Forfeited/Expired

outstanding at April 30, 2020

exercisable at April 30, 2020

following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of April 30, 2020:

Average Remaining Contractual Life

Exercise Price

Average Remaining Contractual Life

$ 0.67 - $2.30

Options outstanding at July 31, 2021

Options exercisable at July 31, 2021

The following table summarizes

information about stock options outstanding and exercisable under the 2018 Share Plan as of July 31, 2021:

SCHEDULE OF OUTSTANDING AND EXERCISABLE

Options Outstanding

Options Exercisable

Range of Exercise Prices

Number Outstanding

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Number Exercisable

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

2.09 - $ 3.70

3.84 - $ 5.30

2018 Share Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards,

performance awards and stock units to employees, directors and consultants.

As of April 30, 2021, the 2018 Share Plan had 1,757,937 shares

available for future grants.

regarding the 2018 Share Plan for the six months ended April 30, 2021 is as follows:

Information regarding the 2018

Share Plan for the nine months ended July, 2020 is as follows:

SCHEDULE OF OPTION ACTIVITY

Average Exercise

Price Per Share

Intrinsic Value

Aggregate Intrinsic Value

Options outstanding at October 31, 2019

Forfeited/Expired

Options outstanding at April 30, 2021

Options exercisable at April 30, 2021

following table summarizes information about stock options outstanding and exercisable under the 2018 Share Plan as of April 30, 2021:

of Exercise Prices

Average Remaining Contractual Life

Average Exercise Price

Average Remaining Contractual Life

Average Exercise Price

regarding the 2018 Share Plan for the six months ended April 30, 2020 is as follows:

Options outstanding at July 31, 2020

Options exercisable at July 31, 2020

The following table summarizes

information about stock options outstanding and exercisable under the 2018 Share Plan as of July 31, 2020:

Options Outstanding

Options Exercisable

Range of Exercise Prices

Number Outstanding

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Number Exercisable

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

3.84 - $ 4.61

Non-Plan Options

In addition to options granted

under stock option plans, during the years ended October 31, 2012 and 2013, the Board of Directors approved the grant of stock options

to certain employees and directors (the “Non-Plan Options”).

Information regarding Non-Plan

Options for the nine months ended July 31, 2021 is as follows:

OF OPTION ACTIVITY

Average Exercise

Price Per Share

Intrinsic Value

Options outstanding at October 31, 2020

Options outstanding at April 30, 2020

Options exercisable at April 30, 2020

following table summarizes information about stock options outstanding and exercisable under the 2018 Share Plan as of April 30, 2020:

of Exercise Prices

Average Remaining Contractual Life

Weighted Average

Options outstanding and exercisable at

July 31, 2021

The following table summarizes

information about Non-Plan Options outstanding and exercisable as of July 31, 2021:

OF OUTSTANDING AND EXERCISABLE

Exercise Prices

Weighted Average Remaining Contractual Life

Exercise Price

Average Remaining Contractual Life

Average Exercise Price

addition to options granted under stock option plans, during the years ended October 31, 2012 and 2013, the Board of Directors approved

the grant of stock options to certain employees and directors (the “Non-Plan Options”).

regarding Non-Plan Options for the six months ended April;

30, 2021 is as follows:

Information regarding Non-Plan

Options for the nine months ended July 31, 2020 is as follows:

Average Exercise

Price Per Share

Options outstanding at October 31, 2020

Options outstanding

and exercisable at

April 30, 2021

following table summarizes information about Non-Plan Options outstanding and exercisable as of April 30, 2021:

Exercise Prices

Average Remaining Contractual Life

Exercise Price

regarding Non-Plan Options for the six months ended April 30, 2020 is as follows:

Weighted Average

Exercise Price Per Share

Intrinsic Value

Aggregate Intrinsic Value

Options outstanding at October 31, 2019

Options outstanding and exercisable at

following table summarizes information about Non-Plan Options outstanding and exercisable as of April 30, 2020:

July 31, 2020

The following table summarizes

information about Non-Plan Options outstanding and exercisable as of July 31, 2020:

Exercise Prices

Weighted Average

Contractual Life

Exercise Price

June 1, 2021, stock options to purchase 2,990,000 shares were granted under the 2018 Share Plan.

Each of our non-employee directors was

awarded options for 30,000 shares that vest over one year.

Our Lead Independent Director, our Chairman, President and Chief Executive

Officer and our Chief Operating Officer and Chief Financial Officer were awarded options for 200,000 shares, 500,000 shares and 100,000

shares, respectively, that vest over three years.

Further, our Chairman, President and Chief Executive Officer and our Chief Operating

Officer and Chief Financial Officer were awarded options for 2,000,000 shares and 100,000 shares, respectively, that vest in four equal

installments upon the Company’s share price achieving targets ranging from $5.00 to $8.00 per share.

May 8, 2018, a restricted stock award of 1,500,000 shares of common stock was granted under the 2018 Share Plan to our Chairman, President

and Chief Executive Officer.

The restricted stock award was to vest in its entirety upon achievement of a target trading price of $11.00

per share of the Company’s common stock before May 31, 2021.

The restricted stock award did not vest as of May 31, 2021.

For restricted

stock awards vesting upon achievement of a price target of our common stock we use a Monte Carlo Simulation in estimating the fair value

at grant date and recognize compensation cost over the implied service period (median time to vest).

