Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer, President and General
Counsel, as our principal executive officer (“Chief Executive Officer”), and our Chief Financial Officer, as our principal
financial officer (“Chief Financial Officer”), evaluated the effectiveness of our “disclosure controls and procedures,”
as such term is defined in Rule 13a-15(e) promulgated under the Exchange Act. Disclosure controls and procedures are designed to ensure
that the information required to be disclosed in the reports that we file or submit to the Commission pursuant to the Exchange Act are
recorded, processed, summarized and reported within the period specified by the Commission’s rules and forms and are accumulated
and communicated to our management, including our Chief Executive Officer, as appropriate to allow timely decisions regarding required
disclosures. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of April
30, 2022, that certain of our disclosure controls and procedures were not effective due to the material weaknesses in internal control
over financial reporting. This is described below in Management’s Report on Internal Control over Financial Reporting.
A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Also, controls can be
circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The
design of any system of controls is also based in part upon certain assumptions about the likelihood of future events. There can be no
assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Management’s Report on Internal Controls
over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal controls over financial reporting as that term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).
Our internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
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A material weakness is a deficiency, or a combination
of deficiencies, in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented or detected in a timely basis.
Under the supervision and with the participation
of our Chief Executive Officer and our Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal
controls over financial reporting as of April 30, 2022, based on the criteria outlined in Internal Control-Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and identified the following material
weaknesses in internal controls over financial reporting:
·
Insufficient Segregation of Duties of the Chief Financial Officer . We have delegated some of the duties of our Chief Financial Officer to other personnel within the Company and have added review and approval processes performed by the Chief Executive Officer. However, we have determined that we still have insufficient segregation of the duties of our Chief Financial Officer. We plan to hire an additional person to work for our Chief Financial Officer to enable sufficient segregation of his duties.
Because of this material weakness, our Chief Executive
Officer and our Chief Financial Officer concluded that, as of April 30, 2022, our internal controls over financial reporting were not
effective based on the COSO criteria.
We plan to make changes to our procedures and
controls that we believe are reasonably likely to strengthen and materially affect our internal controls over financial reporting. The
one material weakness should be eliminated during fiscal year 2023.
Prior to the remediation of our material weakness,
there remains risk that the processes and procedures on which we currently rely will fail to be sufficiently effective, which could result
in material misstatement of our financial position or results of operations and require a restatement. Because of the inherent limitations
in all control systems, no evaluation of controls - even where we conclude the controls are operating effectively - can provide absolute
assurance that all control issues, including instances of fraud, if any, have been detected. These inherent limitations include the realities
that judgments in decision making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, controls can
be circumvented by the individual acts of a person, by collusion of two or more people, or by management override of the controls. The
design of any system of controls also is based in part upon certain assumptions about the likelihood of future events; accordingly, there
can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, our control
systems, as we develop them, may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures
may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur
and not be detected and could be material to our financial statements.
Remediation of a Material Weakness
Throughout the year ended April 30, 2022, we undertook
remediation measures related to a previously reported material weakness in internal control over financial reporting. The previously reported
material weakness related to insufficient information technology controls and documentation. We completed the remediation measures during
the year ended April 30, 2022, including testing of the design and implementation of the related controls. We acquired and installed an
accounting software package to record our transactions to provide the level of controls required by COSO. Based on these procedures, we
believe that this previously reported material weakness has been remediated.
Changes in Internal Controls over Financial
Reporting
Other than described above in this Item 9A, there
were no changes to our internal control over financial reporting during the fiscal year ended April 30, 2022, that have materially affected,
or are reasonably likely to materially affect, our internal controls over financial reporting.
The Certifications of our Principal Executive
and Principal Financial Officer required in accordance with Rule 13a-14(a) under the Exchange Act and Section 302 of the Sarbanes-Oxley
Act of 2002 (“Certifications”) are attached to this Report. The disclosures set forth in this Item 9A contain information
concerning: (i) the evaluation of our disclosure controls and procedures, and changes in internal control over financial reporting, referred
to in paragraph 4 of the Certifications; and (ii) material weaknesses in the design or operation of our internal control over financial
reporting, referred to in paragraph 5 of the Certifications. The Certifications should be read in conjunction with this Item 9A for a
more complete understanding of the matters covered by the Certifications.
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ITEM 9B. OTHER INFORMATION
On May 8, 2022, we entered into amendments to
the employment agreements with each of Kenneth L. Waggoner, our Chief Executive Officer and President, and Carlos A. Trujillo, our Chief
Financial Officer. The terms of such amended employment agreements are summarized in Part III, Item 11. “Executive Compensation—Employment
Arrangements” of this Report, which summaries are qualified in their entirety by reference to the full text of such amended employment
agreements filed herewith as Exhibits 10.40 and 10.41.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
As of July 15, 2022, our directors and executive
officers are:
Age
Position
Kenneth L. Waggoner
74
Chairman of the Board, Chief Executive Officer, President and General Counsel
Gerald W. Crabtree
81
Director and Chief Scientific Officer
Carlos A. Trujillo
64
Director and Chief Financial Officer
Thomas Liquard
49
Director
Michael M. Abecassis
64
Director
Raymond C.F. Tong
63
Director
Matthias Löhr
63
Director
Kenneth L. Waggoner
Kenneth L. Waggoner became our Chief Executive
Officer and President in November 2013. Shortly thereafter, Mr. Waggoner assumed the additional position of General Counsel. In April
2014, Mr. Waggoner became a full-time employee as the Chief Executive Officer, President and General Counsel of both PharmaCyte and Viridis
Biotech, a wholly owned subsidiary of PharmaCyte. Mr. Waggoner has been a member of the Board since September 2014. Mr. Waggoner has over
forty-five years of experience in management, business, operations and the practice of law. It was his education, training, experience
and leadership skills that led us to elect him to the Board and appoint him Chairman.
Mr. Waggoner began his professional career as
an attorney in private practice. From 1986 to 2003, he was a senior partner with the international law firm Brobeck, Phleger and Harrison
(“Brobeck”). He was the Managing Partner of Brobeck’s Los Angeles office. While at Brobeck, Mr. Waggoner served as a
member of the Executive Committee and Policy Committee. Mr. Waggoner was the co-Chairman of Brobeck’s worldwide Environmental Law
Group.
Mr. Waggoner’s career included leadership
and legal positions with Fortune 100 companies most of his professional career. From 2003 to 2005, Mr. Waggoner served as the Vice President
and General Counsel of Chevron’s global downstream operations where he was responsible for the overall management of legal services
to the North American, Latin American, European and Asian Products Companies. While at Chevron, Mr. Waggoner led the restructuring of
Chevron’s global Legal Department following Chevron’s acquisition of Texaco.
From 2005 until September 2013, Mr. Waggoner was
the principal of the Law Offices of Kenneth L. Waggoner & Associates. During that time, he held leadership and legal positions with
several start-up companies and provided legal counsel and business advice to his clients.
Mr. Waggoner received his Juris Doctorate with
honors from Loyola University School of Law in Los Angeles in 1973.
Gerald W. Crabtree
Gerald W. Crabtree is our Chief Scientific Officer
and has been a member of the Board since February 2013. He has served as Chief Scientific Officer since October 14, 2020. Prior to that,
Dr. Crabtree was our Chief Operating Officer. Given the major importance to developing treatments for cancer and diabetes coupled with
Dr. Crabtree’s education, training and experience, Dr. Crabtree was appointed to the Board.
Dr. Crabtree’s background in the biomedical
sciences has been substantial, having been involved with various biopharmaceutical companies where he has alternatively supervised and
coordinated the development of multiple drug candidates, prepared clinical protocols, investigator brochures, monographs, and research
and review articles.
94
Dr. Crabtree has over 50 years of experience in
the biomedical sciences sector with the majority of that being in the cancer area. Dr. Crabtree served as the Director of Project Planning
and Management (Oncology and Immunology) at Bristol-Myers Squibb (“BMS”) from 1990 to 1997. While at BMS, Dr. Crabtree established
and directed the department that coordinated the development of all oncologic and immunologic drugs from initial discovery through regulatory
approval. He also served as Project Manager for the development of the major anticancer agent, Taxol. Taxol ultimately became a multi-billion-dollar
drug for BMS and is still widely used to treat a variety of cancers. From 1985 to 1990, Dr. Crabtree was the Director of Pharmacology
at Viratek, a subsidiary of ICN Pharmaceuticals, in Costa Mesa, California, where he worked on the development of anticancer drugs first
developed at the Nucleic Acid Research Institute, a joint venture between Eastman Kodak and ICN Pharmaceuticals. He also helped coordinate
the development of ribavirin, Viratek's landmark antiviral drug. From 1970 through 1985, Dr. Crabtree was a member of the faculty of Brown
University where he was involved in both basic and clinical cancer research.
Dr. Crabtree received his Ph.D. in Biochemistry
from the University of Alberta, Edmonton, Alberta, Canada, and has published over 80 articles in peer-reviewed journals. He was a National
Cancer Institute of Canada Research Fellow, is currently a member of the American Society of Clinical Oncology and was a member of the
American Association for Cancer Research from the early 1990s until recently and has served on research grant review committees for the
National Institutes of Health and the American Cancer Society.
Carlos A. Trujillo
Carlos A. Trujillo has been our Chief Financial
Officer and a member of the Board since March 2017. He began working for us as an independent contractor in September 2014. In January
2015, Mr. Trujillo became a full-time employee as the Vice President of Finance of both us and Viridis Biotech, and in March 2017, Mr.
Trujillo was appointed as our Chief Financial Officer. Mr. Trujillo has over three decades of experience in management, business, operations
and financial accounting. It was his education, experience and leadership skills that led us to elect him to the Board.
Mr. Trujillo is a Certified Public Accountant
with an active license from the State of California. He has more than three decades of experience in finance, accounting and management.
Mr. Trujillo started his career in public accounting and was the manager of an audit department a large regional public accounting firm.
Mr. Trujillo then established a consulting and accounting practice which he operated for ten years and provided services as the Chief
Financial Accountant to numerous organizations in several different industries. His experience has extended to companies in the biotechnology,
telecommunications, manufacturing, construction and real estate development sectors.
For the last fourteen years, Mr. Trujillo has
been the Chief Financial Officer for both privately held and publicly traded and multinational companies. From June 2008 through September
2014, Mr. Trujillo was the Chief Financial Officer of VelaTel Global Communications, Inc. As a result, he brings experience to us in preparing
and filing periodic reports with the Commission, in mergers and acquisitions and in the filing of comprehensive financial statements.
Mr. Trujillo received his Bachelor of Accounting
degree from California State University, Fullerton in 1982.
Thomas Liquard
Thomas Liquard has been a member of the Board
since April 2015. Mr. Liquard has more than 15 years of experience in the pharmaceutical industry, having held various commercialization,
product development and leadership roles with large pharmaceutical and biotechnology companies.
Mr. Liquard currently serves as the Senior Vice
President of Product Development at Neurelis, Inc., a San Diego based biotechnology company. He joined Neurelis in late 2017. He From
August 2015 to August 2017, Mr. Liquard was the Chief Executive Officer of Immuron, a Melbourne, Australia-based pharmaceutical company.
Prior to Immuron, Mr. Liquard served as the Chief Executive Officer and Chief Operating Officer of Alchemia, a major Australian pharmaceutical
company. Mr. Liquard worked for Alchemia from October 2013 to November 2014. Mr. Liquard spent the previous seven years with Pfizer, Inc.
based in New York, where he held various senior commercial positions. His last was as Senior Director, Portfolio Development Leader and
Emerging Markets for the Established Products portfolio. In that role, Mr. Liquard drove business development (M&A, licensing, partnerships)
and internal product development initiatives.
95
Mr. Liquard was appointed to the Board because
of his experience and expertise in leading positions with life science-based biotech and pharmaceutical companies. We believed that his
seven-year tenure with Pfizer, one of the world’s leading pharmaceutical companies, where he played leading roles in the development
of that company’s portfolio development, was a needed asset to us. Mr. Liquard received his Master of Business Administration in
Finance and Strategy from the Columbia Business School and a Bachelor of Science degree from the University of Southern California.
Michael M. Abecassis
Michael M. Abecassis, MD was appointed to the
Board in July 2017. Since November 2019, Dr. Abecassis has been Dean of the University of Arizona College of Medicine – Tucson.
Prior to that and since 1992, Dr. Abecassis was a transplantation surgeon at the Northwestern University Feinberg School of Medicine.
Dr. Abecassis was appointed to the Board because of his demonstrated leadership qualities in academia, in the clinic and throughout his
career in medicine. These attributes and his experience in the medical field translate directly to the work being undertaken by us in
the cancer arena and have led us to elect him to the Board.
Dr. Abecassis was the Director of the Comprehensive
Transplant Center of the Feinberg School of Medicine. He was also the Chief of Transplant Surgery in the Department of Surgery at Feinberg
and a James Roscoe Miller Distinguished Professor of Medicine at Feinberg.
Dr. Abecassis received his Medical Degree from
the University of Toronto in 1983 and was awarded a Master of Business Administration degree from the Kellogg School of Management at
Northwestern University in 2000. After his postgraduate tenure in Toronto, Dr. Abecassis began his clinical career as Assistant Professor
of Surgery and Director of Liver Transplantation and Hepatobiliary Surgery at the University of Iowa. In 1993, Dr. Abecassis became Northwestern
University’s Director of Liver Transplantation, where he initiated Northwestern’s liver transplant program. In 2004, Dr. Abecassis
was named Chief of the Division of Transplantation at the Feinberg School of Medicine. He became Founding Director of the Comprehensive
Transplant Center at Northwestern in 2009 and was appointed Dean for Clinical Affairs at the Feinberg School of Medicine in 2008, serving
until 2011.
Dr. Abecassis has received continuous funding
from the National Institutes of Health (“NIH”) for the past 17 years. He is the principal investigator in research that includes
both laboratory and clinical studies. He is also the principal investigator of the clinical core of the NIH Genomics of Transplantation
Cooperative Research Program. Dr. Abecassis has trained numerous clinical and research fellows.
Dr. Abecassis is a member of the Society of University
Surgeons and the American Surgical Association and was President of the American Society of Transplant Surgeons 2010-2011. He has served
and continues to serve on the Editorial Boards of major scientific journals (Hepatology, Surgery, Transplantation and Liver Transplantation)
and is a reviewer for all major journals related to surgery and transplantation. He has served as a member of NIH grant study sections
and special emphasis panels relating to both transplantation and virology. He is a permanent member of the National Institute of Allergy
and Infectious Diseases study section for career development and training grants.
Dr. Abecassis has been a course director for the
American Society of Transplant Surgeons Leadership Development Program since 2010 and was course director for the Advanced Leader Development
Program in 2013 at Northwestern’s Kellogg School of Management. He was a voting member of the Medicare Coverage Advisory Committee
and served on the United HealthCare Group Physician Advisory Board on Healthcare Performance and Quality. Dr. Abecassis has been a member
of various local, regional and national regulatory committees and has published seminal papers on both the regulatory and financial aspects
of transplantation, including the Healthcare Reform and the Affordable Care Act.
Raymond C.K Tong
Raymond C.K. Tong, MD serves as Chief Executive
Officer of Harmony Medical Inc., an Asian investment group active in the introduction and distribution of medical and healthcare products
and services in China and throughout Asia. He is also Chairman of the Business Development Committee of Shanghai Kedu Healthcare Group,
the largest medical equipment third-party service provider in China, representing products from GE, Philips, Siemens, Kodak and other
multi-nationals as well as local companies. He was appointed to the Board in October 2017. It was his stellar career in the medical field,
as well as his significant connections to the investment community throughout Asia, leadership skills and business acumen and experience
that caused us to elect him to the Board.
96
Dr. Tong has been a Director of Medifocus Inc.
since January 27, 2015. He was also a Director of Shanghai CP Guojian Pharmaceutical, one of the first and largest bio-pharmaceutical
manufacturers in China. In addition, Dr. Tong is the founding Director and Chief Executive Officer of VetCell Therapeutics Asia, a cell
therapy company focused on providing cell-based treatments for use in veterinary medicine in Asia.
Dr. Tong’s earlier career includes senior
management positions in China with Pfizer and Ball Corporation. He was also responsible for the Healthcare Investment Division of CITIC
in Hong Kong. CITIC is the largest conglomerate in China and an established global player, with businesses covering healthcare, financial
services, resources, energy, manufacturing, engineering and many others.
Dr. Tong received his medical degree from the
University of Toronto in Ontario, Canada in 1983. He also received a Ph.D. degree in neurophysiology and an M.B.A. degree. After receiving
his medical degree, Dr. Tong founded a chain of medical clinics in the Province of Ontario where he served as Medical Director and Chief
Physician. During this period, he also served as a consultant and an investigator in several clinical trials. In 1989, Dr. Tong returned
to Hong Kong, where he was born and resided before medical school, and spent the next 19 years in prominent corporate appointments with
several multinational medical and pharmaceutical companies discussed above.
Matthias Löhr
Matthias Löhr, MD was appointed to the Board
in March 2022. Dr. Löhr is a licensed physician, board-certified internist and Professor of Gastroenterology and Hepatology at the
Karolinska Institute of Stockholm, Sweden. He leads the pancreatic team at Karolinska University Hospital. He has served as Professor
of Molecular Gastroenterology at the University of Heidelberg with a same-named unit at the German Cancer Research Center in Heidelberg
Germany. He has worked as a translational scientist and principal investigator in clinical studies in gastrointestinal oncology for many
years. In addition to being highly published, he has extensive scientific and grant review experience, and has received multiple awards
and distinctions. These attributes and his experience in the medical field translate directly to the work being undertaken by us in the
cancer arena have led us to elect him to the Board.
Dr. Löhr served as the Principal Investigator
for the Phase 1/2 and Phase 2 clinical trials of the PharmaCyte’s pancreatic cancer therapy that were completed in the early 2000s.
He is familiar with the Cell-in-a-Box ® live-cell encapsulation technology that forms the core of our pancreatic cancer
therapy. He also administered our therapy for pancreatic cancer in clinical trials in patients with advanced, inoperable pancreatic cancer.
Dr. Löhr has also previously served as a
consultant to us in connection with our development of treatments for pancreatic cancer and diabetes using the Cell-in-a-Box ®
technology. He has expertise in both diseases and has a thorough understanding of our technology and its use in a clinical setting.
In 2000, Dr. Löhr was appointed Professor
of Molecular Gastroenterology at the University of Heidelberg and became Head of the Division at the German Cancer Research Center, which
he led until 2010. Dr. Löhr has authored more than 340 original peer-reviewed scientific papers and more than 50 reviews. He has
authored six books. He has been granted six patents and is an Editor Board Member of the Journal of Clinical Medicine, Pancreatology,
Scientific Reports, and the World Journal of Gastroenterology.
Dr. Löhr holds MD and PhD degrees from the
Universities of Hamburg and Rostock. Following receipt of his medical degree, he served a residency in pathology in Hamburg, Germany,
and residencies in internal medicine and gastroenterology, where he became chief resident and later attending physician and assistant
professor at the University of Rostock.
Family Relationships
There are no family relationships among our executive
officers, directors and significant employees.
Legal Proceedings
As of April 30, 2022, our personnel do not have
any involvement in legal proceedings requiring disclosure pursuant to the rules and regulations of the Commission.
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Code of Ethics
Our Board has adopted a written Code of Business
Conduct and Ethics, an Insider Trading Policy and Software Policies that apply to our directors, officers, employees and contractors.
These documents can be viewed and downloaded from the “Governance” dropdown menu of our website under the “Company”
tab. The content of these documents is not incorporated into this Form 10-K.
Corporate Governance and Committees
Board Leadership and Structure
The Chairman of the Board presides at all meetings
of the Board. Mr. Waggoner serves as the Chairman of the Board and as our Chief Executive Officer, President and General Counsel.
The Board does not have a policy on whether or
not the roles of Chief Executive Officer and Chairman of the Board should be separate. The Board believes that it should be free to make
a choice from time to time in any manner that is in the best interests of the Company and our stockholders.
Audit Committee
The Audit Committee is currently comprised of
Dr. Michael Abecassis, Dr. Tong, and Mr. Liquard. The Chairman of the Audit Committee is Mr. Liquard. The primary purposes of our Audit
Committee are to assist the Board in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting,
auditing, financial reporting, internal control, legal compliance and risk management functions of the Company, including, assisting the
Board’s oversight of: (i) the integrity of our financial statements; (ii) the effectiveness of our internal control over financial
reporting; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent registered
public accounting firm; and (v) the performance of our internal audit function and independent registered public accounting firm.
Our Board has determined that each member of our
Audit Committee is independent within the meaning of the rules of Nasdaq. Our Board has determined that the Chairman of the Audit Committee,
Mr. Liquard, is an “audit committee financial expert,” as that term is defined in Item 407(d) of Regulation S-K under the
Exchange Act.
Our Audit Committee charter can be viewed and
downloaded from the “Governance” dropdown menu of our website under the “Company” tab.
Compensation Committee
The Compensation Committee is currently comprised
of Mr. Liquard, Dr. Tong and Dr. Löhr. The Chairperson of the Compensation Committee is Dr. Tong. The primary purposes of our Compensation
Committee are: (i) to establish and maintain our executive compensation policies and compensation consistent with corporate objectives
and stockholder interests; (ii) to oversee the competency and qualifications of our senior management personnel and the provisions of
senior management succession planning; and (iii) to advise the Board with respect to director compensation issues.
The Compensation Committee, which is composed
of independent directors, provides overall guidance for our executive compensation policies and determines the value and elements of compensation
for our executive officers.
Our Compensation Committee charter can be viewed
and downloaded from the “Governance” dropdown menu of our website under the “Company” tab.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee
is currently comprised of Dr. Abecassis and Dr. Tong. The Chairperson of the Nominating and Corporate Governance Committee is Dr. Abecassis.
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The primary purposes of the Nominating Committee
are: (i) to recommend to the Board the nomination of individuals who are qualified to serve as our directors and on committees of the
Board; (ii) to advise the Board with respect to the composition, size, structure and procedures of the Board; (iii) to advise the Board
with respect to the composition, size and membership of the Board’s committees; (iv) to advise the Board with respect to corporate
governance principles applicable to the Company; and (v) to oversee the evaluation of the Board as a whole and the evaluation of its individual
members standing for re-election. The Nominating Committee also has responsibility for reviewing and approving all transactions that are
“related party” transactions under the Commission’s rules.
The Nominating Committee does not set specific,
minimum qualifications that nominees for director must meet in order for the Nominating Committee to recommend them to the Board, but
rather believes that each nominee should be evaluated based on his or her individual merits, considering our needs and the composition
of the Board. Members of the Nominating Committee discuss and evaluate possible candidates in detail and suggest individuals to explore
in more depth. Once a candidate is identified whom the Nominating Committee wants to seriously consider and move toward nomination, the
Chairman of the Nominating Committee enters into a discussion with that nominee candidate. Subsequently, the Chairperson will discuss
the qualifications of the candidate with the other members of the Nominating Committee, and the Nominating Committee will then make a
final recommendation with respect to that candidate to the Board.
Board Practices
Our business and affairs are managed under the
direction of our Board. The primary responsibilities of our Board are to provide oversight, strategic guidance, counseling and direction
to our senior management.
Policy Regarding Board Attendance
Our directors are expected to attend meetings
of the Board as frequently as necessary to properly discharge their responsibilities and to spend the time needed to prepare for each
such meeting. If an annual meeting of stockholders is held, our directors are expected to attend that meeting, but we do not have a formal
policy requiring them to do so.
Shareholder Communications
We have a process for shareholders who wish to
communicate with our Board. Shareholders who wish to communicate with our Board may write to the Board at our address set forth at the
beginning of this Report. These communications will be reviewed by our Chief Executive Officer and Chief Financial Officer. They will
determine whether the communications should be presented to our Board. The purpose of this screening is to allow the Board to avoid having
to consider irrelevant or inappropriate communications.
ITEM 11. EXECUTIVE COMPENSATION
This section discusses the material components
of the executive compensation program for our executive officers who are named in the “Summary Compensation Table” below (each
a “Named Executive Officer”), as well as the director compensation program for our directors. As a smaller reporting company,
we are not required to include a Compensation Discussion and Analysis and have elected to comply with the scaled disclosure requirements
applicable to smaller reporting companies.
For our fiscal year ended April 30, 2022, our
Named Executive Officers and their positions were as follows:
·
Kenneth L. Waggoner, Chief Executive Officer, President, General Counsel and Chairman of the Board;
·
Gerald W. Crabtree, Chief Scientific Officer and Director; and
·
Carlos A. Trujillo, Chief Financial Officer and Director.
The following tables provide information about
compensation earned during our fiscal years ended April 30, 2022, and 2021, by our Named Executive Officers.
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Summary Compensation Table
Name
Principal Position
Fiscal
Year
Salary
($)
Stock
Awards
($)(1)
Option
Awards
($)(1)
Total
($)
Kenneth L. Waggoner (2)
Chief Executive Officer,
2022
$ 886,344
$ 18,080
$ 14,727
$ 919,151
President and
2021
$ 433,333
$ 105,960
$ 77,212
$ 616,505
General Counsel
Gerald W. Crabtree, (2)
Chief Scientific Officer
2022
$ 128,827
$ 3,013
$ 4,909
$ 136,749
2021
$ 94,333
$ 17,660
$ 25,738
$ 137,731
Carlos A. Trujillo (2)
Chief Financial Officer
2022
$ 609,979
$ 12,053
$ 9,819
$ 631,851
2021
$ 300,000
$ 70,640
$ 51,474
$ 422,114
(1) The amounts in the columns titled “Stock
Awards” and “Option Awards” reflect the grant date fair values of awards made during the identified fiscal year, as
computed in accordance with FASB ASC Topic 718 and the assumptions stated in Note 4 and Note 5 of the Consolidated Financial Statements
to this Report.
(2) We did not pay or accrue any other compensation,
in the form of bonuses, incentive plan compensation or nonqualified deferred compensation earnings to any Named Executive officer for
services as an executive officer during the fiscal years ended April 30, 2022, and 2021; neither were there any perquisites or other personal
benefits payable to our Named Executive Officers.
Outstanding Equity Awards at Fiscal Year End
Option Awards
Stock Awards
Name
Number of Securities Underlying Unexercised Options (#) Exercisable (1)
Number of Securities Underlying Unexercised Options (#) Unexercisable
Option Exercise Price ($)
Option Expiration Date
Number of Shares or Units of Stock That Have Not Vested (#)(1)
Market Value of Shares or Units of Stock That Have Not Vested ($)(2)
Kenneth L. Waggoner
3,000
–
$
81.00
12/31/2023
–
$
–
3,000
–
$
74.25
03/20/2024
–
$
–
3,000
-
$
61.20
01/02/2025
–
$
–
3,000
-
$
10.05
12/31/2025
–
$
–
1,000
2,000
$
2.50
01/01/2027
–
$
–
–
–
$
–
–
1,600
$
3,728
Gerald W. Crabtree
1,000
–
$
81.00
12/31/2023
–
$
–
1,000
–
$
74.25
12/31/2024
–
$
–
1,000
–
$
61.20
01/02/2025
–
$
–
1,000
–
$
10.05
12/31/2026
–
$
–
334
667
$
2.50
01/01/2027
–
$
–
–
–
$
–
–
267
$
622
Carlos A. Trujillo
2,000
–
$
81.00
12/31/2023
–
$
–
2,000
–
$
74.25
12/31/2024
–
$
–
2,000
–
$
61.20
01/02/2025
–
$
–
2,000
–
$
10.05
12/31/2025
–
$
–
667
1,334
$
2.50
01/0/2027
–
$
–
–
–
$
–
–
1,067
$
2,486
_______________________
(1)
Subject to the Named Executive Officer’s continued employment, 1/12 th of each grant vests monthly after the grant date. The unexercisable/unvested awards shown in this table were each granted effective as of January 1, 2022.
(2)
The market value is based on the closing stock price of $2.33 on April 30, 2022, the last day of trading in this fiscal year.
100
Employment Arrangements
Kenneth L. Waggoner
We have entered into an Amended and Restated Executive
Compensation Agreement with Mr. Waggoner (“Waggoner Compensation Agreement”) with an effective date of January 1, 2022. The
current term of the Waggoner Compensation Agreement extends until December 31, 2024, with annual extensions at the end of the term (or
any extension of the term), unless we or Mr. Waggoner provide 90-days written notice of termination. The Waggoner Compensation Agreement
provides that Mr. Waggoner will serve as a member of our Board, as our Chief Executive Officer, President and General Counsel and as the
Chief Executive Officer and General Counsel of our subsidiary Viridis Biotech, Inc. Under this agreement, Mr. Waggoner is paid a base
salary of $520,000 subject to annual increases in the discretion of our Compensation Committee and shall be eligible to receive cash incentive
compensation (“Bonus”). Mr. Waggoner is eligible to participate in the Company’s 2021 Equity Incentive Plan (“2021
Plan”). On May 20, 2022, the Compensation Committee granted Mr. Waggoner (i) a stock option grant to purchase 529,000 shares of
common stock exercisable over a ten-year term at an exercise price per share equal to the closing price of the common stock on the date
of grant, vesting at the rate of 25% immediately and the remaining vesting monthly over three years from the date of grant, approximately
11,000 option shares per month, and (ii) a grant of 150,800 restricted stock units, vesting at the rate of 25% immediately and an additional
25% on each anniversary of the grant date.
If Mr. Waggoner’s employment is terminated
by us without “Cause” or by him for “Good Reason” (as such terms are defined in the Waggoner Compensation Agreement),
then subject to his execution of a timely release, he is entitled to: (i) severance equal to two times the sum of his base salary at the
time his employment terminates, (ii) payment of the annual bonus, if any, earned by Mr. Waggoner for the year preceding the year of termination,
or, if greater, the target bonus, if any, for the year of termination, (iii) accelerated vesting of any unvested stock or option awards
and (iv) continued health coverage for Mr. Waggoner and his family and life insurance coverage for Mr. Waggoner, if any, for 18 months
at the Company’s expense.
Notwithstanding the foregoing, if Mr. Waggoner’s
employment is terminated by us without Cause or by him for Good Reason within two years after a “Change in Control” (as such
term is defined in the Waggoner Compensation Agreement) or within six months prior to a Change in Control, then the base salary and bonus,
if any, component of severance would be paid in lump sum. Also, Mr. Waggoner would be entitled to receive a full Code Section 280G tax
gross-up, with respect to any amounts that may be subject to the excise tax provisions under Code Section 280G.
If Mr. Waggoner’s employment ceases due
to his death, (i) any otherwise unvested equity awards held by him at the time of his death would become vested, (ii) his eligible dependents
would be entitled to continued healthcare coverage at the Company’s expense for up to 18 months, and (iii) his designated beneficiary
or estate would receive the proceeds, if any, from any life insurance.
If Mr. Waggoner’s employment is terminated
due to “Disability” (as such term is defined in the Waggoner Compensation Agreement) he would receive continued health coverage
and life insurance coverage, if any, for 18 months at our expense, as well as any disability benefits payable under any long-term disability
plan or policy we maintain. In addition, any otherwise unvested equity awards would then become vested.
Additionally, Mr. Waggoner is bound by confidentiality
and non-disparagement provisions as well as non-solicitation and non-competition covenants that apply during the term of his employment
and for twenty-four months after termination of his employment.
Gerald W. Crabtree
We have entered into an Executive Compensation
Agreement with Dr. Crabtree (“Crabtree Compensation Agreement”). The current term of the Crabtree Compensation Agreement extends
until December 31, 2022 with annual extensions at the end of the term (or any extension of the term) unless we or Dr. Crabtree provide
90-days written notice of termination. The Crabtree Compensation Agreement provides that Dr. Crabtree will serve as a member of our Board,
as our Chief Scientific Officer and as the Chief Operating Officer of our subsidiary Viridis Biotech. Dr. Crabtree is paid a base salary
of $84,000 subject to annual increases in the discretion of our Compensation Committee. The Crabtree Compensation Agreement also provides
that, during his continued employment, Dr. Crabtree will receive annual stock grants of 400 shares of restricted common stock, vesting
at the rate of 33 shares per month, and an annual stock option grant to purchase 1,000 shares of common stock exercisable over a five-year
term at an exercise price per share equal to the closing price of the common stock on the date of grant, vesting at the rate of 83 option
shares per month.
All other terms regarding severance benefits,
treatment on a change in control, employment termination due to death/disability and restrictive covenants are substantially the same
as disclosed above for the Waggoner Agreement.
101
Carlos A. Trujillo
We have entered into an Amended and Restated Executive
Compensation Agreement with Mr. Trujillo (“Trujillo Compensation Agreement”) with an effective date of January 1, 2022. The
current term of the Trujillo Compensation Agreement extends until December 31, 2024, with annual extensions at the end of the term (or
any extension of the term) unless we or Mr. Trujillo provide 90-days written notice of termination.
The Trujillo Compensation Agreement provides that
Mr. Trujillo will serve as a member of our Board and as our Chief Financial Officer. Mr. Trujillo is paid an annual base salary of $380,000,
subject to annual increases at the discretion of the Compensation Committee and shall be eligible to receive an annual Bonus. Mr. Trujillo
is eligible to participate in the 2021 Plan. On May 20, 2022, the Compensation Committee granted Mr. Trujillo (i) a stock option grant
to purchase 201,860 shares of common stock exercisable over a ten-year term at an exercise price per share equal to the closing price
of the common stock on the date of grant, vesting at the rate of 25% immediately and the remaining vesting monthly over three years from
the date of grant, approximately 4,200 option shares per month, and (ii) a grant of 57,540 restricted stock units, vesting at the rate
of 25% immediately and an additional 25% on each anniversary of the grant date.
All other terms regarding severance benefits, treatment on a change
in control, employment termination due to death/disability and restrictive covenants are substantially the same as disclosed above for
the Waggoner Agreement.
Directors Compensation
The following table sets forth information concerning
compensation paid or to our directors, other than our Named Executive Officers who also serve as directors, during the year ended April
30, 2022.
Director Compensation Table
Name
Fees Earned
($)
Stock Awards
($)(1)
Option
Awards
($)(1)(2)
Total ($)
Thomas Liquard
$ 50,000
8,868
5,551
$ 64,419
Thomas C.K Yuen
$ 50,000
8,868
5,551
$ 64,419
Michael M. Abecassis
$ 50,000
5,411
3,456
$ 58,867
Raymond C.K. Tong
$ 50,000
1,065
798
$ 51,863
Matthias Löhr
$ 12,500
–
–
$ 12,500
(1)
The amounts in the columns titled “Stock Awards” and “Option Awards” reflect the grant date fair values of awards made during the fiscal year ended April 30, 2022, as computed in accordance with FASB ASC Topic 718 and the assumptions stated in Note 4 and Note 5 of the Consolidated Financial Statements to this Report.
(2)
As of April 30, 2022, the non-employee directors held unexercised options to purchase shares as follows: Mr. Liquard, 1,503, Dr. Abecassis, 2,470 and Dr. Tong, 1,670 shares. These include options granted during the year ended April 30, 2022 (shown in this column) and options granted in prior years.
Each non-employee director is party to an agreement
to serve as a director. The agreements provide that each non-employee director receives a cash retainer of $12,500 per quarter (pro-rated
for periods of service less than a quarter). In addition, we annually grant to each non-employee director: (i) 334 shares of our common
stock; and (ii) a stock option to purchase 334 shares of our common stock with a term of five years and an exercise price per share equal
to the closing price of the common stock on the date of grant. Each of these equity awards is fully vested upon grant.
Our three employee directors (who are also Named
Executive Officers) do not receive additional compensation for their service on the Board. For information regarding the compensation
of our three employee directors, please see above, under the heading “Executive Compensation.”
102
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth as of July 15,
2022, certain information with respect to the beneficial ownership of our common stock by each person known by us to be the beneficial
owner of more than five percent (5%) of our common stock, by each of our directors, by each of our Named Executive Officers and by all
executive officers and directors as a group.
Name and Address
Amount and Nature of Beneficial Ownership (1)
Percentage of
Common Stock (1)
Mitchell P. Kopin
1,231,482 (2)
5.7%
Sabby Volatility Warrant Master Fund, Ltd.
1,260,928 (3)
5.8%
Iroquois Master Fund Ltd.
1,309,099 (4)
6.1%
Kenneth L. Waggoner, Chairman of the Board, Chief Executive Officer, President and General Counsel
263,052 (5)
1.2%
Gerald W. Crabtree, Chief Scientific Officer and Board Member
16,308
*
Carlos A. Trujillo, Chief Financial Officer and Board Member
106,028 (6)
*
Thomas Liquard, Board Member
3,504
*
Michael M. Abecassis, Board Member
5,272
*
Raymond C.K. Tong, Board Member
3,338
*
Matthias Löhr, Board Member
3,338
*
All directors and executive officers as a group (7 persons)
400,840
1.8%
________________________________
* Indicates percentage is less than 1.0%.
(1)
Percentages based on 21,601,047 shares of common stock issued and outstanding as of July 15, 2022, in addition to the options to purchase shares that are unexercised, but which are exercisable within sixty days of July 15, 2022, which are presented below:
(2)
This information is based on a Form 13 G/A filed with the SEC on February 11, 2022 by Mitchell P. Kopin (“Kopin”). Kopin reported sole and shared voting and sole and shared dispositive power of 1,231,482 shares of common stock underlying currently exercisable warrants. The address of Kopin is c/o Intracoastal Capital, LLC, 245 Palm Trail, Delray Beach, Florida 33483.
(3)
This information is based on a Form 13 G/A filed with the SEC on January 4, 2022 by Sabby Volatility Warrant Master Fund, Ltd. (“Sabby”). Sabby reported sole and shared voting and sole and shared dispositive power of 1,260,928 shares of common stock underlying currently exercisable warrants. The address of Sabby is c/o Ogier Fiduciary Services (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman KY1-9007, Cayman Islands.
(4)
This information is based on a Form 13 D/A filed with the SEC on July 11, 2022 by Iroquois Master Fund Ltd. (“Iroquois”). Iroquois reported sole and shared voting and sole and shared dispositive power of 1,309,099 shares of common stock underlying currently exercisable warrants. The address of Iroquois is 2 Overhill Road, Suite 400, Scarsdale, New York 10583.
(5)
Includes 529,000 options and 150,800 restricted stock units contingent
upon stockholder approval.
(6)
Includes 201,860 options and 57,540 restricted stock units contingent
upon stockholder approval.
Exercisable options within sixty days of July 15, 2022:
Kenneth L. Waggoner, JD
240,927
Gerald W. Crabtree, PhD
4,667
Carlos A. Trujillo, CPA
96,211
Thomas Liquard
1,837
Michael M. Abecassis, MD
2,804
Raymond C.K. Tong, MD
1,670
Matthias Löhr, MD
334
The address of all beneficial owners is 3960 Howard
Hughes Parkway, Suite 500, Las Vegas, Nevada, 89169. Each person has sole voting and investment power with respect to the shares of common
stock.
103
Securities Authorized for Issuance under Equity
Compensation Plans
The following table sets forth certain aggregated
information with respect to compensation plans (including individual arrangements) under which our securities are authorized for issuance
as of April 30, 2022:
Plan category
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
Weighted-average
exercise price of
outstanding
options, warrants
and rights
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a))
(a)
(b)
(c)
Equity compensation plans approved by security holders
–
–
–
Equity compensation plans not approved by security holders
40,900
$ 50.35
–
Total
40,900
$ 50.35
–
Please see Notes 5 and 6 of the Consolidated Financial Statements to
this Report for more information regarding our equity compensation arrangements.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
We had the following related party transactions
during the years ended April 30, 2022 and 2021, respectively.
We own 14.3% of the equity in SG Austria and is
reported on the cost method of accounting. SG Austria has two subsidiaries: (i) Austrianova; and (ii) Austrianova Thailand. We purchased
products and services from these subsidiaries in the approximate amounts of $323,000 and $405,000 in the years ended April 30, 2022, and
2021, respectively.
In April 2014, we entered a consulting agreement
with Vin-de-Bona pursuant to which it agreed to provide professional consulting services to us. Vin-de-Bona is owned by Prof. Günzburg
and Dr. Salmons, both of whom are involved in numerous aspects of our scientific endeavors relating to cancer and diabetes (Prof. Gunzburg
is the Chairman of Austrianova, and Dr. Salmons is the Chief Executive Officer and President of Austrianova). The term of the agreement
is for 12 months, automatically renewable for successive 12-month terms. After the initial term, either party can terminate the agreement
by giving the other party 30 days’ written notice before the effective date of termination. The amounts we paid Vin-de-Bona for
the years ended April 30, 2022, and 2021, were approximately $114,000 and $82,000, respectively. In addition, during the years ended April
30, 2022, and 2021, we issued 167 and 167 common shares, respectively, to Dr. Salmons. We recorded a noncash consulting expense of approximately
$400 and $5,000 relating to these share issuances for the years ended April 30, 2022, and 2021, respectively.
Except for Mr. Liquard, Dr. Abecassis, Dr. Tong
and Dr. Löhr, the Board has determined that none of our directors satisfy the definition of Independent Director as established in
the Nasdaq Marketplace Rules. Mr. Liquard, Dr. Abecassis, Dr. Tong and Dr. Löhr have been determined by the Board to be Independent
Directors.
104
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
A summary of the fees billed by our independent
audit firm, Armanino LP, for professional services rendered for the years ended April 30, 2022, and 2021 is set forth below.
Service
2022
2021
Audit Fees
$ 167,239
$ 80,196
Audit-Related Fees
33,238
63,590
Tax Fees
–
–
All Other Fees
61,149
–
Total
$ 261,626
$ 143,786
During the years ended April 30, 2022, and 2021,
we incurred from Armanino $167,239 and $80,196 in annual audit fees, respectively, and $33,238 and $63,590 in quarterly review fees, respectively.
Additional fees relating to capital raises were paid to Armanino in the amounts of $61,149 and $0 during the years ended April 30, 2022,
and 2021, respectively.
Our Audit Committee pre-approves all services
to be performed by our independent auditor. All the services listed above have been pre-approved by our Audit Committee.
ITEM 15. EXHIBITS
(a) Documents filed as part of this Report:
(1) Financial Statements.
Our Consolidated Financial Statements and associated
Notes and Schedules, as of April 30, 2022, and 2021, and for each of the two years in the period ended April 30, 2022, together with the
reports thereon of our independent registered public accounting firm, are set forth on pages F-1 to F-27 of this Report.
(2) Financial Statement Schedules.
Schedule II - Valuation and Qualifying Accounts
for the Years Ended 2022, and 2021 is incorporated by reference to page F-27 of the financial statements included herewith.
105
(3) Exhibits.
Except as so indicated below and in Exhibit 32.1,
the following exhibits are filed as part of, or incorporated by reference into, the Report. Certain of the agreements filed as exhibits
contain representations and warranties made by the parties thereto. The assertions embodied in such representations and warranties are
not necessarily assertions of fact, but a mechanism for the parties to allocate risk. Accordingly, investors should not rely on the representations
and warranties as characterizations of the actual state of facts or for any other purpose at the time they were made or otherwise.
Exhibit No.
Description
Location
3.1
Articles of Incorporation of the Company, as amended, dated October 31, 2019
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 13, 2020.
3.2
Corporate Bylaws.
Incorporated by reference from the Company’s Registration Statement on Form SB-2 (File No. 333-68008) filed with the SEC on August 20, 2001.
3.3
Amendment No. One to the Bylaws of PharmaCyte Biotech, Inc.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on September 25, 2014.
3.4
Amendment No. Two to the Bylaws of PharmaCyte Biotech, Inc.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on October 3, 2014.
3.5
Amendment No. Three to Bylaws of PharmaCyte Biotech, Inc.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on June 4, 2021.
3.6
Amendment No. Four to Bylaws of PharmaCyte Biotech, Inc.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on July 6, 2021.
3.7
Certificate of Amendment to Articles of Incorporation of the Company, dated July 2, 2021
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on July 6, 2021.
3.8
Certificate of Change to Articles of Incorporation of the Company, dated July 9, 2021
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on July 13, 2021
4.1
Form of Common Stock Certificate.
Incorporated by reference from the Company’s Registration Statement on Form SB-2 (File No. 333-68008) filed with the SEC on August 20, 2001.
4.2
Description of Securities
Filed herewith.
4.3
Form of Common Warrant
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021.
4.4
Form of Pre-funded Warrant
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021.
4.5
Form of Underwriter’s Warrant
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021.
4.6
Form of Pre-Funded Common Stock Purchase Warrant
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on August 23, 2021.
4.7
Form of Series A Warrant Common Stock Purchase Warrant
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on August 23, 2021.
4.8
Form of Placement Agent Common Stock Purchase Warrant
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on August 23, 2021.
10.1
Asset Purchase Agreement, dated May 26, 2011, between SG Austria Pte. Ltd. and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on June 28, 2012.
10.2
First Addendum, dated June 11, 2011, to Asset Purchase Agreement between SG Austria Pte. Ltd. and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on June 28, 2012.
10.3
Second Addendum, dated June 14, 2012, to Asset Purchase Agreement between SG Austria Pte. Ltd. and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on June 28, 2012.
10.4
Third Addendum, dated June 25, 2013, to Asset Purchase Agreement between SG Austria Private Limited and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on July 18, 2013.
10.5
Licensing Agreement, dated June 25, 2013, between Austrianova Singapore Pte. Ltd. and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on July 18, 2013.
106
10.6
Manufacturing Framework Agreement, dated March 20, 2014, between Austrianova Singapore Pte. Ltd. and the Company.
Incorporated by reference from the Company’s Annual Report on Form 10-K filed with the SEC on August 4, 2014.
10.7
Master Services Agreement, dated April 7, 2014, between ViruSure GmbH and the Company.
Incorporated by reference from the Company’s Annual Report on Form 10-K filed with the SEC on August 4, 2014.
10.8
Consulting Agreement, dated April 1, 2014, between Vin-de-Bona Trading Company Pte. Ltd. and the Company.
Incorporated by reference from the Company’s Annual Report on Form 10-K filed with the SEC on August 4, 2014.
10.9
License Agreement, dated October 13, 2014, between University of Technology, Sydney and PharmaCyte Biotech Australia Pty Ltd (formerly, Nuvilex Australia Pty Ltd).
Incorporated by reference from Amendment No. 1 to the Company’s Annual Report on Form 10-K/A filed with the SEC on October 17, 2014.
10.10
Master Services Agreement, dated March 7, 2014, between ViruSure GmbH and the Company.
Incorporated by reference from Amendment No. 1 to the Company’s Annual Report on Form 10-K/A filed with the SEC on October 17, 2014.
10.11
Licensing Agreement, dated December 1, 2014, between Austrianova Singapore Pte. Ltd. and the Company.
Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on December 15, 2014.
10.12†
First Stock Option Agreement, dated March 10, 2015, between Kenneth L. Waggoner and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 13, 2015.
10.13†
Second Stock Option Agreement, dated March 10, 2015, between Kenneth L. Waggoner and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 13, 2015.
10.14†
Executive Compensation Agreement, dated January 1, 2015, between Gerald W. Crabtree and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 13, 2015.
10.15†
First Stock Option Agreement, dated March 10, 2015, between Gerald W. Crabtree and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 13, 2015.
10.16†
Second Stock Option Agreement, dated March 10, 2015, between Gerald W. Crabtree and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 13, 2015.
10.17†
Letter agreement, dated April 20, 2015, between Thomas Liquard and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on April 29, 2015.
10.18†
Amendment No. 1, dated December 30, 2015, to Executive Compensation Agreement between Gerald W. Crabtree and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 8, 2016.
10.19†
Third Stock Option Agreement, dated December 30, 2015, between Gerald W. Crabtree and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 8, 2016.
10.20†
Third Stock Option Agreement, dated December 30, 2015, between Kenneth L. Waggoner and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 8, 2016.
10.21
First Amendment, dated June 30, 2015, to Licensing Agreement, dated December 1, 2014, between Austrianova Singapore Pte. Ltd. and the Company.
Incorporated by reference from the Company’s Annual Report on Form 10-K filed with the SEC on July 29, 2016.
10.22
Second Amendment, dated October 19, 2015, to Licensing Agreement, dated December 1, 2014, between Austrianova Singapore Pte. Ltd. and the Company .
Incorporated by reference from the Company’s Annual Report on Form 10-K filed with the SEC on July 29, 2016.
107
10.23
Variation, dated April 20, 2016, to License Agreement, October 13, 2014, between University of Technology, Sydney and PharmaCyte Biotech Australia Pty Ltd (formerly, Nuvilex Australia Pty Ltd).
Incorporated by reference from the Company’s Annual Report on Form 10-K filed with the SEC on July 29, 2016.
10.24
First Amendment, dated June 24, 2016, to Licensing Agreement, dated June 25, 2013, between Austrianova Singapore Pte. Ltd. and the Company.
Incorporated by reference from the Company’s Annual Report on Form 10-K filed with the SEC on July 29, 2016.
10.25
Binding Memorandum of Understanding, dated July 28, 2016, between Austrianova Singapore Pte Ltd. and the Company.
Incorporated by reference from the Company’s Annual Report on Form 10-K filed with the SEC on July 29, 2016.
