What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-12-15 compared with 2023-06-14 · 123 added, 150 removed, 86 unchanged (76% of the section changed)

39 unchanged sentences

to treat rare brain disorders in partnership with Prevacus, Inc.

To date, none of our product candidates has received regulatory clearance

To date, none of our product candidates have received regulatory clearance

or approval for commercial sale.

Currently no research and development activities are being incurred on the CardioMap® or the Save

a Life devices.

On October 4, 2023, we entered into an Asset Purchase

Agreement (the “Purchase Agreement”) with Oragenics, Inc.

(“Oragenics” the “Purchaser”).

to the Purchase Agreement, we have agreed to sell and assign certain assets and certain liabilities related to a segment of our business

focused on developing medical products that treat brain related illnesses and diseases (the “Purchased Assets”) to Oragenics.

See below and Note 4 of Notes to Consolidated Financial Statements for additional information.

We plan to license, improve, and develop our products

and identify and select distribution channels.

We intend to establish agreements with distributors to get products to market quickly,

and undertake and engage in direct marketing efforts effort as we move closer to regulatory approvals.

We will determine the most effective

distribution method for each unique product we include in our portfolio.

We will engage third-party research and development firms who

specialize in creating products to assist us in developing our own products, and we will apply for trademarks and patents once we have

developed proprietary products.

We intend to establish agreements with distributors to get products to market quickly and

undertake and engage in direct marketing efforts as we move closer to regulatory approvals.

We will determine the most effective distribution

method for each unique product we include in our portfolio.

We will engage third-party research and development firms that specialize

in creating products to assist us in developing our own products, and we will apply for trademarks and patents once we have developed

proprietary products.

Recent Funding

Mast Hill Fund L.P.

On December 13, 2022, we entered into a Securities

Purchase Agreement (the “SPA”) with Mast Hill Fund, L.P.

(“Mast Hill”).

Pursuant to the SPA, we sold Mast Hill

(i) an $870,000 face value, one-year, 10% per annum Promissory Note convertible into shares of our common stock at $0.12 per share, (ii)

a five-year share purchase warrant entitling Mast Hill to acquire 2,000,000 shares of our common stock at $0.20 per share (the “Warrant”),

and (iii) a five-year warrant for 4,000,000 shares of our common stock at $0.20 per share issuable in the event of default.

after original discount, fees and expenses, was $723,868.

LPC Purchase Agreement Draws

During the nine months ended April 30, 2023, LPC

purchased a total of 3,533,591 shares of our common stock for total proceeds of $572,720 pursuant to the August 14, 2020, LPC Purchase

As of April 30, 2023, LPC had purchased a total of 7,282,518 shares of our common stock for total proceeds of $2,592,986 and

the remaining purchase availability was $7,657,014 and the remaining shares available were 11,988,846.

Promissory Note

On September 21, 2022, we entered into a promissory

note for $30,000 with a consultant for investor relations services with an interest rate of 8% per annum and a due date of December 31,

The promissory note was amended on December 30, 2022, to extend the maturity date to January 31, 2023.

On January 31, 2023, the

note was extended to June 30, 2023.

During the three months ended October 31, 2023, LPC purchased

a total of 500,000 shares of our common stock for total proceeds of $45,820 pursuant to the August 14, 2020, LPC Purchase Agreement.

LPC had purchased a total of 7,882,518 shares of our common stock for total proceeds of $2,646,306, the remaining purchase availability

was $7,603,694 and the remaining shares available were 11,388,846.

Asset Purchase Agreement with Oragenics,

On October 4, 2023, we entered into an Asset Purchase

Agreement (the “Purchase Agreement”) with Oragenics, Inc.

(“Oragenics” the “Purchaser”).

to the Purchase Agreement, we have agreed to sell and assign certain assets and certain liabilities related to a segment of our business

focused on developing medical products that treat brain related illnesses and diseases (the “Purchased Assets”) to Oragenics

in exchange for (i) $1,000,000 in cash and 8,000,000 shares of convertible Series F Preferred Stock.