We did not record any compensation

expense related to the restricted stock award during the six months ended April 30, 2021 and 2020.

Stock Purchase Plan

Company maintains the Anixa Biosciences, Inc.

Employee Stock Purchase Plan (the “ESPP”) which permits eligible employees

to purchase shares at not less than 85% of the market value of the Company’s common stock on the offering date or the purchase

date of the applicable offering period, whichever is lower.

The plan was adopted by our Board of Directors on August 13, 2018 and approved

by our shareholders on September 27, 2018.

During the six months ended April 30, 2021 and 2020, employees purchased 1,634 and 9,618 shares,

respectively, with aggregate proceeds of approximately $3,000 and $15,000, respectively.

October 30, 2020 we issued a warrant, expiring on October 30, 2025, to purchase 60,000 shares of common stock at $2.06 per share, vesting

over five months, to a consultant for investor relations services.

We recorded consulting expense of approximately $38,000 and $96,000,

respectively, during the three and six months ended April 30, 2021, based on the fair value of the warrant on the date of grant recognized

On May 8, 2018, a restricted

stock award of 1,500,000 shares of common stock was granted under the 2018 Share Plan to our Chairman, President and Chief Executive Officer.

The restricted stock award was to vest in its entirety upon achievement of a target trading price of $ 11.00 per share of the Company’s

common stock before May 31, 2021 .

The restricted stock award did not vest as of May 31, 2021 and expired.

For restricted stock awards

vesting upon achievement of a price target of our common stock we use a Monte Carlo Simulation in estimating the fair value at grant date

and recognize compensation cost over the implied service period (median time to vest).

We did not record any compensation expense related

to the restricted stock award during the nine months ended July 31, 2021 and 2020.

Employee Stock Purchase Plan

The Company maintains the Anixa

Biosciences, Inc.

Employee Stock Purchase Plan which permits eligible employees to purchase shares at not less than 85 % of the market

value of the Company’s common stock on the offering date or the purchase date of the applicable offering period, whichever is lower.

The plan was adopted by our Board of Directors on August 13, 2018 and approved by our shareholders on September 27, 2018.

During the nine

months ended July 31, 2021 and 2020, employees purchased 1,634 and 9,618 shares, respectively, with aggregate proceeds of approximately

$ 3,000 and $ 15,000 , respectively.

On October 30, 2020 we issued

a warrant, expiring on October

30, 2025 , to purchase 60,000

shares of common stock at $ 2.06

per share, vesting over five

months, to a consultant for investor relations services.

We recorded consulting expense of approximately $ -0-

and $ 96,000 ,

respectively, during the three and nine months ended July 31, 2021, based on the fair value of the warrant on the date of grant recognized

on a straight-line basis over the vesting period.

We did not record any consulting expense related to warrants during the three and six

months ended April 30, 2020.

discussed in Note 2, in connection with the March 25, 2021 public offering we issued to certain designees of the underwriter, as compensation,

warrants to purchase 300,000 shares of common stock at $6.5625 per share, expiring on March 22, 2026.

No warrants were issued during

the six-month period ended April 30, 2020.

of April 30, 2021, we also had warrants outstanding to purchase 500,000 shares of common stock at $5.03 per share, issued during fiscal

year 2017 and expiring on November 30, 2021.

record any consulting expense related to warrants during the three and nine months ended July 31, 2020.

As discussed in Note 2, in connection

with the March 25, 2021 public offering we issued to certain designees of the underwriter, as compensation, warrants to purchase 300,000

shares of common stock at $ 6.5625 per share, expiring on March 22, 2026 .

No warrants were issued during the nine month period ended July

As of July 31, 2021, we also

had warrants outstanding to purchase 500,000 shares of common stock at $ 5.03 per share, issued during fiscal year 2017 and expiring on

November 30, 2021 .

FAIR VALUE MEASUREMENTS

GAAP defines fair value and establishes a framework for measuring fair value.

We have categorized our financial assets and liabilities,

based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.

If the inputs

used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level

input that is significant to the fair value measurement of the instrument.

assets and liabilities recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs to the

valuation techniques as follows:

1 - Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active

market which we have the ability to access at the measurement date.

2 - Financial assets and liabilities whose values are based on quoted market prices in markets where trading occurs infrequently or whose

values are based on quoted prices of instruments with similar attributes in active markets.

Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both

unobservable and significant to the overall fair value measurement.

These inputs reflect management’s own assumptions about the

assumptions a market participant would use in pricing the asset and liabilities.

following table presents the hierarchy for our financial assets measured at fair value on a recurring basis as of April 30, 2021:

US GAAP defines fair value and

establishes a framework for measuring fair value.

We have categorized our financial assets and liabilities, based on the priority of the

inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.

If the inputs used to measure the financial

instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to

the fair value measurement of the instrument.

Financial assets and liabilities

recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs to the valuation techniques as

Level 1 - Financial assets and

liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market which we have the

ability to access at the measurement date.

Level 2 - Financial assets and

liabilities whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted

prices of instruments with similar attributes in active markets.

Level 3 – Financial assets

and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant

to the overall fair value measurement.

These inputs reflect management’s own assumptions about the assumptions a market participant

would use in pricing the asset and liabilities.