10.26†
Amendment No. 2, dated March 10, 2017, to Executive Compensation Agreement between Gerald W. Crabtree and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 13, 2017.
10.27†
Fourth Stock Option Agreement, dated March 10, 2017, between Kenneth L. Waggoner and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 13, 2017.
10.28†
Third Stock Option Agreement, dated March 10, 2017, between Carlos A. Trujillo and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 13, 2017.
10.29†
Fourth Stock Option Agreement, dated March 10, 2017, between Gerald W. Crabtree and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 13, 2017.
10.30†
Amendment No. 1, dated March 10, 2017, to Letter Agreement between Thomas Liquard and the Company.
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on March 13, 2017.
10.31†
Letter Agreement, dated May 1, 2017, between Thomas C. K. Yuen and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on May 2, 2017.
10.32†
Letter agreement, dated June 29, 2017, between Michael Abecassis, M.D. and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on July 10, 2017.
10.33
Binding Term Sheet, dated August 30, 2017, among Austrianova Singapore Pte. Ltd., SG Austria Pte. Ltd. and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on September 6, 2017.
10.34†
Letter agreement, dated October 9, 2017, between Raymond C. F. Tong and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on October 10, 2017.
10.35
Fourth Addendum, dated May 14, 2018, to Asset Purchase Agreement between SG Austria Pte. Ltd. and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on May 15, 2018.
10.36
Third Amendment, dated May 14, 2018, to Licensing Agreement, dated December 1, 2014, between Austrianova Singapore Pte. Ltd and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on May 15, 2018.
10.37
Second Amendment, dated May 14, 2018, to the Licensing Agreement, dated June 25, 2013, between Austrianova Singapore Pte. Ltd and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on May 15, 2018.
10.38†
Amendment No. 3 , dated as of October 14, 2020, to Executive Compensation Agreement between Gerald W. Crabtree and the Company.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on October 16, 2020.
10.39
Securities Purchase Agreement, dated as of August 19, 2021.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on August 23, 2021.
10.40†
Amended and Restated Executive Compensation Agreement, dated May 8, 2022, between Kenneth L. Waggoner and the Company.
Filed herewith.
10.41†
Amended and Restated Executive Compensation Agreement, dated May 8, 2022, between Carlos A. Trujillo and the Company.
Filed herewith.
10.42†
PharmaCyte Biotech, Inc. 2021 Equity Incentive Plan.
Filed herewith.
108
14.1
PharmaCyte Biotech, Inc. Code of Business Conduct and Ethics.
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on September 25, 2014.
21.1
List of Subsidiaries.
Filed herewith.
23.1
Consent of Armanino LLP.
Filed herewith.
31.1
Certification of Chief Executive Officer (Principal Executive Officer) pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under Sarbanes-Oxley Act of 1934, as amended.
Filed herewith.
31.2
Certification of Chief Financial Officer (Principal Financial and Principal Accounting Officer) pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under Sarbanes-Oxley Act of 1934, as amended.
Filed herewith.
32.1
Certification of Chief Executive Officer (Principal Executive Officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
32.2
Certification of Chief Financial Officer (Principal Financial and Principal Accounting Officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Filed herewith.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
Filed herewith.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Filed herewith.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
Filed herewith.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
Filed herewith.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Filed herewith.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)
Filed herewith.
† A contract, compensatory plan or arrangement
to which a director or executive officer is a party or in which one or more directors or executive officers are eligible to participate.
Financial Statements Schedule:
The following financial statement schedule is
set forth on page F-27 of this Report:
Schedule II — Valuation
and Qualifying Accounts for the years ended April 30, 2022, and 2021.
All other schedules are omitted because they are
not required, not applicable or the information is provided in the financial statements or notes thereto.
ITEM 16. FORM 10-K SUMMARY
None.
109
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PharmaCyte Biotech, Inc.
July 28, 2022
By: /s/ Kenneth L. Waggoner
Kenneth L. Waggoner
Chief Executive Officer
(Duly Authorized Officer and Principal Executive Officer)
July 28, 2022
By: /s/ Carlos A Trujillo
Carlos A. Trujillo
Chief Financial Officer
(Duly Authorized Officer and Principal Financial
and Accounting Officer)
Pursuant to the requirements of the Exchange Act,
this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
July 28, 2022
By: /s/ Kenneth L. Waggoner
Kenneth L. Waggoner
Chief Executive Officer, Chairman of the Board and Director
(Principal Executive Officer)
July 28, 2022
By: /s/ Carlos A. Trujillo
Carlos A. Trujillo
Chief Financial Officer and Director
(Principal Financial and Accounting
Officer)
July 28, 2022
By: /s/ Gerald W. Crabtree
Gerald W. Crabtree, Director
July 28, 2022
By: /s/ Thomas Liquard
Thomas Liquard, Director
July 28, 2022
By: /s/ Michael M. Abecassis
Michael M. Abecassis, Director
July 28, 2022
By: /s/ Raymond C.F. Tong
Raymond C.F. Tong, Director
July 28, 2022
By: /s/ Matthias Löhr
Matthias Löhr, Director
110
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH
REPORTS
FILED PURSUANT TO SECTION 15(d) OF THE ACT BY
REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT
The registrant has not sent to its security holders any annual report
covering the registrant’s fiscal year ended April 30, 2022.
111
PHARMACYTE BIOTECH, INC.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONTENTS
Report of
Independent Registered Public Accounting Firm (PCAOB Auditor ID: 32 )
F-2
Consolidated Balance Sheets as of April 30, 2022, and 2021
F-4
Consolidated Statements of Operations for the Years Ended April 30, 2022, and 2021
F-5
Consolidated Statements of Comprehensive Loss for the Years Ended April 30, 2022, and 2021
F-6
Consolidated Statements of Stockholders’ Equity for the Years Ended April 30, 2022, and 2021
F-7
Consolidated Statements of Cash Flows for the Years Ended April 30, 2022, and 2021
F-8
Notes to Consolidated Financial Statements
F-9
Financial Statement Schedule II - Valuation and Qualifying Accounts
F-28
F- 1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
and Stockholders
PharmaCyte Biotech, Inc.
Las Vegas, Nevada
Opinion on the
Consolidated Financial Statements
We have audited the accompanying
consolidated balance sheets of PharmaCyte Biotech, Inc. and subsidiaries (collectively the "Company") as of April 30, 2022 and
2021, and the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the
two years in the period ended April 30, 2022, and the related notes (collectively referred to as 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 April 30, 2022
and 2021, and the related consolidated results of its operations and cash flows for each of the two years in the period ended April 30,
2022, in conformity with U.S. generally accepted accounting principles. In addition, in our opinion, the consolidated financial statement
schedules listed in the accompanying index presents fairly, in all material respects, the information set form therein when read in conjunction
with the related consolidated financial statements.
Basis for Opinion
The Company's management
is responsible for these consolidated financial statements and consolidated financial statement schedules. Our responsibility is to express
an opinion on the Company's consolidated financial statements and on the consolidated financial statement schedules 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 and 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 audit to obtain reasonable assurance
about whether the consolidated financial statements and consolidated financial statement schedules 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 and consolidated
financial statement schedules, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding 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
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.
/s/ Armanino LLP
Bellevue, Washington
July 28, 2022
We have served as the
Company's auditor since 2015.
F- 2
PHARMACYTE BIOTECH, INC.
CONSOLIDATED BALANCE SHEETS
April 30,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$ 85,400,656
$ 2,202,106
Prepaid expenses and other current assets
94,172
73,131
Total current assets
85,494,828
2,275,237
Other assets:
Intangible assets
3,549,427
3,549,427
Investment in SG Austria
1,572,193
1,572,193
Other assets
7,688
7,372
Total other assets
5,129,308
5,128,992
Total Assets
$ 90,624,136
$ 7,404,229
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 205,361
$ 172,261
Accrued expenses
499,009
552,517
Total current liabilities
704,370
724,778
Total Liabilities
704,370
724,778
Commitments and Contingencies (Notes 7 and 9)
–
–
Stockholders' equity:
Common stock, authorized: 33,333,334 shares, $ 0.0001 par value; 20,721,047 and 1,590,084 shares issued and outstanding as of April 30, 2022, and 2021, respectively
2,072
159
Additional paid-in capital
201,582,107
114,109,169
Accumulated deficit
( 111,648,656 )
( 107,409,495 )
Accumulated other comprehensive loss
( 15,757 )
( 20,382 )
Total stockholders' equity
89,919,766
6,679,451
Total Liabilities and Stockholders' Equity
$ 90,624,136
$ 7,404,229
The accompanying notes are an integral part
of these consolidated financial statements.
F- 3
PHARMACYTE BIOTECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended April 30,
2022
2021
Revenue
$ –
$ –
Operating expenses:
Research and development costs
690,937
916,249
Compensation expense
1,544,751
1,429,150
Director fees
256,490
273,230
Legal and professional
809,489
586,207
General and administrative
1,090,347
418,145
Total operating expenses
4,392,014
3,622,981
Loss from operations
( 4,392,014 )
( 3,622,981 )
Other income (expense):
Gain on forgiveness of Paycheck Protection Program loan
–
75,979
Interest income
157,645
–
Interest expense
( 509 )
( 3,046 )
Other expense, net
( 4,283 )
( 1,188 )
Total other income, net
152,853
71,745
Net loss
$ ( 4,239,161 )
$ ( 3,551,236 )
Basic loss per share
$ ( 0.27 )
$ ( 2.45 )
Diluted loss per share
$ ( 0.27 )
$ ( 2.45 )
Weighted average shares outstanding basic
15,521,654
1,448,285
Weighted average shares outstanding diluted
15,521,654
1,448,285
The accompanying notes are an integral part
of these consolidated financial statements.
F- 4
PHARMACYTE BIOTECH, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Years Ended April 30,
2022
2021
Net loss
$ ( 4,239,161 )
$ ( 3,551,236 )
Other comprehensive income:
Foreign currency translation adjustments
4,625
1,327
Other comprehensive income
4,625
1,327
Comprehensive loss
$ ( 4,234,536 )
$ ( 3,549,909 )
The accompanying notes are an integral part
of these consolidated financial statements.
F- 5
PHARMACYTE BIOTECH, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED APRIL 30, 2022, AND 2021
Common
Stock
Additional Paid-in
Accumulated
Accumulated
Other
Comprehensive
Total
Stockholders’
Shares
Amount
Capital
Deficit
Loss
Equity
Balance, April 30, 2020
1,092,425
$ 109
$ 108,968,817
$ ( 103,858,259 )
$ ( 21,709 )
$ 5,088,958
Stock issued for compensation
4,400
–
194,261
–
–
194,261
Stock issued for services
2,333
–
70,326
–
–
70,326
Stock issued for cash, net of issuance
costs of $ 472,300
461,782
47
4,699,200
–
–
4,699,247
Stock issued for warrant exercises
29,144
3
( 3 )
–
Stock-based compensation - options
–
–
176,568
–
–
176,568
Foreign currency translation adjustments
–
–
–
–
1,327
1,327
Net loss
–
–
–
( 3,551,236 )
–
( 3,551,236
Balance, April 30, 2021
1,590,084
$ 159
$ 114,109,169
$ ( 107,409,495 )
$ ( 20,382 )
$ 6,679,451
Stock issued for compensation
4,400
–
33,146
–
–
33,146
Stock issued for services
2,338
–
34,846
–
–
34,846
Stock issued for cash, net of cash
issuance costs of $ 8,362,137
19,101,812
1,911
82,611,089
–
–
82,613,000
Stock-based compensation - options
–
–
44,810
–
–
44,810
Issuance of pre-funded warrants
–
–
4,749,049
–
–
4,749,049
Reverse stock split adjustment
22,413
2
( 2 )
–
Foreign currency translation adjustments
–
–
–
–
4,625
4,625
Net loss
–
–
–
( 4,239,161 )
–
( 4,239,161 )
Balance, April 30, 2022
20,721,047
$ 2,072
$ 201,582,107
$ ( 111,648,656 )
$ ( 15,757 )
$ 89,919,766
The accompanying notes are an integral part
of these consolidated financial statements.
F- 6
PHARMACYTE BIOTECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended April 30,
2022
2021
Cash flows from operating activities:
Net loss
$ ( 4,239,161 )
$ ( 3,551,236 )
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on forgiveness of Paycheck Protection Program loan
–
( 75,200 )
Stock issued for services
34,846
70,326
Stock issued for compensation
33,146
194,261
Stock-based compensation - options
44,810
176,568
Change in operating assets and liabilities:
Increase (decrease) in prepaid expenses and other current assets
( 21,041 )
69,653
Decrease in other assets
( 316 )
–
Increase (decrease) in accounts payable
33,100
( 13,581 )
Decrease in accrued expenses
( 2,703 )
( 201,680 )
Net cash used in operating activities
( 4,117,319 )
( 3,330,889 )
Cash flows from investing activities:
Net cash used in investing activities
–
–
Cash flows from financing activities:
Payment of insurance financing loan
( 50,805 )
( 62,440 )
Proceeds from sale of common stock, net of issuance costs
87,362,049
4,699,247
Net cash provided by financing activities
87,311,244
4,636,807
Effect of currency rate exchange on cash and cash equivalents
4,625
1,327
Net increase in cash and cash equivalents
83,198,550
1,307,245
Cash and cash equivalents at beginning of the year
2,202,106
894,861
Cash and cash equivalents at end of the year
$ 85,400,656
$ 2,202,106
Supplemental disclosure of cash flows information:
Cash paid during the years for income taxes
$ 1,600
$ 800
Cash paid during the years for interest expense
$ 509
2,267
Non-cash equity issuance costs
$ 34,477,000
$ –
The accompanying notes are an integral part
of these consolidated financial statements.
F- 7
PHARMACYTE BIOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – NATURE OF BUSINESS
PharmaCyte Biotech, Inc. (“Company”)
is a biotechnology company focused on developing cellular therapies for cancer, diabetes and malignant ascites based upon a proprietary
cellulose-based live cell encapsulation technology known as “Cell-in-a-Box ® .” The Cell-in-a-Box ®
technology is intended to be used as a platform upon which therapies for several types of cancer, including locally advanced, inoperable
pancreatic cancer (“LAPC”) will be developed. The current generation of the Company’s product candidate is referred
to as “CypCaps™.”
On September 1, 2020, the Company submitted an
Investigational New Drug Application (“IND”) to the United States Food and Drug Administration (“FDA”) for a planned
Phase 2b clinical trial in LAPC. On October 1, 2020, the Company received notice from the FDA that it had placed the IND on clinical hold.
On October 30, 2020, the FDA sent a letter to the Company setting forth the reasons for the clinical hold and specific guidance on what
the Company must do to have the clinical hold lifted.
To lift the clinical hold, the FDA has informed
the Company that it needs to conduct several additional preclinical studies. The FDA also requested additional information regarding several
topics, including DNA sequencing data, manufacturing information and product release specifications. The Company is also in the process
of conducting these studies and gathering additional information to submit to the FDA. See “Clinical Hold” below.
The Cell-in-a-Box ® encapsulation
technology potentially enables genetically engineered live human cells to be used as a means to produce various biologically active molecules.
The technology is intended to result in the formation of pinhead sized cellulose-based porous capsules in which genetically modified live
human cells can be encapsulated and maintained. In a laboratory setting, this proprietary live cell encapsulation technology has been
shown to create a micro-environment in which encapsulated cells survive and flourish. They are protected from environmental challenges,
such as the sheer forces associated with bioreactors and passage through catheters and needles. The Company believes that this enables
greater cell growth and production of the active molecules. The capsules are largely composed of cellulose (cotton) and are bioinert.
The Company is developing therapies for pancreatic
and other solid cancerous tumors by using genetically engineered live human cells that it believes are capable of converting a cancer
prodrug into its cancer-killing form. The Company encapsulates those cells using the Cell-in-a-Box ® technology and places
those capsules in the body as close as possible to the tumor. In this way, the Company believes that when a cancer prodrug is administered
to a patient with a particular type of cancer that may be affected by the prodrug the killing of the patient’s cancerous tumor may
be optimized.
The Company is also developing a way to delay the production and accumulation
of malignant ascites that results from many types of abdominal cancerous tumors. The Company’s therapy for malignant ascites involves
using the same encapsulated cells it employs for pancreatic cancer but placing the encapsulated cells in the peritoneal cavity of a patient
and administering ifosfamide intravenously.
In addition to the two cancer programs discussed
above, the Company has been working on ways to exploit the benefits of the Cell-in-a-Box ® technology to develop therapies
for cancer that involve prodrugs based upon certain constituents of the Cannabis plant. However, until the FDA allows us to commence
our clinical trial in LAPC and we are able to validate our Cell-in-a-Box ® encapsulation technology in a clinical trial,
we are not spending any further resources developing our Cannabis Program.
Finally, the Company has been developing a potential
therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes. The Company’s product candidate for the treatment of diabetes
consists of encapsulated genetically modified insulin-producing cells. The encapsulation will be done using the Cell-in-a-Box ®
technology. Implanting these encapsulated cells in the body is designed to have them function as a bio-artificial pancreas for purposes
of insulin production.
F- 8
Clinical Hold
On October 1, 2020, we received notice from the
FDA that it had placed our IND on clinical hold. On October 30, 2020, the FDA sent us a letter setting forth the reasons for the clinical
hold and providing specific guidance on what we must do to have the clinical hold lifted.
In order to address the clinical hold, the FDA
has requested that we:
·
Provide additional sequencing data and genetic stability studies;
·
Conduct a stability study on the Company’s final formulated product candidate as well as the cells from the Company’s Master Cell Bank;
·
Evaluate the compatibility of the delivery devices (the prefilled syringe and the microcatheter used to implant the CypCaps ™ ) with the Company’s product candidate for pancreatic cancer;
·
Provide additional detailed description of the manufacturing process of the Company’s product candidate for pancreatic cancer;
·
Provide additional product release specifications for the Company’s encapsulated cells;
·
Demonstrate comparability between the 1 st and 2 nd generation of the Company’s product candidate for pancreatic cancer and ensure adequate and consistent product performance and safety between the two generations;
·
Conduct a biocompatibility assessment using the Company’s capsules material;
·
Address specified insufficiencies in the Chemistry, Manufacturing and Controls information in the cross-referenced Drug Master File;
·
Conduct an additional nonclinical study in a large animal (such as a pig) to assess the safety, activity, and distribution of the product candidate for pancreatic cancer; and
·
Revise the Investigators Brochure to include any additional preclinical studies conducted in response to the clinical hold and remove any statements not supported by the data the Company generated.
The FDA also requested that the Company address
the following issues as an amendment to the Company’s IND:
·
Provide a Certificate of Analysis for pc3/2B1 plasmid that includes tests for assessing purity, safety, and potency;
·
Perform qualification studies for the drug substance filling step to ensure that the Company’s product candidate for pancreatic cancer remains sterile and stable during the filling process;
·
Submit an updated batch analysis for the Company’s product candidate for the specific lot that will be used for manufacturing all future product candidates;
·
Provide additional details for the methodology for the Resorufin (CYP2B1) potency and the PrestoBlue cell metabolic assays;
·
Provide a few examples of common microcatheters that fit the specifications in the Company’s Angiography Procedure Manual;
·
Clarify the language in our Pharmacy Manual regarding proper use of the syringe fill with the Company’s product candidate for pancreatic cancer; and
·
Provide a discussion with data for trial of the potential for cellular and humoral immune reactivity against the heterologous rat CYP2B1 protein and potential for induction of autoimmune-mediated toxicities in our study population.
The Company assembled a scientific and regulatory
team of experts to address the FDA requests. That team has been working diligently to complete the items requested by the FDA. The Company
is in the latter stages of conducting the studies and providing the information requested by the FDA.