The Purchased Assets include drug

candidates for treating mild traumatic brain injury (mTBI), also known as concussion, and for treating Niemann Pick Disease Type C (NPC),

as well as our proprietary powder formulation and its nasal delivery device.

We received $500,000 upon the execution of the

Purchase Agreement on October 4, 2023 and will receive the additional $500,000 upon the earlier of (a) the closing of the Purchase Agreement

(the “Closing”), (b) within three business days after the date that we have obtained our stockholders’ approval for

the transaction or (c) immediately upon the Purchasers’ wrongful termination of the Purchase Agreement in breach of the Purchase

The closing is expected to be at the end of the

fourth calendar quarter of 2023.

At the closing, Oragenics will issue 8,000,000

shares of convertible Series F Preferred Stock to us.

A number equal to 19.9% of Oragenics shares of common stock outstanding will be

automatically converted into common stock at that time.

As of December 14, 2023, Oragenics common stock traded at $5.43 per share.

The remaining shares of convertible Series F

Preferred Stock will convert upon certain listing and change in control criteria being achieved.

See Note 4 of Notes to Consolidated Financial

Statements for additional information.

Accredited Investor Note Payable

On July 7, 2023, we received a $150,000 advance

from an accredited investor related to a $500,000 Note Purchase Agreement (the “NPA”) entered into with two accredited investors

on August 15, 2023, at which time the additional $350,000 was received.

See Note 6 of Notes to Consolidated Financial

Statements for additional information.

Going Concern

See Note 1 of Notes to Financial Statements.

See Note 1 of Notes to Consolidated Financial Statements.

Significant Accounting Policies and Use of

During the nine months ended April 30, 2023, there

were no significant changes to our significant accounting policies and estimates are described in Note 2.

Summary of Significant Accounting

Policies included in Part II, Item 8.

of our Annual Report on Form 10-K for the year ended July 31, 2022, filed with the Securities

and Exchange Commission on October 31, 2022.

During the three months ended October 31, 2023,

there were no significant changes to our significant accounting policies and estimates as described in Note 2.

Summary of Significant

Accounting Policies included in Part II, Item 8.

of our Annual Report on Form 10-K for the year ended July 31, 2023, which was filed

with the SEC on October 30, 2023.

Results of Operations

We do not currently sell or market any products

and did not have any revenue in the three or nine month periods ended April 30, 2023 or 2022.

and we did not have any revenue in the three-month periods ended October 31, 2023 or 2022.

We will commence actively marketing products

1 unchanged sentence

successful in obtaining FDA clearance or approval for our products.

Three Months Ended April 30,

In-process research and development expense

Research and development expense

General and administrative expense

Three Months Ended

Research and development

Stock-based compensation

General and administrative

Loss from operations

Gain on sale of asset

Interest expense

Other expense, net

$ (1,284,104 )

$ (3,099,271 )

$ (1,815,167 )

Basic and diluted net loss per share

Nine Months Ended April 30,

In-process research and development expense

Research and development expense

General and administrative expense

Loss from operations

Interest expense

Other income, net

$ (5,105,412 )

$ (6,438,258 )

$ (1,332,846 )

Basic and diluted net loss per share

In-Process Research and Development

In-process research and development in the nine-month

period ended April 30, 2023 relates to the value of the 1,000,000 shares of our Common Stock with a value of $0.17 per share issued to

Prevacus in connection with the November 2022 Option Agreement.

Research and Development Expense

Our Research and development expense includes

expenses related to our current projects, including, clinical research, design and manufacturing, formulation, regulatory and consultants.

The decreases in Research and development expense

were due to the following:

Three months ended

April 30, 2023

Research and Development

Our Research and development includes expenses

related to our current projects which include, clinical research, design and manufacturing, formulation, regulatory and consultants.

The change in Research and development was due

to the following:

Three months ended

April 30, 2022

Nine months ended

April 30, 2023

nine months ended

April 30, 2022

October 31, 2023

October 31, 2022

Increase (decrease) in:

Drug development

Phase I clinical trial

Australian research and development rebate

Prototype phase

The decreases in drug development, consultants

and prototype phase were the result of the completion of the development of the concussion drug in the fourth quarter of fiscal 2022.

The decrease in Phase I clinical trial costs in the three months ended April 30, 2023, as compared to the decrease in the nine months

ended April 30, 2023, was the result of the completion of dosing patients in the Phase I clinical trial of our concussion drug device

trial in first quarter of fiscal 2023.

The decreases in the Phase I clinical trial is

the result of the completion of the dosing of subject in the first quarter of 2022, offset by the Australian research and development

Stock-Based Compensation

The decrease in stock-based compensation was due to

the decrease in stock option expense for directors, officers, employees and consultants from $625,576 in the three months ended October

31, 2022 compared to $37,229 expensed in the three months ended October 31, 2023 due to a $83,066 stock option recapture of options forfeited,

offset by an increase of $131,255 of RSUs expense in the first quarter of 2023 related to directors, officers and employees.

General and Administrative Expense

Our general and administrative expense includes

salaries and related benefits for employees in finance, accounting, sales, administrative, and research and development activities, as

well as stock-based compensation, costs related to maintaining compliance as a public company and legal and professional fees.

The changes in General and administrative expense

were due to the following:

Three months ended

April 30, 2023

three months ended

April 30, 2022

Nine months ended

April 30, 2023

nine months ended

April 30, 2022

salaries and related benefits for employees, business development and investor relations activities, legal and professional fees, and

administrative costs related to maintaining compliance as a public company.

The change in General and administrative expense

was due to the following:

Three months ended October 31, 2023 compared to three months ended October 31, 2022

Increase (decrease) in:

Board and stock expense

Business development and investor relations

Consulting fees

Financing fees

Legal and professional fees

$ (1,743,827 )

$ (1,329,760 )

The board and stock expense increases were due

to the vesting of restricted stock units.

The decreases in business development and investor relations were a result of decreased activities

related to business development.

The decrease in wages in the nine-month period was due to the $400,000 bonus granted to our executive

officers in January 2022.

The decrease in the three months ended October

31, 2023, was primarily a result of the decrease in business development activities due to limited resources.

Gain on Sale of Asset

The increase in the gain on sale of asset is the

result of the non-refundable fee of $500,000 received upon the execution of the Oragenics Asset Purchase Agreement.

Interest Expense

Interest expense includes interest on debt outstanding,

as well as the amortization of unamortized debt issuance costs and debt closing costs.

Certain information regarding debt outstanding

was as follows:

Three Months Ended April 30,

Nine Months Ended April 30,

as well as the amortization of beneficial conversion feature, debt discount and debt issuance costs.

Certain information regarding debt

outstanding was as follows:

Three Months Ended October 31,

Weighted average debt outstanding

Weighted average interest rate

The increases in the weighted average debt outstanding

were due to the addition of principal to both the LGH and Tysadco notes in exchange for extending the maturity date of the notes.

we issued a $30,000 promissory note during the first quarter of fiscal 2023 and an $870,000 promissory note during the second quarter

of fiscal 2023.

The weighted average interest rate decreased due

to the extension of maturity dates on the LGH and Tysadco notes that have flat interest rates.

Other Income, net

Other income, net in the nine months ended April

30, 2022, included a donation in the amount of $500,000 in partnership with the Erase PTSD Now organization

and the Glenn Greenberg and Linda Vester Foundation.

Other income, net in all periods includes foreign exchange gains and losses

related to invoices denominated and paid in foreign currencies.

Net loss decreased in the three and nine months

ended April 30, 2023 compared to the same periods of the prior year due to decreased research and development expense, general and administrative

expense and interest expense as discussed above.

The increase in the weighted average debt outstanding

was due to convertible debt agreements entered into with Mast Hill in the second quarter of fiscal 2023 and two accredited investors in

the first quarter of fiscal 2024.

Net loss decreased in the three-month period ended

October 31, 2023 compared to the same period of 2022 primarily due to the $331,214 decrease in research and development due to the completion

of dosing of patients in the Phase I clinical trial in the first quarter of fiscal 2023, and the $809,355 decrease in stock expense and

business development and investor relations activities in the first quarter of fiscal 2024 compared to the same quarter of fiscal 2023.

Liquidity and Capital Resources

See Recent Funding above for a discussion of our

recent debt and equity financings.