The following table presents

the hierarchy for our financial assets measured at fair value on a recurring basis as of July 31, 2021:

OF FAIR VALUE MEASUREMENTS

Money market funds:

Cash and cash

Cash and cash equivalents

Certificates of deposit:

2 unchanged sentences

Treasury bills and bonds:

Short-term investments

Total financial assets

following table presents the hierarchy for our financial assets measured at fair value on a recurring basis as of October 31, 2020:

The following table presents

the hierarchy for our financial assets measured at fair value on a recurring basis as of October 31, 2020:

Money market funds:

Cash and cash

Cash and cash equivalents

Certificates of deposit:

Cash and cash equivalents

Short-term investments

Total financial assets

non-financial assets that are measured on a non-recurring basis include our other assets which are measured using fair value techniques

whenever events or changes in circumstances indicate a condition of impairment exists.

The estimated fair value of prepaid expenses and

other current assets, accounts payable and accrued expenses approximates their individual carrying amounts due to the short-term nature

of these measurements.

Cash and cash equivalents are stated at carrying value which approximates fair value.

Our non-financial assets that

are measured on a non-recurring basis include our other assets which are measured using fair value techniques whenever events or changes

in circumstances indicate a condition of impairment exists.

The estimated fair value of prepaid expenses and other current assets, accounts

payable and accrued expenses approximates their individual carrying amounts due to the short-term nature of these measurements.

cash equivalents are stated at carrying value which approximates fair value.

ACCRUED EXPENSES

expenses consist of the following as of:

Accrued expenses consist of the

following as of:

OF ACCRUED EXPENSES

July 31, 2021

October 31, 2020

Payroll and related expenses

Accrued royalty and contingent legal fees

Accrued collaborative research and license

Accrued collaborative research and license expense

Accrued other

NET LOSS PER SHARE OF COMMON STOCK

net loss per common share (“Basic EPS”) is computed by dividing net loss by the weighted average number of common shares

Diluted net loss per common share (“Diluted EPS”) is computed by dividing net loss by the weighted average number

of common shares and dilutive common share equivalents and convertible securities then outstanding.

Diluted EPS for all periods presented

is the same as Basic EPS, as the inclusion of the effect of common share equivalents then outstanding would be anti-dilutive.

reason, excluded from the calculation of Diluted EPS for the six months ended April 30, 2021 and 2020, were stock options to purchase

8,813,626 and 8,382,234 shares, respectively, and warrants to purchase 860,000 and 500,000 shares, respectively.

Basic net loss per common share

(“Basic EPS”) is computed by dividing net loss by the weighted average number of common shares outstanding.

Diluted net loss

per common share (“Diluted EPS”) is computed by dividing net loss by the weighted average number of common shares and dilutive

common share equivalents and convertible securities then outstanding.

Diluted EPS for all periods presented is the same as Basic EPS,

as the inclusion of the effect of common share equivalents then outstanding would be anti-dilutive.

For this reason, excluded from the

calculation of Diluted EPS for the nine months ended July 31, 2021 and 2020, were stock options to purchase 10,303,626 and 8,101,658 shares,

respectively, and warrants to purchase 860,000 and 500,000 shares, respectively.

EFFECT OF RECENTLY ADOPTED AND ISSUED PRONOUNCEMENTS

February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02 (“ASU 2016-02”)

Accounting Standards Codification Topic 842, Leases (“ASC 842”), which supersedes Topic 840, Leases, and which requires lessees

to recognize most leases on the balance sheet.

In February 2016, the Financial

Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02 (“ASU 2016-02”) Accounting Standards Codification

Topic 842, Leases (“ASC 842”), which supersedes Topic 840, Leases, and which requires lessees to recognize most leases on

the balance sheet.

The new lease standard does not substantially change lessor accounting.

For public companies,

the standard was effective for the first interim reporting period within annual periods beginning after December 15, 2018, although early

adoption was permitted.

Lessees and lessors were required to apply the new standard at the beginning of the earliest period presented

in the financial statements in which they first apply the new guidance.

In July 2018, FASB issued ASU 2018-11, Leases, which provides

an additional transition option for an entity to apply the provisions of ASC 842 by recognizing a cumulative effect adjustment at the

effective date of adoption without adjusting the prior comparative periods presented.

The requirements of this standard include a significant

increase in required disclosures.

For public companies, the standard was effective

for the first interim reporting period within annual periods beginning after December 15, 2018, although early adoption was permitted.

Lessees and lessors were required to apply the new standard at the beginning of the earliest period presented in the financial statements

in which they first apply the new guidance.

In July 2018, FASB issued ASU 2018-11, Leases, which provides an additional transition option

for an entity to apply the provisions of ASC 842 by recognizing a cumulative effect adjustment at the effective date of adoption without

adjusting the prior comparative periods presented.

The requirements of this standard include a significant increase in required disclosures.

The Company adopted ASU 2016-02 on November 1, 2019.

The adoption of this standard did not have a material

impact on our condensed consolidated financial statements.

See Note 9 regarding the accounting and disclosures related to our office

recognize deferred tax assets and liabilities for the estimated future tax effects of events that have been recognized in our financial

statements or tax returns.

Under this method, deferred tax assets and liabilities are determined based on the difference between the

financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are

expected to reverse.

