What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-12-16 compared with 2024-06-14 · 70 added, 168 removed, 88 unchanged (73% of the section changed)

40 unchanged sentences

regulatory clearance or approval for commercial sale.

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

(the “Agreement”) with Oragenics, Inc.

(“Oragenics”).

Pursuant to the Agreement, we sold 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 “Assets”) to Oragenics.

The closing was completed on December 28, 2023.

See below and Note 4 of Notes to Condensed Consolidated

Financial Statements for additional information.

We plan to license, improve, and develop our products

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Recent Funding

LPC Purchase Agreement Draws

During the nine months ended April 30, 2024, LPC

purchased a total of 600,000 shares of our common stock for total proceeds of $55,620 pursuant to the August 14, 2020, LPC Purchase Agreement.

At December 31, 2023, the LPC Purchase Agreement expired.

Asset Agreement with Oragenics, Inc.

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

with Oragenics, which closed on December 7, 2023.

Pursuant to the Agreement, we sold the segment of our business and related assets focused

on developing medical products that treat brain related illnesses and diseases (the “Assets”) to Oragenics in exchange for

(i) $1,000,000 in cash;

(ii) 8,000,000 shares of convertible Series F preferred stock;

and (iii) the assumption of $325,672 of our accounts

The total value of consideration received was $16,400,687.

The in-process research and development 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

Agreement on October 4, 2023, and received the additional $500,000 on December 11, 2023, upon our stockholder approval for the sale of

Following the closing of the Agreement on December 28, 2023, we received 8,000,000 shares of Series F preferred stock.

receipt, 511,308 shares of the Series F preferred stock, which represented 19.9% of the then outstanding shares of Oragenics common stock,

converted into 511,308 shares of Oragenics common stock.

At the closing, we were required to obtain the

consent of Mast Hill to consummate the closing of the Asset Agreement.

As part of the consent, we entered into a pledge agreement with

Mast Hill granting a security interest in 154,545 of the total preferred shares, and collectively with all of the common shares or other

securities into which the preferred shares are converted or exchanged into common shares, until the Mast Hill debt is paid.

The remaining shares of convertible Series F preferred

stock will convert upon Oragenics shareholder approval and upon certain listing and change in control criteria being achieved.

at our option, we are allowed to convert additional shares of the Series F preferred stock as long as we do not own a total of more than

19.9% of the then outstanding Oragenics common stock.

See Note 4 of Notes to Condensed Consolidated

Financial Statements for additional information.

Accredited Investor

Promissory Note

On February 13, 2024, we entered into a six-month

promissory note for $50,000, with Jonathan Lutz, an accredited investor, with an interest rate of 10% per annum and due August 11, 2024.

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 Condensed Consolidated

Financial Statements for additional information.

On August 14, 2024, we entered into a $300,000

promissory note (the “Note”) with an accredited investor.

The $300,000 was received on August 22, 2024.

The Note has a one-year

maturity, becoming due on August 22, 2025, and bears interest at the rate of 18% per annum.

In addition, we issued the investor a warrant

to purchase 300,000 shares of our common stock at $0.10 per share that expires August 14, 2029, with a fair value of $13,343.

31, 2024, $300,000 in principal and $11,539 in accrued interest remained outstanding.

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, 2024, 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, 2023, filed with the Securities

and Exchange Commission on October 30, 2023.

During the three months ended October 31, 2024,

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, 2024, which was filed

with the SEC on November 13, 2024.

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, 2024 or 2023.

and we did not have any revenue in the three-month periods ended October 31, 2024 or 2023.

We will commence actively marketing products

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successful in obtaining FDA clearance or approval for our products.

Three Months Ended April 30,

Research and development expense

Stock-based compensation

General and administrative expense

Loss from operations

Loss on investment

Interest expense

Other income (expense), net

Deemed dividend

Net loss attributable to common stockholders

$ (1,284,102 )

Basic net loss per share attributable to common stockholders

Diluted net loss per share attributable to common stockholders

Nine Months Ended April 30,

In-process research and development expense

Research and development expense

Three Months Ended

Research and development

Stock-based compensation

General and administrative expense

General and administrative

Gain on sale of asset

Loss from operations

Gain on sale of assets

Loss on investment

Unrealized losses on investment

Interest expense

Other income, net

Net income (loss)

Deemed dividend

Net income (loss) attributable to common shareholders

$ (5,105,412 )

Basic net income (loss) per share attributable to common stockholders

Diluted net income (loss) per share attributable to common stockholders

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 a 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

Nine months ended

April 30, 2024 compared to three months ended

April 30, 2023

Increase (decrease) in:

Phase I clinical trial

Australian research and development rebate

Phase II clinical trial

The decreases in the Phase I clinical trial and

the Australian research and development rebate in the nine months ended April 30, 2024, compared to the nine months ended April 30, 2023,

were the result of the completion of the dosing of subject in the first quarter of fiscal 2023.