See Recent Funding above for a discussion of our recent financings.

The following table sets forth the primary sources and uses of cash:

Nine Months Ended April 30,

Three Months Ended October 31,

Net cash used in operating activities

$ (1,354,850 )

$ (2,554,811 )

Net cash used in investing activities

Net cash provided by financing activities

To date, we have financed our operations primarily

through debt financing and limited sales of our common stock.

Our ability to continue to access capital could be affected adversely by

various factors, including general market and other economic conditions, interest rates, the perception of our potential future earnings

and cash distributions, any unwillingness on the part of lenders to make loans to us and any deterioration in the financial position of

lenders that might make them unable to meet their obligations to us.

If these conditions continue and we cannot raise funds through a

public or private debt financing, or an equity offering, our ability to grow our business may be negatively affected.

In such case, we

may need to suspend research and development activities until market conditions improve.

Historically, we have financed our operations

primarily through debt financing, limited sales of our common stock and recently through the sale of our neurological asset for upfront

non-refundable fees.

Our ability to continue to access capital could be affected adversely by various factors, including general market

and other economic conditions, interest rates, the perception of our potential future earnings and cash distributions, any unwillingness

on the part of lenders to make loans to us, and any deterioration in the financial position of lenders that might make them unable to

meet their obligations to us.

If these conditions continue and we cannot raise funds through a public or private debt financing, or an

equity offering, our ability to grow our business may be negatively affected.

In such case, we may need to suspend the creation of new

products until market conditions improve.

The following notes payable were outstanding:

Convertible note issued to LGH due June 30, 2023, with a flat interest rate of 8.0% of the original principal of $1,050,000 and convertible at $0.20 per share

Promissory notes issued to officers and directors due June 30, 2023, with a fixed interest rate of 8.0% per annum (see Note 10)

Promissory note with an interest rate of 8% per annum due June 30, 2023

Tysadco convertible promissory note payable due December 31, 2023, with a flat interest rate of 8.0% of the original principal of $250,000 and convertible at $0.20 per share

Mast Hill convertible promissory note due December 13, 2023, with a fixed interest rate of 10% per annum and convertible at $0.12 per share

Unamortized debt discount and closing costs

October 31, 2023

July 31, 2023

Convertible note issued to LGH due December 31, 2023, with a set interest amount of $84,000 through July 7, 2023, then an interest rate of 8.0% per annum of the then outstanding principal of $1,055,000 and convertible at $0.12 per share

Promissory notes issued to officers and directors due January 31, 2024, with an interest rate of 8.0% per annum

Note purchase agreement issued to two accredited investors due August 15, 2024, with an interest rate of 12% per annum

ClearThink convertible promissory note due December 31, 2023, with a set interest amount of $20,000 and convertible at $0.20 per share

Mast Hill convertible promissory note due June 13, 2024, with an interest rate of 10% per annum and convertible at $0.12 per share

Unamortized beneficial conversion feature, debt discount and closing costs

Australian Research and Development Rebate

In the first nine months of fiscal 2023, we incurred

In the first quarter of fiscal 2024, we incurred

$25,843 of expenses related to our Phase I clinical trial of our concussion drug device combination that are eligible for the Australian

research and development rebate for a rebate due of $294,654, which was recorded as an offset to Research and development expense.

On November 18, 2022, we received a research and

development rebate from the government of Australia in the amount of $313,709 for clinical work performed in Australia related to our

Phase I human clinical trial during the fiscal year ended July 31, 2022.

On December 8, 2022, we received a goods and service

tax refund, which was accrued as part of our research and development rebate due from the Australian government, in the amount of $82,705

related to our Phase I human clinical trial during July, August and September 2022.

On February 10, 2023, we received a goods and

service tax refund, which was accrued as part of our research and development rebate due from the Australian government, in the amount

of $9,231 related to our Phase I human clinical trial during October, November and December 2022.

research and development rebate for a rebate due of $12,534, which was recorded as an offset to research and development expense during

the quarter ended October 31, 2023.

Inflation did not have a material impact on our

7 unchanged sentences

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 2. Management’s Discussion and Analysis