A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be

We have provided a full valuation allowance against our deferred tax asset due to our historical pre-tax losses and the uncertainty

regarding the realizability of these deferred tax assets.

have substantial net operating loss carryforwards for Federal and California income tax returns.

These net operating loss carryforwards

could be subject to limitations under Internal Revenue Code section 382.

We have no unrecognized income tax benefits as of April 30,

2021 and October 31, 2020 and we account for interest and penalties related to income tax matters, if any, in general and administrative

lease approximately 2,000 square feet of office space at 3150 Almaden Expressway, San Jose, California (our principal executive offices)

from an unrelated party pursuant to an operating lease that expires September 30, 2021.

Our base rent is approximately $5,000 per month

and the lease provides for annual increases of approximately 3% and an escalation clause for increases in certain operating costs.

expense was approximately $16,000 and $16,000, respectively, for the three months ended April 30, 2021 and 2020, and approximately $32,000

and $32,000, respectively, for the six months ended April 30, 2021 and 2020.

November 1, 2019, the Company adopted ASC 842, which increases transparency and comparability by recognizing a lessee’s rights

and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities.

The new guidance

requires the recognition of the right-of-use (“ROU”) assets and related operating lease liabilities on the balance sheet.

The Company adopted the new guidance using the modified retrospective approach on November 1, 2019.

operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments.

The remaining

5-month lease term as of April 30, 2021 for the Company’s lease includes the noncancelable period of the lease.

The lease does

not contain a Company option to extend the lease or an option to extend the lease controlled by the lessor.

All ROU assets are reviewed

for impairment.

sheet information related to the Company’s lease is presented below:

The adoption of this standard did not have a material impact on our condensed consolidated

financial statements.

See Note 9 regarding the accounting and disclosures related to our office lease.

In January 2020, the FASB issued

Accounting Standards Update 2020-01 (“ASU 2020-01”) Investments-Equity Securities (Topic 321), Investments-Equity Method and

Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815).

The amendments in ASU 2020-01 clarify certain interactions between

the guidance to account for certain equity securities under Topic 321, the guidance to account for investments under the equity method

of accounting in Topic 323, and the guidance in Topic 815, which could change how an entity accounts for an equity security under the

measurement alternative or a forward contract or purchased option to purchase securities that, upon settlement of the forward contract

or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option in accordance

with Topic 825, Financial Instruments.

These amendments improve current GAAP by reducing diversity in practice and increasing comparability

of the accounting for these interactions.

The amendments in this update are effective for fiscal years beginning after December 15, 2020,

and interim periods within those fiscal years.

The adoption of this standard will not have a material impact on our disclosures or consolidated

financial statements.

We recognize deferred tax assets

and liabilities for the estimated future tax effects of events that have been recognized in our financial statements or tax returns.

this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases

of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

We have provided a full

valuation allowance against our deferred tax asset due to our historical pre-tax losses and the uncertainty regarding the realizability

of these deferred tax assets.

We have substantial net operating

loss carryforwards for Federal and California income tax returns.

These net operating loss carryforwards could be subject to limitations

under Internal Revenue Code section 382.

We have no unrecognized income tax benefits as of July 31, 2021 and October 31, 2020 and we account

for interest and penalties related to income tax matters, if any, in general and administrative expenses.

We lease approximately 2,000

square feet of office space at 3150 Almaden Expressway, San Jose, California (our principal executive offices) from an unrelated party

pursuant to an operating lease that expires September 30, 2021 .

Our base rent is approximately $ 5,000 per month and the lease provides

for annual increases of approximately 3 % and an escalation clause for increases in certain operating costs.

Rent expense was approximately

$ 16,000 and $ 16,000 , respectively, for the three months ended July 31, 2021 and 2020, and approximately $ 48,000 and $ 48,000 , respectively,

for the nine months ended July 31, 2021 and 2020.

On November 1, 2019, the Company

adopted ASC 842, which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from

leases by recording them on the balance sheet as lease assets and lease liabilities.

The new guidance requires the recognition of the

right-of-use (“ROU”) assets and related operating lease liabilities on the balance sheet.

The Company adopted the new guidance

using the modified retrospective approach on November 1, 2019.

For operating leases, the lease

liability is initially and subsequently measured at the present value of the unpaid lease payments.

The remaining 2 -month lease term as

of July 31, 2021 for the Company’s lease includes the noncancelable period of the lease.

The lease does not contain a Company option

to extend the lease or an option to extend the lease controlled by the lessor.

All ROU assets are reviewed for impairment.

Balance sheet information related

to the Company’s lease is presented below:

OF OPERATING LEASE

Balance Sheet Location

July 31, 2021

October 31, 2020

Operating Lease:

Right-of-use asset

Operating lease right-of-use asset

Right-of-use liability,

Right-of-use liability, current

Operating lease liability

of April 30, 2021, the annual minimum lease payments of our operating lease liabilities were as follows:

As of July 31, 2021, the annual

minimum lease payments of our operating lease liabilities were as follows:

OF MINIMUM LEASE PAYMENTS

Operating Leases

2021 future minimum payments, undiscounted

Imputed interest

value of future minimum lease payments

COMMITMENTS AND CONTINGENCIES

are not involved in any litigation or other legal proceedings and management is not aware of any pending litigation or legal proceeding

against us that would have a material adverse effect upon our results of operations or financial condition.

of Coronavirus Pandemic

March 10, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

The virus and actions taken to mitigate its

spread have had and are expected to continue to have a broad adverse impact on the economies and financial markets of many countries,

including the geographical areas in which the Company operates and conducts its business, and which the Company’s partners operate

and conduct their business.