No additional expenses are expected related

to ONP-002 as a result of the sale of the asset to Oragenics.

Basic and diluted net loss per share

Research and Development

Research and development relates to our current

projects and includes expenses for clinical research, design and manufacturing, formulation, regulatory and consultants.

Currently, we are not working on any research

and development projects.

Stock-Based Compensation

The decreases in Stock-based compensation for

the three and nine months ended April 30, 2024, compared to the same periods of 2023 were due to fewer grants and unvested awards outstanding.

The decrease in stock-based compensation was due

to fewer awards issued in recent quarters as well as a lower price for our common stock.

General and Administrative Expense

Our General and administrative expense includes

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 changes in General and administrative expense

were due to the following:

April 30, 2024

compared to three months ended

April 30, 2024

compared to three months ended

April 30, 2023

General and administrative includes expenses related

to 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 change in General and administrative expense

was due to the following:

Three months ended October 31, 2024 compared to three months ended October 31, 2023

Increase (decrease) in:

Public company expense

Business development and investor relations

Consulting fees

Insurance expense

Legal and professional fees

Public Company Expense

The decreases in the current fiscal year periods

compared to the prior fiscal year were primarily a result of the decreases in business development activities due to limited resources

and fewer employees.

Bad debt expense

The decreases in wages and business development

and investor relations were due to fewer employees and lower activity throughout the company.

Gain on Sale of Asset

The gain on sale of asset in the nine months ended

April 30, 2024 relates to our sale of our 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 to Oragenics in December 2023.

Loss on Investment

Loss on investment in the three and nine months

ended April 30, 2024 relates to the revaluation of the common stock of Oragenics held as an investment.

The gain on sale of asset in fiscal 2024 relates

to our sale of our 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 to Oragenics

in December 2023.

Unrealized Losses on Investment

Unrealized losses on investment in relates to

the valuation of the common stock of Oragenics held by us as an investment.

See Notes 3 and 4 of Notes to Consolidated Financial Statements

for additional information.

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 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 decrease in the weighted average debt outstanding

for the three and nine months ended April 30, 2024, was due to the conversion of convertible debt agreements with Mast Hill, ClearThink

and the two accredited investors.

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

$ (1,151,509 )

$ (1,354,850 )

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Historically, we have financed our operations

primarily through debt financing, limited sales of our common stock and recently through the sale of our neurological assets to Oragenics

as discussed in Note 4 of Notes to Condensed Consolidated Financial Statements.

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.

case, we may need to suspend the creation of new products until market conditions improve.

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

have suspended research and development activities until market conditions improve.

The following notes payable were outstanding:

April 30, 2024

October 31, 2024

July 31, 2024

Convertible note issued to LGH due June 30, 2024, with a set interest amount of $84,000 through July 7, 2023, then an interest rate of 8.0% per annum of outstanding principal and convertible at $0.12 per share

Promissory notes issued to officers and directors due July 31, 2024, with an interest rate of 8.0% per annum and convertible at $0.12 per share

Accredited investor promissory note due August 11, 2024, with an interest rate of 10% per annum and convertible into Oragenics common stock held by us at $2.50 per share

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 December 13, 2024, with an interest rate of 10% per annum and convertible at $0.072 per share

Convertible note issued to LGH due December 31, 2024, with a set interest amount of $84,000 through July 7, 2023, then an interest rate of 8.0% per annum of outstanding principal and convertible at $0.072 per share

Promissory notes issued to officers and directors due December 31, 2024, with an interest rate of 8.0% per annum and convertible at $0.12 per share

Accredited investor promissory note due February 13, 2025, with an interest rate of 10% per annum and convertible into 30,000 shares of Oragenics common stock held by us.

Mast Hill convertible promissory note due June 13, 2025, with an interest rate of 10% per annum and convertible at $0.072 per share

Accredited investor promissory note due August 22, 2025, with an interest rate of 18% per annum

Unamortized debt discount and closing costs

Unamortized beneficial conversion feature

Australian Research and Development Rebate

In the first nine months of fiscal 2024, we incurred

$43,092 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 $20,900, which was recorded as an offset to Research and development expense.

Inflation did not have a material impact on our

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis