Anixa Biosciences Inc 10-K

Item 9A. Controls and Procedures. Disclosure Controls and Procedures We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and our President, Chief Operating Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 and 15d-15 of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and our President, Chief Operating Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of fiscal year 2022. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our management, including the principal executive officer and principal financial officer, does not expect that our internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, cannot provide full assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. 39 Under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, we conducted an evaluation as to the effectiveness of our internal control over financial reporting as of October 31, 2022. In making this assessment, our management used the criteria for effective internal control set forth by the Committee of Sponsoring Organizations of the Treadway Commission in the 2013 Internal Control – Integrated Framework . Based on this assessment, our management concluded that our internal control over financial reporting was effective as of October 31, 2022. This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to a permanent exemption of the Commission that permits the Company to provide only management’s report in this Annual Report on Form 10-K. Accordingly, our management’s assessment of the effectiveness of our internal control over financial reporting as of October 31, 2022 has not been audited by our auditors, Haskell & White LLP. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during the fourth quarter of fiscal year 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Item 9B. Other Information. None. PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this Item will be set forth in our Proxy Statement for the 2023 Annual Meeting of Stockholders scheduled for March 9, 2023 which such Proxy Statement will be filed with the SEC within 120 days of October 31, 2022, and will be incorporated into this Annual Report on Form 10-K by reference. Item 11. Executive Compensation. The information required by this Item will be set forth in our Proxy Statement for the 2023 Annual Meeting of Stockholders scheduled for March 9, 2023 which such Proxy Statement will be filed with the SEC within 120 days of October 31, 2022, and will be incorporated into this Annual Report on Form 10-K by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item will be set forth in our Proxy Statement for the 2023 Annual Meeting of Stockholders scheduled for March 9, 2023 which such Proxy Statement will be filed with the SEC within 120 days of October 31, 2022, and will be incorporated into this Annual Report on Form 10-K by reference. 40 Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item will be set forth in our Proxy Statement for the 2023 Annual Meeting of Stockholders scheduled for March 9, 2023 which such Proxy Statement will be filed with the SEC within 120 days of October 31, 2022, and will be incorporated into this Annual Report on Form 10-K by reference. Item 14. Principal Accounting Fees and Services . The information required by this Item will be set forth in our Proxy Statement for the 2023 Annual Meeting of Stockholders scheduled for March 9, 2023 which such Proxy Statement will be filed with the SEC within 120 days of October 31, 2022, and will be incorporated into this Annual Report on Form 10-K by reference. PART IV Item 15. Exhibits, Financial Statement Schedules. (a)(1)(2) Financial Statement Schedules See accompanying “Index to Consolidated Financial Statements.” (b) Exhibits 3.1 Certificate of Incorporation, as amended. (Incorporated by reference to Form 10-Q for the fiscal quarter ended July 31, 1992 and Form S-3, dated February 11, 2014.) 3.2 Amendment to the Certificate of Incorporation. (Incorporated by reference to Exhibit 3.2 to our Form 10-K for the fiscal year ended October 31, 2013.) 3.3 Certificate of Amendment to the Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 to our Form 8-K, dated September 4, 2014.) 3.4 Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock. (Incorporated by reference to Exhibit 3.1 to our Form 8-K, dated September 10, 2014.) 3.5 Certificate of Amendment to the Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 to our Form 8-K, dated June 25, 2015.) 3.6 Certificate of Amendment to the Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 to our Form 10-Q for the fiscal quarter ended April 30, 2018.) 3.7 Certificate of Amendment to the Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 to our Form 8-K, dated October 1, 2018.) 3.8 Certificate of Amendment to the Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 to our Form 8-K, dated August 13, 2020.) 3.9 Amended and Restated By-laws. (Incorporated by reference to Exhibit 3.8 to our Form 10-K for the fiscal year ended October 31, 2019.) 3.10 Amendment to the Amended and Restated Bylaws of the Company. (Incorporated by reference to our Form 8-K, dated April 2, 2021.) 4.1 Form of Underwriter Warrants. (Incorporated by reference to Exhibit 4.1 to our Form 8-K, dated March 24, 2021.) 41 4.2 Description of the Company’s Securities Registered under Section 12 of the Exchange Act (Incorporated by reference to the description of our common stock contained in our Current Report on Form 8-K filed on March 31, 2014.) 10.1 2010 Share Incentive Plan. (Incorporated by reference to Exhibit 10.1 to our Form 8-K, dated July 20, 2010.) 10.2 Amendment No. 1 to the 2010 Share Incentive Plan. (Incorporated by reference to Exhibit 10.1 to our Form 8-K, dated July 7, 2011.) 10.3 Amendment No. 2 to the 2010 Share Incentive Plan. (Incorporated by reference to Exhibit 10.1 to our Form 8-K, dated September 5, 2012.) 10.4 Amendment No. 3 to the 2010 Share Incentive Plan. (Incorporated by reference to Exhibit 10.1 to our Form 10-Q for the fiscal quarter ended January 31, 2014.) 10.5 2018 Share Incentive Plan. (Incorporated by reference to Exhibit 4.13 to our Form S-8 dated October 1, 2018.) 10.6 License Agreement, dated November 13, 2017, between Certainty Therapeutics, Inc. and The Wistar Institute of Anatomy and Biology. (Incorporated by reference to Exhibit 10.14 to our Form 10-K, dated January 9, 2018.) (Portions of this exhibit have been redacted pursuant to a request for confidential treatment. The redacted portions have been separately filed with the Securities and Exchange Commission.) 10.7 Amendment to License Agreement between Certainty Therapeutics, Inc. and The Wistar Institute of Anatomy and Biology. (Incorporated by reference to Exhibit 10.1 to our Form 10-Q for the fiscal quarter ended January 31, 2021.) (Certain information has been redacted in the marked portions of the exhibit.) 10.8 Amended and Restated Master Collaboration Agreement, dated November 1, 2021, between Certainty Therapeutics, Inc. and H. Lee Moffitt Cancer Center and Research Institute, Inc. (Incorporated by reference to Exhibit 10.8 to our Form 10-K for the fiscal year ended October 31, 2021.) 10.9 Exclusive License Agreement, dated July 8, 2019, between the Company and The Cleveland Clinic Foundation. (Incorporated by reference to Exhibit 10.1 to our Form 10-Q for the fiscal quarter ended July 31, 2019.) (Certain information has been redacted in the marked portions of the exhibit.) 10.10 Collaboration Agreement, dated April 14, 2020, between the Company and OntoChem GmbH. (Incorporated by reference to Exhibit 10.1 to our Form 10-Q for the fiscal quarter ended April 30, 2020.) (Certain information has been redacted in the marked portions of the exhibit.) 