We are currently following the recommendations of local health authorities to minimize exposure risk for

our team members and visitors.

However, while the outlook is improving, and there has been a loosening of restrictions in many of the

areas in which we and our partners operate and conduct our business, the scale and scope of this pandemic is unknown, and the duration

of the business disruption and related financial impact cannot be reasonably estimated at this time.

While we have implemented specific

business, continuity plans to reduce the potential impact of COVID-19, there is no guarantee that our continuity plans will be successful.

have experienced certain disruptions to our business such as temporary closure of our offices and similar disruptions have occurred for

our partners.

Specifically, the outbreak has caused temporary shutdowns of the laboratories and other service providers that we rely

on to develop our programs, and those laboratories and service providers that have been operating or that have begun operating recently

have been doing so with more limited capacity due to social distancing requirements.

As a result, our progress has been slowed and there

is no assurance that we will be able to meet our previously announced timelines regarding the advancement of our programs.

extent to which COVID-19 or any other health epidemic may impact our results will depend on future developments, which are highly uncertain

and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19

or treat its impact, among others.

Accordingly, COVID-19 could have a material adverse effect on our business, results of operations,

financial condition and prospects.

Present value of future minimum lease payments

In August 2021 the lease was extended

until September 30, 2024 under substantially the same terms as the existing lease.

COMMITMENTS AND CONTINGENCES

Litigation Matters

We are not involved in any litigation

or other legal proceedings and management is not aware of any pending litigation or legal proceeding against us that would have a material

adverse effect upon our results of operations or financial condition.

Impact of Coronavirus Pandemic

On March 10, 2020, the World

Health Organization declared the COVID-19 outbreak a pandemic.

The virus and actions taken to mitigate its spread have had and are expected

to continue to have a broad adverse impact on the economies and financial markets of many countries, including the geographical areas

in which the Company operates and conducts its business, and which the Company’s partners operate and conduct their business.

are currently following the recommendations of local health authorities to minimize exposure risk for our team members and visitors.

while the outlook is improving, and there has been a loosening of restrictions in many of the areas in which we and our partners operate

and conduct our business, the scale and scope of this pandemic is unknown, and the duration of the business disruption and related financial

impact cannot be reasonably estimated at this time.

While we have implemented specific business continuity plans to reduce the potential

impact of COVID-19, there is no guarantee that our continuity plans will be successful.

We have experienced certain disruptions

to our business such as temporary closure of our offices and similar disruptions have occurred for our partners.

Specifically, the outbreak

has caused temporary shutdowns of the laboratories and other service providers that we rely on to develop our programs, and those laboratories

and service providers that have been operating or that have begun operating recently have been doing so with more limited capacity due

to social distancing requirements.

As a result, our progress has been slowed and there is no assurance that we will be able to meet our

previously announced timelines regarding the advancement of our programs.

The extent to which COVID-19

or any other health epidemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted,

including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact,

among others.

Accordingly, COVID-19 could have a material adverse effect on our business, results of operations, financial condition and

SEGMENT INFORMATION

follow the accounting guidance of ASC 280 “Segment Reporting”

(“ASC 280”).

Reportable operating segments are

determined based on the management approach.

The management approach, as defined by ASC 280, is based on the way that the chief operating

decision-maker organizes the segments within an enterprise for making operating decisions and assessing performance.

While our results

of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker manages the enterprise in five reportable

segments, each with different operating and potential revenue generating characteristics:

(i) CAR-T Therapeutics, (ii) Cancer Vaccines,

(iii) Anti-Viral Therapeutics, (iv) Cancer Diagnostics and (v) Patent Licensing activities.

The following represents selected financial

information for our segments for the three and six months ended April 30, 2021 and 2020 and as of April 30, 2021 and October 31, 2020:

the Three Months Ended

the Six Months Ended

We follow the accounting guidance

of ASC 280 “Segment Reporting” (“ASC 280”).

Reportable operating segments are determined based on the management

The management approach, as defined by ASC 280, is based on the way that the chief operating decision-maker organizes the segments

within an enterprise for making operating decisions and assessing performance.

While our results of operations are primarily reviewed

on a consolidated basis, the chief operating decision-maker manages the enterprise in five reportable segments, each with different operating

and potential revenue generating characteristics:

(i) CAR-T Therapeutics, (ii) Cancer Vaccines, (iii) Anti-Viral Therapeutics, (iv) Cancer

Diagnostics and (v) Patent Licensing activities.

The following represents selected financial information for our segments for the three

and nine months ended July 31, 2021 and 2020 and as of July 31, 2021 and October 31, 2020:

OF SEGMENT INFORMATION

For the Three Months Ended

For the Nine Months Ended

Net Income/(Loss):

CAR-T Therapeutics

$ (1,445,758 )

$ (2,406,494 )

$ (1,125,363 )

Cancer Vaccines

1 unchanged sentence

Cancer Diagnostics

$ (2,436,889)

$ (2,657,990 )

$ (4,669,266 )

$ (5,274,565 )

Patent Licensing

Net Income/(Loss)

Total operating costs and expenses

Less non-cash share-based

(1,110,086 ))

costs and expenses

Less non-cash share-based compensation

Operating costs and expenses

excluding non-cash share-based

Operating costs and expenses excluding

share based compensation:

non-cash share-based compensation:

CAR-T Therapeutics

2 unchanged sentences

Cancer Diagnostics

Patent Licensing

Operating costs and expenses excluding non-cash share-based compensation

Total assets:

3 unchanged sentences

Cancer Diagnostics

costs and expenses excluding non-cash share-based compensation expense is the measurement the chief operating decision-maker uses in

managing the enterprise.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

included in this Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of

Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange

Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning

future events and results.

We generally use the words “believes,”

“expects,”

“intends,”

“plans,”

“anticipates,”

“likely,”

“will”

and similar expressions to identify forward-looking statements.

forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which

are beyond our control, which may cause our actual results, performance or achievements, or industry results, to be materially different

from any future results, performance or achievements expressed or implied by such forward-looking statements.

These risks, uncertainties

and factors include, but are not limited to, those factors set forth in our Annual Report on Form 10-K for the fiscal year ended October

31, 2020 and the condensed consolidated financial statements included in this Report.

Except as required by applicable law, including

the securities laws of the United States, we undertake no obligation to publicly update or revise any forward-looking statements, whether

as a result of new information, future events or otherwise.

You are cautioned not to unduly rely on such forward-looking statements when

evaluating the information presented in this Report.

discuss the description of our business in the Notes to our Condensed Consolidated Financial Statements.

OF OPERATIONS

months ended April 30, 2021 compared with three months ended April 30, 2020

the past several years, our revenue was derived from technology licensing and the sale of patented technologies, including revenue from

the settlement of litigation.

We have not generated any revenue to date from our therapeutics or vaccine programs.

In addition, while

we pursue our therapeutics and vaccine programs, we may also make investments in and form new companies to develop additional emerging

technologies.

We do not expect to begin generating revenue with respect to any of our current therapy or vaccine programs in the near

We hope to achieve a profitable outcome by eventually licensing our technologies to large pharmaceutical companies that have the

resources and infrastructure in place to manufacture, market and sell our technologies as therapeutics or vaccines.

The eventual licensing

of any of our technologies may take several years, if it is to occur at all, and may depend on positive results from human clinical trials.

had no revenue during the three-month periods ended April 30, 2021 and 2020.

Royalties, Contingent Legal Fees, Litigation and Licensing Expenses

had no inventor royalties, contingent legal fees, litigation and licensing expenses during the three-month periods ended April 30, 2021

and Development Expenses

and development expenses incurred in the three months ended April 30, 2021 associated with each of our development programs consisted

of approximately $548,000 for CAR-T therapeutics, approximately $336,000 for cancer vaccines, approximately $118,000 for anti-viral therapeutics

and $-0- for cancer diagnostic.

and development expenses are related to the development of our cancer therapeutics, vaccine and diagnostics programs and our anti-viral

drug program, and decreased by approximately $207,000 to approximately $1,022,000 in the three months ended April 30, 2021, from approximately

$1,229,000 in the three months ended April 30, 2020.

The decrease in research and development expenses was primarily due to a decrease

in outside research and development expense related to our cancer diagnostics program of approximately $305,000 and decreases in employee

compensation and related costs, other than stock option compensation expense, of approximately $124,000 and employee stock option compensation

expense of approximately $89,000, all due to the suspension of development of our cancer diagnostics program.

In addition, no license

payments related to our collaborative agreement with OntoChem concerning discovery and development of anti-viral drugs for COVID-19 were

required in the current period compared to approximately $111,000 in the prior year period.

These decreases in expenses were offset by

an increase in research and development expenses related to our other development programs of approximately $331,000 and an increase

in consultant stock option and warrant expense of approximately $78,000.

and Administrative Expenses

and administrative expenses decreased by approximately $26,000 to approximately $1,415,000 in the three months ended April 30, 2021,

from approximately $1,441,000 in the three months ended April 30, 2020.

The decrease in general and administrative expenses was primarily

due to a decrease in employee compensation and related costs, other than stock option expense, of approximately $100,000, a decrease

in consultant expense of approximately $78,000, a decrease in director compensation of approximately $38,000, offset by an increase in

patent expense of approximately $110,000, an increase in shareholder relations expense of approximately $54,000 and an increase in corporate

insurance expense of approximately $25,000.

income decreased by approximately $12,000 to less than $1,000 in the three months ended April 30, 2021, from approximately $12,000 in

the comparable prior year period as a result of a decrease in interest rates.

Loss Attributable to Noncontrolling Interest

net loss attributable to noncontrolling interest, representing Wistar’s 5% ownership interest in Certainty’s net loss, was

approximately $38,000 and $18,000, respectively, in the three months ended April 30, 2021 and 2020.

months ended April 30, 2021 compared with six months ended April 30, 2020

the six months ended April 30, 2021, we recorded revenue of approximately $513,000 from one license agreement.