10.11 Amendment to Collaboration Agreement between the Company and OntoChem GmbH. (Incorporated by reference to Exhibit 10.13 to our Form 10-K, for the fiscal year ended October 31, 2020.) 10.12 Assignment Agreement dated May 1, 2021, between the Company, OntoChem GmbH and MolGenie GmbH. (Incorporated by reference to Exhibit 10.1 to our Form 10-Q for the fiscal quarter ended April 30, 2021.) 10.13 Amendment 2 to the Collaboration Agreement between the Company and MolGenie GmbH. (Incorporated by reference to Exhibit 10.2 to our Form 10-Q for the fiscal quarter ended April 30, 2021.) (Certain information has been redacted in the marked portions of the exhibit.) 10.14 Exclusive License Agreement, dated October 20, 2020, between the Company and The Cleveland Clinic Foundation. (Incorporated by reference to Exhibit 10.14 to our Form 10-K, for the fiscal year ended October 31, 2020.) (Certain information has been redacted in the marked portions of the exhibit.) 10.15 Amendment No. 1 to Exclusive License Agreement between the Company and The Cleveland Clinic Foundation. (Incorporated by reference to Exhibit 10.1 to our Form 10-Q for the fiscal quarter ended July 31, 2022.) (Certain information has been redacted in the marked portions of the exhibit.) 10.16 Joint Development and Option Agreement, dated January 26, 2021, between the Company and The Cleveland Clinic Foundation. (Incorporated by reference to Exhibit 10.2 to our Form 10-Q for the fiscal quarter ended January 31, 2021.) (Certain information has been redacted in the marked portions of the exhibit.) 10.17 Form of Controlled Equity Offering SM Sales Agreement (Incorporated by reference to Exhibit 10.1 to our Form S-3 dated September 9, 2022) 14 Code of Conduct (Incorporated by reference to Exhibit 14 to our Form 10-K, for the fiscal year ended October 31, 2020.) 21 Subsidiaries of Anixa Biosciences, Inc. (Incorporated by reference to Exhibit 21 to our Form 10-K, for the fiscal year ended October 31, 2020.) 23.1 Consent of Haskell & White LLP. (Filed herewith.) 31.1 Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated January 4, 2023. (Filed herewith.) 31.2 Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated January 4, 2023. (Filed herewith.) 32.1 Statement of Chief Executive Officer, pursuant to Section 1350 of Title 18 of the United States Code, dated January 4, 2023. (Filed herewith.) 32.2 Statement of Chief Financial Officer, pursuant to Section 1350 of Title 18 of the United States Code, dated January 4, 2023. (Filed herewith.) Item 16. Form 10-K Summary . The Company has elected not to include a summary pursuant to this Item 16. 42 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Anixa Biosciences, Inc. By: /s/ Amit Kumar Dr. Amit Kumar Chairman of the Board and January 4, 2023 Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. By: /s/ Amit Kumar Dr. Amit Kumar Chairman of the Board and Chief Executive Officer January 4, 2023 (Principal Executive Officer) By: /s/ Michael J. Catelani Michael J. Catelani President, Chief Operating Officer and Chief Financial Officer (Principal Financial January 4, 2023 and Accounting Officer) By: /s/ Lewis H. Titterton, Jr. Lewis H. Titterton, Jr. January 4, 2023 Director By: /s/ Arnold Baskies Dr. Arnold Baskies January 4, 2023 Director By: /s/ Emily Gottschalk Emily Gottschalk January 4, 2023 Director 43 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2022 Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 200 ) F-1 Consolidated Balance Sheets as of October 31, 2022 and 2021 F-2 Consolidated Statements of Operations for the years ended October 31, 2022 and 2021 F-3 Consolidated Statements of Equity for the years ended October 31, 2022 and 2021 F-4 Consolidated Statements of Cash Flows for the years ended October 31, 2022 and 2021 F-5 Notes to Consolidated Financial Statements F-6 Additional information required by schedules called for under Regulation S-X is either not applicable or is included in the consolidated financial statements or notes thereto. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders Anixa Biosciences, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Anixa Biosciences, Inc. (the “Company”) as of October 31, 2022 and 2021, and the related consolidated statements of operations, equity, and cash flows for each of the two years in the period ended October 31, 2022, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of October 31, 2022 and 2021, and the consolidated results of its operations and its cash flows for each of the years in the two year period ended October 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters. HASKELL & WHITE LLP We have served as the Company’s auditor since 2013 Irvine, California January 4, 2023 F- 1 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) October 31, October 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 12,360 $ 29,128 Short–term investments 17,327 6,599 Prepaid expenses and other current assets 513 276 Total current assets 30,200 36,003 Operating lease right-of-use asset 212 254 Total assets $ 30,412 $ 36,257 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 265 $ 136 Accrued expenses 1,726 1,095 Operating lease liability 46 39 Total current liabilities 2,037 1,270 Operating lease liability, non-current 175 220 Total liabilities 2,212 1,490 Commitments and contingencies (Note 7) - Equity: Shareholders’ equity: Preferred 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; 140 shares authorized; no shares issued or outstanding - - Preferred stock - - Common stock, par value $ .01 per share; 100,000,000 shares authorized; 30,913,902 and 30,050,894 shares issued and outstanding as of October 31, 2022 and 2021, respectively 309 301 Additional paid-in capital 247,123 239,927 Accumulated deficit ( 218,385 ) ( 204,790 ) Total shareholders’ equity 29,047 35,438 Noncontrolling interest (Note 2) ( 847 ) ( 671 ) Total equity 28,200 34,767 Total liabilities and equity $ 30,412 $ 36,257 The accompanying notes are an integral part of these statements. F- 2 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) 2022 2021 For the years ended October 31, 2022 2021 Revenue $ - $ 512 Operating costs and expenses: Inventor royalties, contingent legal fees, litigation and licensing expenses - 385 Research and development expenses (including non-cash share based compensation expenses of $ 3,635 and $ 4,166 , respectively) 6,703 6,190 General and administrative expenses (including non-cash share based compensation expenses of $ 3,020 and $ 3,892 , respectively) 7,172 7,073 Total operating costs and expenses 13,875 13,648 Loss from operations ( 13,875 ) ( 13,136 ) Gain on disposal of property and equipment - 6 Interest income 104 2 Net loss ( 13,771 ) ( 13,128 ) Less: Net loss attributable to noncontrolling interest ( 176 ) ( 174 ) Net loss attributable to common stockholders $ ( 13,595 ) $ ( 12,954 ) Net loss per share: Basic and diluted $ ( 0.45 ) $ ( 0.45 ) Weighted average common shares outstanding: Basic and diluted 30,374 28,579 The accompanying notes are an integral part of these statements. F- 3 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY FOR THE YEARS ENDED OCTOBER 31, 2022 AND 2021 (in thousands, except share data) Shares Par Value Capital Deficit Equity Interest E Additional Total Non- Common Stock Paid-in Accumulated Shareholders’ controlling Total Shares Par Value Capital Deficit Equity Interest Equity BALANCE, October 31, 2020 24,248,695 $ 242 $ 200,355 $ ( 191,836 ) $ 8,761 $ ( 497 ) $ 8,264 Stock option compensation to employees and directors - - 7,503 - 7,503 - 7,503 Expired restricted stock award to employee ( 1,500,000 ) ( 15 ) 15 - - - - Stock options and warrants issued to consultants - - 555 - 555 - 555 Common stock issued upon exercise of stock options 207,697 2 432 - 434 - 434 Common stock issued pursuant to employee stock purchase plan 2,377 - 6 - 6 - 6 Common stock issued in a public offering, net of offering expenses of $ 2,208 4,285,715 43 20,249 - 20,292 - 20,292 Common stock issued in an at-the-market offering, net of offering expenses of $ 341 2,806,410 29 10,805 - 10,834 - 10,834 Proceeds received on sale of common stock held by ZQX Advisors, LLC - - 7 - 7 - 7 Net loss - - - ( 12,954 ) ( 12,954 ) ( 174 ) ( 13,128 ) BALANCE, October 31, 2021 30,050,894 $ 301 $ 239,927 $ ( 204,790 ) $ 35,438 $ ( 671 ) $ 34,767 Balance, value 30,050,894 $ 301 $ 239,927 $ ( 204,790 ) $ 35,438 $ ( 671 ) $ 34,767 Stock option compensation to employees and directors - - 6,000 - 6,000 - 6,000 Stock options and warrants issued to consultants - - 655 - 655 - 655 Common stock issued upon exercise of stock options and warrants 827,619 8 431 - 439 - 439 Common stock issued to consultants 30,648 - 97 - 97 - 97 Common stock issued pursuant to employee stock purchase plan 4,741 - 13 - 13 - 13 Net loss - - - ( 13,595 ) ( 13,595 ) ( 176 ) ( 13,771 ) BALANCE, October 31, 2022 30,913,902 $ 309 $ 247,123 $ ( 218,385 ) $ 29,047 $ ( 847 ) $ 28,200 Balance, value 30,913,902 $ 309 $ 247,123 $ ( 218,385 ) $ 29,047 $ ( 847 ) $ 28,200 Total Shareholders’ Equity [Member] The accompanying notes are an integral part of these statements. F- 4 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) 2022 2021 For the years ended October 31, 2022 2021 Cash flows from operating activities: Reconciliation of net loss to net cash used in operating activities: Net loss $ ( 13,771 ) $ ( 13,128 ) Stock option compensation to employees and directors 6,000 7,503 Stock options and warrants issued to consultants 655 555 Common stock issued to consultants 97 - Gain on disposal of property and equipment - ( 6 ) Amortization of operating lease right-of-use asset 42 60 Change in operating assets and liabilities: Prepaid expenses and other current assets ( 237 ) 36 Accounts payable 129 ( 96 ) Accrued expenses 631 193 Operating lease liability ( 38 ) ( 55 ) Net cash used in operating activities ( 6,492 ) ( 4,938 ) Cash flows from investing activities: Disbursements to acquire short-term investments ( 22,486 ) ( 16,498 ) Proceeds from maturities of short-term investments 11,758 12,539 Proceeds from sale of equipment - 35 Proceeds received on sale of common stock by ZQX Advisors, LLC - 7 Net cash used in investing activities ( 10,728 ) ( 3,917 ) Cash flows from financing activities: Proceeds from sale of common stock in a public offering, net of expenses - 20,292 Proceeds from sale of common stock in an at-the-market offering, net of expenses - 10,834 Proceeds from sale of common stock pursuant to employee stock purchase plan 13 6 Proceeds from exercise of stock options and warrants 439 434 Net cash provided by financing activities 452 31,566 Net (decrease) increase in cash and cash equivalents ( 16,768 ) 22,711 Cash and cash equivalents at beginning of year 29,128 6,417 Cash and cash equivalents at end of year $ 12,360 $ 29,128 Supplemental cash flow information: Cash proceeds from interest income $ 23 $ 2 Supplemental disclosure of non-cash investing activity: Operating lease right-of-use asset $ - $ ( 259 ) Supplemental disclosure of non-cash financing activities: Operating lease liability $ - $ 259 Fair value of warrants issued in connection with public offering $ - $ 1,041 The accompanying notes are an integral part of these statements. F- 5 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BUSINESS AND FUNDING Description of Business As used herein, “we,” “us,” “our,” the “Company” or “Anixa” means Anixa Biosciences, Inc. and its consolidated subsidiaries. Anixa is a biotechnology company developing therapies and vaccines that are focused on critical unmet needs in oncology and infectious disease. Our vaccine programs include (i) the development of a preventative vaccine against triple negative breast cancer (“TNBC”), the most lethal form of breast cancer, as well other forms of breast cancer and (ii) the development of a preventative vaccine against ovarian cancer. Our therapeutics programs include (i) the development of a chimeric endocrine receptor T-cell therapy, a novel form of chimeric antigen receptor T-cell (“CAR-T”) technology, initially focused on treating ovarian cancer, which is being developed at our subsidiary, Certainty Therapeutics, Inc. (“Certainty”), and (ii) the development of anti-viral drug candidates for the treatment of COVID-19 focused on inhibiting certain protein functions of the virus. We 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. Utilizing this technology, we are working in collaboration with Cleveland Clinic to develop a method to vaccinate women against contracting breast cancer, focused specifically on TNBC. The focus of this vaccine is a specific protein, α-lactalbumin, that is only expressed during lactation in a healthy mother’s mammary tissue. This protein disappears when the mother is no longer lactating, but reappears in many forms of breast cancer, especially TNBC. Studies have shown that vaccinating against this protein prevents breast cancer in mice. Following the U.S. Food and Drug Administration’s (“FDA”) authorization to proceed with clinical trials in December 2020, in October 2021, we commenced dosing patients in a Phase 1 clinical trial of our breast cancer vaccine. This study, which is being funded by a U.S. Department of Defense grant, is a multiple-ascending dose Phase 1 trial to determine the maximum tolerated dose (“MTD”) of the vaccine in patients with early-stage, triple-negative breast cancer as well as monitor immune response. The study is being conducted at Cleveland Clinic and will consist of 18 to 24 patients who have completed treatment for early-stage, triple-negative breast cancer within the past three years and are currently tumor-free but at high risk for recurrence. During the course of the study, participants will receive three vaccinations, each two weeks apart, and will be closely monitored for side effects and immune response. Initial indications from preliminary analyses suggest that an immune response is being observed. In December 2022, we announced that we had reached the MTD. We are now expanding the MTD cohort and are vaccinating additional participants at that dose level. Upon completion of vaccination and follow-up tests of the expanded cohort, we will compile and analyze the data, and we anticipate presenting the complete immunological data from the trial at a scientific conference or similar setting in the second calendar quarter of 2023. In November 2020, we executed a license agreement with Cleveland Clinic pursuant to which the Company was granted an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by Cleveland Clinic relating to certain ovarian cancer vaccine technology. This technology pertains to among other things, the use of vaccines for the treatment or prevention of ovarian cancers which express the anti-Mullerian hormone receptor 2 protein containing an extracellular domain (“AMHR2-ED”). In healthy tissue, this protein regulates growth and development of egg-containing follicles in the ovary. While expression of AMHR2-ED naturally and markedly declines after menopause, this protein is expressed at high levels in the ovaries of postmenopausal women with ovarian cancer. Researchers at Cleveland Clinic believe that a vaccine targeting AMHR2-ED could prevent the occurrence of ovarian cancer. We entered into a joint development agreement with Cleveland Clinic to advance this vaccine toward human clinical testing. F- 6 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In May 2021, Cleveland Clinic was granted an award for our ovarian cancer vaccine technology by the National Cancer Institute’s (“NCI”) PREVENT program. The NCI is a part of the National Institutes of Health. The PREVENT program is a peer-reviewed agent development program designed to support pre-clinical development of innovative interventions and biomarkers for cancer prevention and interception towards clinical trials. The scientific and financial resources of the PREVENT program will be used for our ovarian cancer vaccine technology to perform virtually all pre-clinical research and development, manufacturing and IND-enabling studies. This work is being performed at 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. Our subsidiary, 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”), the nation’s first independent biomedical research institute and a leading National Cancer Institute designated cancer research center, relating to Wistar’s chimeric endocrine receptor targeted therapy technology. We have initially focused on the development of a treatment for ovarian cancer, but we also may pursue applications of the technology for the development of treatments for additional solid tumors. The license agreement requires 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 Certainty. Certainty, in collaboration with the H. Lee Moffitt Cancer Center and Research Institute, Inc. (“Moffitt”), is advancing toward human clinical testing of the CAR-T technology licensed by Certainty from Wistar aimed initially at treating ovarian cancer. We received authorization from the FDA in August 2021, to commence enrollment and treatment of patients in a Phase 1 clinical trial. We began patient recruitment for the trial in March 2022, and in August 2022, we treated the first patient in the trial. The treatment appears to have been well-tolerated by the patient, and we continue to monitor her condition. The process of recruiting additional patients is ongoing. This study is a dose-escalation trial with two arms based on injection method—intraperitoneal or intravenous—to determine the maximum tolerated dose in patients with recurrent epithelial ovarian cancer and to assess persistence, expansion and efficacy of the modified T-cells. The study is being conducted at Moffitt and will consist of 24 to 48 patients who have received at least two prior lines of chemotherapy. The study is estimated to be completed in two to four years depending on multiple factors including when maximum tolerated dose is reached, the rate of patient recruitment, and how long we maintain the two different injection methods. In April 2020, we entered into a collaboration with OntoChem GmbH (“OntoChem”) to discover and ultimately develop anti-viral drug candidates against COVID-19. Through this collaboration, we utilized advanced computational methods, machine learning, and molecular 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. F- 7 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The screening process resulted in the identification of multiple compounds that could potentially disrupt critical enzymes of the virus, including the virus’ main protease, M pro . Several of these compounds were synthesized and tested in in vitro biological assays. Upon completion of these biological assays, we identified two of the most promising compounds and tested them in animal models. In these animal studies, the two compounds were compared to Remdesivir, which at the time the assays were performed was 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 between each of our compounds and Remdesivir. Based on this promising data in the animal study, we directed our team to proceed to the next stage of drug development and we selected one of the compounds around which our team is performing combinatorial synthetic medicinal chemistry to evaluate whether potency can be increased and pharmacokinetics optimized. This work is ongoing. In 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. As a result of the MolGenie spin-out, there was no change in the personnel working on our project, and the assignment caused no interruptions to the program’s development. While use of preventative vaccines is widespread throughout much of the developed world, we believe that there is and will continue to be a need for effective treatments for COVID-19. We believe that there are a number of factors that have limited the effectiveness, both in the near and long term, of the vaccines currently in use, including, but not limited to, vaccine persistence, viral escape and perceptions of long-term safety resulting in vaccine resistance. Furthermore, there are currently new anti-viral treatments, such as Pfizer’s Paxlovid, which is a combination therapy consisting of the protease-inhibitor nirmatrelvir and the antiretroviral ritonavir, that have been authorized for use in the U.S. As the main component of Pfizer’s treatment is a protease-inhibitor targeting M pro , it is most similar to our compounds, and we therefore conducted a head-to-head analysis via a Fluorescence Resonance Energy Transfer (FRET) assay that tested the ability of the compounds to inhibit the function of M pro . The results of this head-to-head in vitro analysis suggest that our compounds may be five times more effective at inhibiting M pro than Pfizer’s nirmatrelvir. Over the next several quarters, we expect the development of our breast and ovarian cancer vaccines, our COVID-19 therapeutic discovery 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 its liquid biopsy platform and 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. Over 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 term. Our strategy is 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. F- 8 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Funding and Management’s Plans Based on currently available information as of January 4, 2023, 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. Under our at-the-market equity program which is currently effective and may remain available for us to use in the future, as of October 31, 2022, we may sell up to $ 100 million of common stock. We did not sell any shares under our at-the-market equity program during the year ended October 31, 2022. We may seek to obtain working capital during our fiscal year 2023 or thereafter through sales of our equity securities or through bank credit facilities or public or private debt from various financial institutions where possible. We 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. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements include the accounts of Anixa Biosciences, Inc. and its wholly and majority owned subsidiaries. All intercompany transactions have been eliminated. Noncontrolling Interest Noncontrolling interest represents Wistar’s 5 % equity ownership in Certainty and is presented as a component of equity. The following table sets forth the changes in noncontrolling interest for the two years ended October 31, 2022 (in thousands): SCHEDULE OF CHANGES IN NONCONTROLLING INTEREST Balance October 31, 2020 $ ( 497 ) Net loss attributable to noncontrolling interest ( 174 ) Balance October 31, 2021 ( 671 ) Net loss attributable to noncontrolling interest ( 176 ) Balance October 31, 2022 $ ( 847 ) Revenue Recognition Our 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. Our revenue recognition policy requires us to make certain judgments and estimates in connection with the accounting for revenue. Such areas 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. F- 9 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Our revenue arrangements generally 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 patents. 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. Cost of Revenues Cost of revenues include the costs and expenses incurred in connection with our patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent legal fees paid to external counsel, other patent-related legal expenses paid to external counsel, licensing and enforcement related research and consulting and other expenses paid to third-parties. These costs are included under the caption “Operating costs and expenses” in the accompanying consolidated statements of operations. Research and Development Expenses Research and development expenses, consisting primarily of employee compensation, payments to third parties for research and development activities, including expenses related to clinical trials, and other direct costs associated with developing immuno-therapy drugs against cancer, developing anti-viral drug candidates for COVID-19, developing our breast cancer vaccine and developing our ovarian cancer vaccine, are expensed in the consolidated financial statements in the year incurred. Fair Value Measurements Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value under U.S. generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. In accordance with ASC 820, 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 consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows: Level 1 – Financial instruments 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. F- 10 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Level 2 – Financial instruments 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 instruments 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 instrument. The following table presents the hierarchy for our financial assets measured at fair value on a recurring basis as of October 31, 2022 (in thousands): SCHEDULE OF HIERARCHY OF FINANCIAL ASSETS Level 1 Level 2 Level 3 Total Money market funds: Cash equivalents $ 11,175 $ - $ - $ 11,175 Certificates of deposit: Cash equivalents 1,000 1,000 Short term investments - 13,700 - 13,700 U. S. treasury bills: Short term investments - 3,627 - 3,627 Total financial assets $ 11,175 $ 18,327 $ - $ 29,502 The following table presents the hierarchy for our financial assets measured at fair value on a recurring basis as of October 31, 2021 (in thousands):   Level 1 Level 2 Level 3 Total Money market funds: Cash equivalents $ 28,949 $ - $ - $ 28,949 Certificates of deposit: Short term investments - 2,000 - 2,000 U. S. treasury bills: Short term investments - 4,599 - 4,599 Total financial assets $ 28,949 $ 6,599 $ - $ 35,548 Our non-financial assets that are measured on a non-recurring basis are property and equipment and 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. Cash Equivalents Cash equivalents consists of highly liquid, short-term investments with original maturities of three months or less when purchased. F- 11 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Short-term Investments At October 31, 2022 and 2021, we had certificates of deposit and United States treasury bills with maturities greater than 90 days and less than 12 months when acquired of $ 17,327 and $ 6,599 , respectively, that were classified as short-term investments and reported at fair value. Income Taxes 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. 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 realized. Stock-Based Compensation We maintain stock equity incentive plans under which we may grant non-qualified stock options, incentive stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, non-employee directors and consultants. Stock Option Compensation Expense We account for stock options granted to employees, directors and consultants using the accounting guidance in ASC 718, Stock Compensation (“ASC 718”). We estimate the fair value of service-based stock options on the date of grant, using the Black-Scholes pricing model, and recognize compensation expense over the requisite service period of the grant. We recorded stock-based compensation expense, related to service-based stock options granted to employees and directors, of approximately $ 3,463,000 and $ 3,531,000 , during the years ended October 31, 2022 and 2021, respectively. Included in stock-based compensation cost for service-based options granted to employees and directors during the years ended October 31, 2022 and 2021 was approximately $ 2,788,000 and $ 1,841,000 , respectively, related to the amortization of compensation cost for stock options granted in prior periods but not yet vested. As of October 31, 2022, there was unrecognized compensation cost related to non-vested service-based stock options granted to employees and directors of approximately $ 5,141,000 , which will be recognized over a weighted-average period of 1 year. For stock options 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 compensation expense over the implied service period (median time to vest). On May 8, 2018, we issued market condition stock options to purchase 1,500,000 shares of common stock, to our Chairman, then-President and Chief Executive Officer, vesting at target trading prices of $ 5.00 to $ 8.00 per share before May 31, 2021 , with implied service periods of three to seven months . The assumptions used in the Monte Carlo Simulation for the May 18, 2018 grant were stock price on date of grant and exercise price of $ 3.70 , contract term of 10 years, expected volatility of 119.6 % and risk-free interest rate of 2.97 %. In October 2018, the first tranche of 500,000 shares of market condition options became exercisable upon achieving an average closing price above $ 5.00 per share for twenty consecutive trading days. The remaining tranches did not vest as of May 31, 2021 and expired. F- 12 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On June 1, 2021, our Chairman, then-President and Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer were awarded market condition stock 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 to $ 8.00 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 and exercise price of $ 4.02 , contract term of 10 years, expected volatility of 75 % and risk-free interest rate of 1.62 %. As of October 31, 2022, 500,000 options and 25,000 options granted to our Chairman, then-President and Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer, respectively, have vested. We recorded stock-based compensation expense related to market condition stock options granted to employees of approximately $ 2,537,000 during the year ended October 31, 2022, which amount represented expense related to the amortization of compensation cost for stock options granted during the year ended October 31, 2021. We recorded stock-based compensation expense related to market condition stock options granted to employees of approximately $ 3,972,000 during the year ended October 31, 2021, which amount did not include any expense related to the amortization of compensation cost for stock options granted in prior periods. As of October 31, 2022, there was no unrecognized compensation cost related to market condition stock options granted to employees. We recorded consulting expense, related to service-based stock options granted to consultants, during the years ended October 31, 2022 and 2021 of approximately $ 434,000 and $ 460,000 , respectively. Included in stock-based consulting expense for the years ended October 31, 2022 and 2021 was approximately $ 434,000 and $ 103,000 , respectively, related to compensation cost for stock options granted in prior periods but not yet vested. As of October 31, 2022, there was unrecognized consulting expense related to non-vested service-based stock options granted to consultants of approximately $ 466,000 , which will be recognized over a weighted-average period of 1.2 years. Fair Value Determination We use the Black-Scholes pricing model in estimating the fair value of stock options granted to employees, directors and consultants which vest over a specific period of time. The stock options we granted during each of the years ended October 31, 2022 and 2021 consisted of awards with 5 -year and 10 -year terms that vest over 12 to 36 months. The following weighted average assumptions were used in estimating the fair value of stock options granted during the years ended October 31, 2022 and 2021: SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS USED IN ESTIMATING FAIR VALUE OF STOCK OPTIONS For the Year Ended October 31, 2022 2021 Weighted average fair value at grant date Valuation assumptions: $ 2.18 $ 2.93 Expected life (years) 5.76 5.66 Expected volatility 102.72 % 109.02 % Risk-free interest rate 1.99 % 0.69 % Expected dividend yield 0 % 0 % F- 13 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. For employees and directors, 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. 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 options. 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 cash dividends and our expectation not to pay dividends in the future. Under ASC 718, the amount of stock-based compensation expense recognized is based on the portion of the awards that are ultimately expected to vest. Accordingly, if deemed necessary, we reduce the fair value of the stock option awards for expected forfeitures, which are forfeitures of the unvested portion of surrendered options. Based on our historical experience and future expectations, we have not reduced the amount of stock-based compensation expenses for anticipated forfeitures. We will reconsider use of the Black-Scholes pricing model 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 the application of ASC 718 in future periods, the compensation expense that we record under ASC 718 may differ significantly from what we have recorded in the current period. Stock Award Compensation Expense We account for stock awards granted to employees, directors and consultants in accordance with ASC 718. On May 8, 2018, a restricted stock award of 1,500,000 shares of common stock was granted to our Chairman, then-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). The assumptions used in the Monte Carlo Simulation were stock price on date of grant of $ 3.70 , contract term of 3.06 years, expected volatility of 128.8 % and risk-free interest rate of 2.66 %. We did not record any compensation expense related to the restricted stock award during the years ended October 31, 2022 and 2021. We did not issue any stock awards during the years ended October 31, 2022 and 2021. As of October 31, 2022, there was no unrecognized compensation cost related to the restricted stock awards. Warrants For warrants granted to consultants for services rendered we estimate the fair value using the Black-Scholes pricing model on the date of grant. During the years ended October 31, 2022 and 2021 we recorded consulting expense, based on the fair value, of approximately $ 221,000 and $ 96,000 , respectively, for warrants granted to consultants. Net Loss Per Share of Common Stock In accordance with ASC 260, Earnings Per Share, 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 years 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 years ended October 31, 2022 and 2021 were options to purchase 10,318,872 shares and 10,770,626 shares, respectively, and warrants to purchase 300,000 shares and 860,000 shares, respectively. F- 14 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are used for, but not limited to, determining stock-based compensation, asset impairment evaluations, tax assets and liabilities, license fee revenue, the allowance for doubtful accounts, depreciation lives and other contingencies. Actual results could differ from those estimates. Effect of Recently Issued Pronouncements 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 did not have a material impact on our consolidated financial statements and related disclosures. In August 2020, the FASB issued Accounting Standards Update 2020-06 (“ASU 2020-06”), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in ASU 2020-06 include guidance on convertible instruments and the derivative scope exception for contracts in an entity’s own equity and simplifies the accounting for convertible instruments which include beneficial conversion features or cash conversion features by removing certain separation models in Subtopic 470-20. Additionally, ASU 2020-06 will require entities to use the “if-converted” method when calculating diluted earnings per share for convertible instruments. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements and related disclosures. In May 2021, the FASB issued Accounting Standards Update 2021-04 (“ASU No. 2021-04”), Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The guidance in ASU 2021-04 requires the issuer to treat a modification of an equity-classified written call option (the “option”) that does not cause the option to become liability-classified as an exchange of the original option for a new option. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the option or as termination of the original option and issuance of a new option. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements and related disclosures. F- 15 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In October 2021, the FASB issued Accounting Standards Update 2021-08 (“ASU No. 2021-08”), Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, to require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The amendments in this update should be applied prospectively and are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements and related disclosures. Concentration of Credit Risks Financial instruments that potentially subject us to concentrations of credit risk are cash equivalents, short-term investments and accounts receivable. Cash equivalents are primarily highly rated money market funds. Short-term investments are certificates of deposit within federally insured limits as well as U.S. treasury bills. Where applicable, management reviews our accounts receivable and other receivables for potential doubtful accounts and maintains an allowance for estimated uncollectible amounts. Our policy is to write-off uncollectable amounts at the time it is determined that collection will not occur. One licensee accounted for 100% of revenues from patent licensing activities during fiscal year 2021. 3. PUBLIC OFFERING On 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. The Company realized net proceeds of approximately $ 20,292,000 from the public offering, after deducting underwriting discounts and deal expenses. In connection with the public offering, the Company issued to certain designees of the underwriter, as compensation, warrants expiring on March 22, 2026 , to purchase 300,000 shares of common stock exercisable for $ 6.5625 per share. 