The license agreement

provided for a one-time, non-recurring, lump sum payment in exchange for a non-exclusive retroactive and future license, and covenant

Pursuant to the terms of the agreement, we have no further obligations with respect to the granted intellectual property

rights, including no obligation to maintain or upgrade the technology, or provide future support or services.

Accordingly, the performance

obligations from this license agreement were satisfied and 100% of the revenue was recognized upon execution of the license agreement.

As discussed in Note 1 to our condensed consolidated financial statements, as part of our legacy operations, the Company remains engaged

in limited patent licensing activities which we do not expect to be a significant part of our ongoing operations or revenue.

had no revenue during the six-month period ended April 30, 2020.

Royalties, Contingent Legal Fees, Litigation and Licensing Expenses

royalties, contingent legal fees, litigation and licensing expenses increased to approximately $385,000 in the six months ended April

30, 2021 from $-0- in the six months ended April 30, 2020.

The increase was primarily due to the increase in related revenues.

royalties and contingent legal fees are expensed in the period that the related revenues are recognized.

Litigation and licensing expenses

related to patent assertion, other than contingent legal fees, are expensed in the period incurred.

and Development Expenses

and development expenses incurred in the six months ended April 30, 2021 associated with each of our development programs consisted of

approximately $910,000 for CAR-T therapeutics, approximately $630,000 for cancer vaccines, approximately $288,000 for anti-viral therapeutics

and approximately $2,000 for cancer diagnostic.

and development expenses are related to the development of our cancer therapeutics, vaccine and diagnostics programs and our anti-viral

drug program, and decreased by approximately $869,000 to approximately $1,850,000 in the six months ended April 30, 2021, from approximately

$2,719,000 in the six months ended April 30, 2020.

The decrease in research and development expenses was primarily due to a decrease

in outside research and development expense related to our cancer diagnostics program of approximately $816,000 and decreases in employee

compensation and related costs, other than stock option compensation expense, of approximately $394,000 and employee stock option compensation

expense of approximately $194,000, all due to the suspension of development of our cancer diagnostics program.

These expense reductions

were offset by an increase in research and development expenses related to our other development programs of approximately $428,000 and

an increase in consultant expense of approximately $51,000.

and Administrative Expenses

and administrative expenses increased by approximately $367,000 to approximately $2,948,000 in the six months ended April 30, 2021, from

approximately $2,581,000 in the six months ended April 30, 2020.

The increase in general and administrative expenses was primarily due

to non-recurring income in the prior year period resulting from the discharge in January 2020 of a disputed liability of approximately

$337,000 upon the expiration of the vendor’s statutory right to pursue collection of the disputed liability, an increase in patent

expense of approximately $186,000, an increase in corporate insurance expense of approximately $47,000, an increase in directors compensation

of approximately $43,000, offset by a decrease in employee compensation and related costs, other than stock option compensation expense,

of approximately $248,000.

income decreased by approximately $24,000 to approximately $1,000 in the six months ended April 30, 2021, from approximately $25,000

in the comparable prior year period as a result of a decrease in interest rates.

Loss Attributable to Noncontrolling Interest

net loss attributable to noncontrolling interest, representing Wistar’s 5% ownership interest in Certainty’s net loss, was

approximately $62,000 and $42,000, respectively, in the six months ended April 30, 2021 and 2020.

AND CAPITAL RESOURCES

primary sources of liquidity are cash, cash equivalents and short-term investments.

on currently available information as of June 10, 2021, we believe that our existing cash, cash equivalents, short-term investments and

expected cash flows will be sufficient to fund our activities for at least the next twelve months.

We have implemented a business model

that conserves funds by collaborating with third parties to develop our technologies.

However, our projections of future cash needs and

cash flows may differ from actual results.

If current cash on hand, cash equivalents, short-term investments and cash that may be generated

from our business operations are insufficient to continue to operate our business, or if we elect to invest in or acquire a company or

companies or new technology or technologies that are synergistic with or complementary to our technologies, we may be required to obtain

more working capital.

During the six months ended April 30, 2021, we raised approximately $20,292,000, net of expenses, through a public

offering in which we sold an aggregate of 4,285,715 shares of common stock and approximately $10,834,000, net of expenses, through our

at-the-market equity program in which we sold an aggregate of 2,806,410 shares of common stock.

Under our at-the-market equity program

which is currently effective and may remain available for us to use in the future, as of April 30, 2021, we may sell an additional approximately

$29.6 million of common stock.

We may seek to obtain working capital during our fiscal year 2021 or thereafter through sales of our equity

securities or through bank credit facilities or public or private debt from various financial institutions where possible.

be certain that additional funding will be available on acceptable terms, or at all.

If we do identify sources for additional funding,

the sale of additional equity securities or convertible debt will result in dilution to our stockholders.

We can give no assurance that

we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future operations, or that other

sources of funding, such as sales of equity or debt, would be available or would be approved by our security holders, if needed, on favorable

terms or at all.

If we fail to obtain additional working capital as and when needed, such failure could have a material adverse impact

on our business, results of operations and financial condition.

Furthermore, such lack of funds may inhibit our ability to respond to

competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would significantly harm the

business and development of operations.

the six months ended April 30, 2021, cash used in operating activities was approximately $2,412,000.

Cash used in investing activities

was approximately $7,724,000, resulting from the purchase of short-term investments of approximately $10,399,000, which was offset by

the proceeds on maturities of short-term investments of approximately $2,640,000 and the proceeds from the sale of equipment of approximately

Cash provided by financing activities was approximately $31,422,000, resulting from net proceeds of approximately $20,292,000

from a public offering of 4,285,715 shares of common stock, the sale of 2,806,410 shares of common stock in an at-the-market equity offering

of approximately $10,834,000, proceeds from exercise of stock options of approximately $294,000 and proceeds from the sale of common

stock pursuant to employee stock purchase plan of approximately $3,000.

As a result, our cash, cash equivalents, and short-term investments

at April 30, 2021 increased approximately $29,046,000 to approximately $38,103,000 from approximately $9,057,000 at the end of fiscal

ACCOUNTING POLICIES

Company’s condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted

in the United States of America.

In preparing these financial statements, we make assumptions, judgments and estimates that can have

a significant impact on amounts reported in our condensed consolidated financial statements.

We base our assumptions, judgments and estimates

on historical experience and various other factors that we believe to be reasonable under the circumstances.

Actual results could differ

materially from these estimates under different assumptions or conditions.

On a regular basis, we evaluate our assumptions, judgments

and estimates and make changes accordingly.

believe that, of the significant accounting policies discussed in Note 2 to our consolidated financial statements in our Annual Report

on Form 10-K for the fiscal year ended October 31, 2020, the following accounting policies require our most difficult, subjective or

complex judgments:

revenue has been derived solely from technology licensing and the sale of patented technologies.

Revenue is recognized upon transfer

of control of intellectual property rights and satisfaction of other contractual performance obligations to licensees in an amount that

reflects the consideration we expect to receive.

follow the accounting guidance of Accounting Standards Codification 606 (“ASC 606”), Revenue from Contracts with Customers.

In accordance with ASC 606 we are required to make certain judgments and estimates in connection with the accounting for revenue.

judgments and estimates may include determining the existence of a contract and identifying each party’s rights and obligations

to transfer goods and services, identifying the performance obligations in the contract, determining the transaction price and allocating

the transaction price to separate performance obligations, estimating the timing of satisfaction of performance obligations, determining

whether a promise to grant a license is distinct from other promised goods or services and evaluating whether a license transfers to

a customer at a point in time or over time.

revenue arrangements provide for the payment, within 30 days of execution of the agreement, of contractually determined, one-time, paid-up

license fees in settlement of litigation and in consideration for the grant of certain intellectual property rights for patented technologies

owned or controlled by the Company.

These arrangements typically include some combination of the following:

(i) the grant of a non-exclusive,

retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by the Company,

(ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation.

In such instances, the intellectual property rights granted have been perpetual in nature, extending until the expiration of the related

Pursuant to the terms of these agreements, we have no further obligations with respect to the granted intellectual property

rights, including no obligation to maintain or upgrade the technology, or provide future support or services.

Licensees obtained control

of the intellectual property rights they have acquired upon execution of the agreement.

Accordingly, the performance obligations from

these agreements were satisfied and 100% of the revenue was recognized upon the execution of the agreements.

compensation cost for service-based stock options granted to employees, directors and consultants is measured at the grant date, based

on the fair value of the award using the Black-Scholes pricing model, and is recognized as an expense on a straight-line basis over the

requisite service period (the vesting period of the stock option) which is one to four years.

For employee options vesting if the trading

price of the Company’s common stock achieves certain price targets we use a Monte Carlo Simulation in estimating the fair value

at grant date and recognize compensation cost over the implied service period.

restricted stock awards vesting upon achievement of a price target of our common stock we use a Monte Carlo Simulation in estimating

the fair value at grant date and recognize compensation cost over the implied service period (median time to vest).

Black-Scholes pricing model and the Monte Carlo Simulation we use to estimate fair value requires valuation assumptions of expected term,

expected volatility, risk-free interest rates and expected dividend yield.

The expected term of stock options represents the weighted

average period the stock options are expected to remain outstanding.

For employees we use the simplified method, which is a weighted

average of the vesting term and contractual term, to determine expected term.

The simplified method was adopted since we do not believe

that historical experience is representative of future performance because of the impact of the changes in our operations and the change

in terms from historical options.

For consultants we use the contract term for expected term.

Under the Black-Scholes pricing model,

we estimated the expected volatility of our shares of common stock based upon the historical volatility of our share price over a period

of time equal to the expected term of the grants.

We estimated the risk-free interest rate based on the implied yield available on the

applicable grant date of a U.S.

Treasury note with a term equal to the expected term of the underlying grants.

We made the dividend yield

assumption based on our history of not paying dividends and our expectation not to pay dividends in the future.

will reconsider use of the Black-Scholes pricing model and the Monte Carlo Simulation if additional information becomes available in

the future that indicates another model would be more appropriate.

If factors change and we employ different assumptions in future periods,

the compensation expense that we record may differ significantly from what we have recorded in the current period.

OF RECENTLY ISSUED PRONOUNCEMENTS

do not believe that any of the recently issued accounting pronouncements will have a material effect on the Company’s consolidated

financial statements.

Patent Licensing

Operating costs and expenses

excluding non-cash share-based compensation expense is the measurement the chief operating decision-maker uses in managing the enterprise.

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