4. ACCRUED EXPENSES Accrued liabilities consist of the following as of: SCHEDULE OF ACCRUED EXPENSES 2022 2021 October 31, 2022 2021 Payroll and related expenses $ 1,144 $ 492 Accrued royalty and contingent legal fees 577 577 Accrued other 5 26 Accrued expenses $ 1,726 $ 1,095 5. SHAREHOLDERS’ EQUITY Stock Option Plans During the year ended October 31, 2022, 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 by our Board of Directors on July 14, 2010 and January 25, 2018, respectively. The 2018 Share Plan was approved by our shareholders on March 29, 2018. F- 16 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During the year ended October 31, 2022, stock options to purchase 793,103 shares, net of 1,083,517 shares withheld on cashless exercises, were exercised with aggregate proceeds of approximately $ 439,000 . During the year ended October 31, 2021, stock options to purchase 207,697 shares, net of 60,691 shares withheld on cashless exercises, were exercised with aggregate proceeds of approximately $ 434,000 . 2010 Share Plan The 2010 Share Plan provides for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants. On the first business day of each calendar year the aggregate number of shares available for future issuance is replenished such that 800,000 shares are available. The exercise price with respect to all of the options granted under the 2010 Share Plan was equal to the fair market value of the underlying common stock at the grant date. In accordance with the provisions of the 2010 Share Plan, the plan terminated with respect to the grant of future options on July 14, 2020. Information regarding the 2010 Share Plan for the two years ended October 31, 2022 is as follows: SCHEDULE OF OPTION ACTIVITY Shares Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Options Outstanding at October 31, 2020 1,907,534 $ 2.82 Exercised ( 178,500 ) $ 2.75 Expired ( 10,400 ) $ 4.57 Options Outstanding at October 31, 2021 1,718,634 $ 2.82 Exercised ( 212,000 ) $ 2.68 Expired ( 5,134 ) $ 3.63 Options Outstanding and Exercisable at October 31, 2022 1,501,500 $ 2.83 $ 4,156,000 The following table summarizes information about stock options outstanding under the 2010 Share Plan as of October 31, 2022: SCHEDULE OF OUTSTANDING AND EXERCISABLE Range of Exercise Prices Number Outstanding and Exercisable Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 0.67 - $ 2.27 477,500 3.78 $ 1.46 $ 2.58 - $ 3.13 515,000 2.38 $ 2.78 $ 3.46 - $ 5.30 509,000 5.54 $ 4.17 F- 17 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. On the first business day of each calendar year the maximum aggregate number of shares available for future issuance is replenished such that 2,000,000 shares are available. The exercise price with respect to all of the options granted under the 2018 Share Plan was equal to the fair market value of the underlying common stock at the grant date. As of October 31, 2022, the 2018 Share Plan had 605,134 shares available for future grants. Information regarding the 2018 Share Plan for the two years ended October 31, 2022 is as follows: SCHEDULE OF OPTION ACTIVITY Shares Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Options Outstanding at October 31, 2020 4,346,661 $ 3.69 Granted 4,490,000 $ 3.82 Exercised ( 33,888 ) $ 3.81 Expired ( 1,392,781 ) $ 3.70 Options Outstanding at October 31, 2021 7,409,992 $ 3.76 Granted 1,430,000 $ 2.74 Exercised ( 22,620 ) $ 3.15 Options Outstanding at October 31, 2022 8,817,372 $ 3.60 $ 17,644,000 Options Exercisable at October 31, 2022 5,219,039 $ 3.57 $ 10,331,000 The following table summarizes information about stock options outstanding under the 2018 Share Plan as of October 31, 2022: SCHEDULE OF OUTSTANDING AND EXERCISABLE Options Outstanding Options Exercisable Range of Exercise Prices Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 2.09 -$ 3.87 5,347,372 7.41 $ 3.24 3,927,095 6.85 $ 3.40 $ 3.96 -$ 5.30 3,470,000 7.98 $ 4.16 1,291,944 7.07 $ 4.09 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 the Non-Plan Options for the two years ended October 31, 2022 is as follows: SCHEDULE OF OPTION ACTIVITY Shares Weighted Average Exercise Price Per Share Options Outstanding at October 31, 2020 1,698,000 $ 2.58 Exercised ( 56,000 ) $ 2.58 Options Outstanding October 31, 2021 1,642,000 $ 2.58 Exercised ( 1,642,000 ) $ 2.58 Options Outstanding and Exercisable at October 31, 2022 - F- 18 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 years ended October 31, 2022 and 2021, employees purchased 4,741 and 2,377 shares, respectively, with aggregate proceeds of approximately $ 13,000 and $ 6,000 , respectively. Common Stock Purchase Warrants 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 $ 96,000 during the year ended October 31, 2021, based on the fair value of the warrant recognized on a straight-line basis over the vesting period. On November 16, 2021, the warrant was exercised in full on a cashless basis and 25,484 shares were withheld as payment. On November 1, 2021 we issued a warrant, expiring on October 30, 2026 , to purchase 60,000 shares of common stock at $ 4.77 per share, vesting over five months , to a consultant for investor relations services. We recorded consulting expense of approximately $ 221,000 during the year ended October 31, 2022, based on the fair value of the warrant recognized on a straight-line basis over the vesting period. The warrant terminated in May 2022 upon termination of the consulting agreement. As discussed in Note 3, 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 . Information regarding the Company’s warrants for the two years ended October 31, 2022 is as follows: SCHEDULE OF WARRANTS ACTIVITY Shares Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Warrants Outstanding at October 31, 2020 560,000 $ 4.71 Issued 300,000 $ 6.56 Warrants Outstanding at October 31, 2021 860,000 $ 5.36 Issued 60,000 $ 4.77 Exercised ( 60,000 ) $ 2.06 Expired ( 560,000 ) $ 4.71 Warrants Outstanding and Exercisable at October 31, 2022 300,000 $ 6.56 $ 0 F- 19 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes information about the Company’s outstanding and exercisable warrants as of October 31 , 2022: SCHEDULE OF OUTSTANDING AND EXERCISABLE Range of Exercise Prices Number Outstanding and Exercisable Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 6.56 300,000 3.39 $ 6.56 ZQX Advisors, LLC ZQX Advisors, LLC (“ZQX”) was an inactive joint venture in which we held a 19.5 % interest, and which was dissolved during fiscal year 2021. The only assets of ZQX were shares of our common stock which were sold during fiscal year 2021, for which we received proceeds of approximately $ 6,000 . 6. LEASES 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 was set to expire on September 30, 2021 . Effective August 17, 2021, the lease was amended to extend the expiration date to September 30, 2024, with an option to extend the lease an additional two years . 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. The amendment to the lease resulted in a right-of-use asset and lease liability of approximately $ 260,000 with a discount rate of 10 %. Rent expense was approximately $ 66,000 and $ 64,000 , respectively, for the years ended October 31, 2022 and 2021. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. The remaining 47 month lease term as of October 31, 2022 for the Company’s lease includes the noncancelable period of the lease and the additional two-year option period that the Company believes it is reasonably certain to exercise. All right-of-use assets are reviewed for impairment when indications of impairment are present. As of October 31, 2022, the annual minimum lease payments of our operating lease liability were as follows (in thousands): SCHEDULE OF MINIMUM LEASE PAYMENTS For Years Ending October 31, Operating Leases 2023 $ 66 2024 67 2025 70 2026 65 Total future minimum lease payments, undiscounted 268 Less: Imputed interest 47 Present value of future minimum lease payments $ 221 7. COMMITMENTS AND CONTINGENCIES Litigation Matters Other than lawsuits we bring to enforce our patent rights, 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. F- 20 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Collaborative Research and License Commitments As of October 31, 2022, our commitments under the collaborative and license agreements with Moffitt, Wistar, Cleveland Clinic and MolGenie for the year ending October 31, 2023 were approximately $ 70,000 . Impact of Coronavirus Pandemic The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity and actions taken in response; our ability to continue daily operations, including as a result of travel restrictions and people working from home; the effect the pandemic may have on the ability to recruit patients to participate in our clinical trials; and any closures of our and our business partners’ offices and facilities. While the Company and its partners are not currently experiencing significant negative impact of COVID-19, there can be no assurance that the current situation will continue. Further, events such as natural disasters and public health emergencies divert our attention away from normal operations and limited resources. Our inability to timely resume normal operations following any pandemic disruption could adversely affect our business, financial condition or results of operations in a material manner. 8. INCOME TAXES Income tax provision (benefit) consists of the following: SCHEDULE OF INCOME TAX PROVISION (BENEFIT) 2022 2021 Year Ended October 31, 2022 2021 Federal: Current $ - $ - Deferred ( 1,021,000 ) 604,000 State: Current - - Deferred ( 350,000 ) ( 129,000 ) Adjustment to valuation allowance related to net deferred tax assets 1,371,000 ( 475,000 ) Income tax provision (benefit) $ - $ - F- 21 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The tax effects of temporary differences that give rise to significant portions of the deferred tax asset, net, at October 31, 2022 and 2021, are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2022 2021 October 31, 2022 2021 Long-term deferred tax assets: Federal and state NOL and tax credit carryforwards $ 22,196,000 $ 20,230,000 Deferred compensation 6,851,000 7,502,000 Intangibles 274,000 330,000 Other 281,000 219,000 Subtotal 29,602,000 28,281,000 Less: valuation allowance ( 29,602,000 ) ( 28,281,000 ) Deferred tax asset, net $ - $ - As of October 31, 2022, we had Federal tax net operating loss and tax credit carryforwards of approximately $ 91,947,000 and $ 1,614,000 , respectively. At the federal level, businesses can carry forward their net operating losses indefinitely, but the deductions are limited to 80 percent of taxable income. Prior to the Tax Cuts and Jobs Act (TCJA) of 2017, businesses could carry losses forward for 20 years (without a deductibility limit). If the tax benefits relating to deductions of option holders’ income are ultimately realized, those benefits will be credited directly to additional paid-in capital. Certain changes in stock ownership can result in a limitation on the amount of net operating loss and tax credit carryovers that can be utilized each year. As of October 31, 2022, management has not determined the extent of any such limitations, if any. We had California tax net operating loss carryforwards of approximately $ 42,712,000 as of October 31, 2022, available within statutory limits ( expiring at various dates between 2023 and 2042 ), to offset future corporate taxable income and taxes payable, if any, under certain computations of such taxes. We have provided a 100 % valuation allowance against our deferred tax asset due to our current and historical pre-tax losses and the uncertainty regarding their realizability. The primary differences from the Federal statutory rate of 21 % and the effective rate of 0 % is attributable to expiring net operating losses and a change in the valuation allowance. The following is a reconciliation of income taxes at the Federal statutory tax rate to income tax expense (benefit): SCHEDULE OF RECONCILIATION OF INCOME TAXES Year Ended October 31, 2022 2021 Income tax benefit at U.S. Federal statutory income tax rate ( 2,892,000 ) ( 21.00 %) $ ( 2,757,000 ) ( 21.00 %) State income taxes ( 962,000 ) ( 6.98 %) ( 917,000 ) ( 6.98 %) Permanent differences 14,000 0.10 % 23,000 0.17 % Expiring net operating losses, credits and other 2,469,000 17.93 % 4,126,000 31.43 % Change in valuation allowance 1,371,000 9.95 % ( 475,000 ) ( 3.62 %) Income tax provision $ - 0.00 % $ - 0.00 % During the two fiscal years ended October 31, 2022, we incurred no Federal and no State income taxes. We have no unrecognized tax benefits as of October 31, 2022 and 2021 and we account for interest and penalties related to income tax matters in general and administrative expenses. Tax years to which our net operating losses relate remain open to examination by Federal and California authorities to the extent which the net operating losses have yet to be utilized. F- 22 ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9. SEGMENT INFORMATION We 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 four reportable segments, each with different operating and potential revenue generating characteristics: (i) CAR-T Therapeutics, (ii) Cancer Vaccines, (iii) Anti-Viral Therapeutics and (iv) Other. The following represents selected financial information for our segments for the years ended October 31, 2022 and 2021: SCHEDULE OF SEGMENT INFORMATION 2022 2021 Year Ended October 31, 2022 2021 Net income (loss): CAR-T Therapeutics $ ( 5,776 ) $ ( 5,673 ) Cancer Vaccines ( 4,889 ) ( 4,559 ) Anti-Viral Therapeutics ( 3,075 ) ( 2,928 ) Other ( 31 ) 32 Total $ ( 13,771 ) $ ( 13,128 ) Net income (loss) $ ( 13,771 ) $ ( 13,128 ) Total operating costs and expenses $ 13,875 $ 13,648 Less non-cash share-based compensation ( 6,655 ) ( 8,058 ) Operating costs and expenses excluding non-cash share-based compensation $ 7,220 $ 5,590 Operating costs and expenses excluding non-cash share based compensation: CAR-T Therapeutics $ 3,206 $ 2,422 Cancer Vaccines 2,355 1,642 Anti-Viral Therapeutics 1,634 1,080 Other 25 446 Total $ 7,220 $ 5,590 Operating costs and expenses excluding non-cash share based compensation $ 7,220 $ 5,590 2022 2021 October 31, 2022 2021 Total assets: CAR-T Therapeutics $ 16,921 $ 15,068 Cancer Vaccines 9,442 13,277 Anti-Viral Therapeutics 3,811 7,368 Other 238 544 Total $ 30,412 $ 36,257 Total assets $ 30,412 $ 36,257 Operating costs and expenses excluding non-cash share-based compensation is the measurement the chief operating decision-maker uses in managing the enterprise. The Company’s consolidated revenue of $ 512,000 and inventor royalties, contingent legal fees, litigation and licensing expense of $ 385,000 , for the year ended October 31, 2021 were solely related to our patent licensing segment. All our revenue is generated domestically (United States) based on the country in which the licensee is located. F- 23