F- 9
Impact of the COVID-19 Pandemic on the Company’s
Operations
COVID-19 continues to cause uncertainty and significant,
industry-wide delays in clinical trials. The availability of vaccines holds promise for the future; however, new variants of the virus
and potential waning immunity from vaccines may result in continued impact from COVID-19 in the future, which could adversely impact our
operations. Although the Company is not yet in a clinical trial, the Company has filed an IND with the FDA to commence a clinical trial
in LAPC. While the IND has been placed on clinical hold by the FDA, the Company has assessed the impact of COVID-19 on its operations.
Many clinical trials have been delayed due to
COVID-19. There are numerous reasons for these delays. For example, patients have shown a reluctance to enroll or continue in a clinical
trial due to fear of exposure to COVID-19 when they are in a hospital or doctor’s office. There are local, regional and state-wide
orders and regulations restricting usual normal activity by people. These discourage and interfere with patient visits to a doctor’s
office if the visit is not COVID-19 related. Healthcare providers and health systems have shifted their resources away from clinical trials
toward the care of COVID-19 patients. The FDA and other healthcare providers are making product candidates for the treatment of COVID-19
a priority over product candidates unrelated to COVID-19.
As a result of COVID-19 and the mitigation efforts
to address it, the Company may experience additional disruptions that could adversely impact its business and clinical trial, if allowed
to proceed, including: (i) delays or difficulties in enrolling patients in the Company’s Phase 2b clinical trial if the FDA allows
the Company to go forward with the trial; (ii) delays or difficulties in clinical site activation, including difficulties in recruiting
clinical site investigators and clinical site personnel; (iii) delays in clinical sites receiving the supplies and materials needed to
conduct the clinical trial, including interruption in global shipping that may affect the transport of the Company’s clinical trial
product; (iv) changes in local regulations as part of a response to COVID-19 which may require the Company to change the ways in which
its clinical trial is to be conducted, which may result in unexpected costs, or to discontinue the clinical trial altogether; (v) diversion
of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as the Company’s
clinical trial sites and hospital staff supporting the conduct of the Company’s clinical trial; (vi) interruption of key clinical
trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments,
employers and others, or interruption of clinical trial subject visits and study procedures, the occurrence of which could affect the
integrity of clinical trial data; (vii) risk that participants enrolled in our clinical trials will acquire COVID-19 while the clinical
trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events;
(viii) delays in necessary interactions with local regulators, ethics committees, and other important agencies and contractors due to
limitations in employee resources or forced furlough of government employees; (ix) limitations in employee resources that would otherwise
be focused on the conduct of the Company’s clinical trial because of sickness of employees or their families or the desire of employees
to avoid contact with large groups of people; (x) refusal of the FDA to accept data from clinical trials in affected geographies; and
(xi) interruption or delays to the Company’s clinical trial activities.
As a result of COVID-19, commencement of the Company’s
clinical trial to treat LAPC may be delayed beyond the lifting of the clinical hold by the FDA should that occur. Also, enrollment may
be difficult for the reasons discussed above. In addition, after enrollment in the trial, if patients contract COVID-19 during their participation
in the trial or are subject to isolation or shelter in place restrictions, this may cause them to drop out of our clinical trial, miss
scheduled therapy appointments or follow-up visits or otherwise fail to follow the clinical trial protocol. If patients are unable to
follow the clinical trial protocol or if the trial results are otherwise affected by the consequences of COVID-19 on patient participation
or actions taken to mitigate COVID-19 spread, the integrity of data from the clinical trial may be compromised or not be accepted by the
FDA. This could further adversely impact or delay the Company’s clinical development program if the FDA allows it to proceed.
Clinical trials in the biopharma industry may
be delayed due to COVID-19. There are numerous reasons for these potential delays. The impact relates to delays in: (i) completing studies
required by the FDA; (ii) manufacturing a new batch of CypCap™ for the Company’s planned clinical trial in LAPC; (iii) manufacturing
syringes of CypCaps™ for some of the Company’s preclinical studies to be completed and for use in the Company’s Malignant
Ascites Program; and (iv) securing third party contractors to conduct various R&D projects for the Company. As a result, there may
be delays in generating responses to the requests from the FDA related to the clinical hold. Many of these potential delays are also due
to the impact of COVID-19 in foreign countries where the Company is conducting these preclinical studies, including India, Europe, Singapore
and Thailand. There have also been supply chain interruptions due to COVID-19.
It is highly speculative in projecting the effects
of COVID-19 on the Company’s proposed clinical development program and the Company generally. Moreover, the various precautionary
measures taken by many governmental authorities around the world in order to limit the spread of COVID-19 has had and may continue to
have an adverse effect on the global markets and global economy, including on the availability and pricing of employees, resources, materials,
manufacturing and delivery efforts and other aspects of the global economy. The continuation of COVID-19 could materially disrupt the
Company’s business and operations, hamper its ability to raise additional funds or sell securities, continue to slow down the overall
economy, curtail consumer spending, interrupt the Company’s sources of supply, and make it hard to adequately staff the Company’s
operations. The effects of COVID-19 quickly and dramatically change over time. Its evolution is difficult to predict, and no one is able
to say with certainty when the pandemic will cease to have an impact on the Company’s operations.
F- 10
Company Background
The Company is a Nevada corporation incorporated
in 1996. In 2013, the Company restructured its operations to focus on biotechnology. The restructuring resulted in the Company focusing
all its efforts upon the development of a novel, effective and safe way to treat cancer and diabetes. In January 2015, the Company changed
its name from Nuvilex, Inc. to PharmaCyte Biotech, Inc. to reflect the nature of its current business. In October 2021, the Company moved
its headquarters to Las Vegas, Nevada.
Nasdaq Listing
The Company’s common stock began trading
on Nasdaq on August 10, 2021, under the symbol “PMCB.” Prior to that, the Company’s common stock was quoted on the OTCQB
Market under the symbol “PMCB.” Following the reverse stock split (discussed below) of the Company’s common stock on
July 12, 2021, and until August 6, 2021, the OTCQB Market Symbol for the Company’s common stock had been “PMCBD.” Thereafter,
it reverted to “PMCB.”
Reverse Stock Split
Effective July 12, 2021, the Company filed a Certificate
of Change with the Nevada Secretary of State that authorized a 1:1500 reverse stock split of the Company’s common stock. The reverse
stock split resulted in reducing the authorized number of shares of the Company’s common stock from 50 billion to thirty-three million
three hundred thirty-three thousand three hundred thirty-four with a par value of $ 0.0001 per share. Any fractional shares resulting from
the reverse stock split were rounded up to the next whole share. All warrants, option, share and per share information in this Report
gives retroactive effect to such 1:1500 reverse stock split.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Principles of Consolidation and Basis of Presentation
The Consolidated Financial Statements include
the accounts of the Company and its wholly owned subsidiaries. The Company operates independently and through four wholly owned subsidiaries:
(i) Bio Blue Bird; (ii) PharmaCyte Biotech Europe Limited; (iii) PharmaCyte Biotech Australia Pty. Ltd.; and (iv) Viridis Biotech, Inc.
and are prepared in accordance with U.S. GAAP and the Rules and Regulations of the Commission. Upon consolidation, intercompany balances
and transactions are eliminated. The Company’s 14.3 % investment in SG Austria is presented on the cost method of accounting.
Use of Estimates in the Preparation of Financial
Statements
The preparation of financial statements in accordance
with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities known to exist as of the date the financial statements are published and the reported amounts of revenues
and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation
of the Company’s consolidated financial statements; accordingly, it is possible that the actual results could differ from these
estimates and assumptions, which could have a material effect on the reported amounts of the Company’s consolidated financial position
and results of operations. The severity, magnitude and duration, as well as the economic consequences of COVID-19, are uncertain, rapidly
changing and difficult to predict. Therefore, the Company’s accounting estimates and assumptions may change over time in response
to COVID-19 and may change materially in future periods.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks
and short-term liquid investments purchased with maturities of three months or less.
F- 11
Intangible Assets
The Financial Accounting Standards Board (“FASB”)
standard on goodwill and other intangible assets prescribes a two-step process for impairment testing of goodwill and indefinite-lived
intangibles, which is performed annually, as well as when an event triggering impairment may have occurred. The first step tests for impairment,
while the second step, if necessary, measures the impairment. The Company has elected to perform its annual analysis at the end of its
reporting year.
The Company’s intangible assets are licensing
agreements related to the Cell-in-a-Box ® technology for $ 1,549,427 and diabetes license for $ 2,000,000 for an aggregate
total of $ 3,549,427 .
These intangible assets have an indefinite life;
therefore, they are not amortizable.
The Company concluded that there was no impairment
of the carrying value of the intangible assets for the years ended April 30, 2022, and 2021.
Impairment of Long-Lived Assets
The Company evaluates long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying value of an asset may not be fully recoverable. If the estimated
future cash flows (undiscounted and without interest charges) from the use of an asset are less than carrying value, a write-down would
be recorded to reduce the related asset to its estimated fair value. No impairment was identified or recorded during the years ended April
30, 2022, and 2021.
Fair Value of Financial Instruments
For certain of the Company’s non-derivative
financial instruments, including cash, accounts payable and accrued expenses, the carrying amount approximates fair value due to the short-term
maturities of these instruments.
Accounting Standards Codification (“ASC”)
Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held
by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy
for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported
in the consolidated balance sheets for current liabilities qualify as financial instruments and are a reasonable estimate of their fair
values because of the short period between the origination of such instruments and their expected realization and their current market
rate of interest. The three levels of valuation hierarchy are defined as follows:
·
Level 1. Observable inputs such as quoted prices in active markets;
·
Level 2. Inputs, other than the quoted prices in active markets, which are observable either directly or indirectly; and
·
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
Income Taxes
Deferred taxes are calculated using the liability
method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards,
and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
F- 12
A valuation allowance is provided for deferred
income tax assets when, in management’s judgment, based upon currently available information and other factors, it is more likely
than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation
allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates
of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. The Company believes
the determination to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it
is based on, among other things, an estimate of future taxable income in the U.S. and certain other jurisdictions, which is susceptible
to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material. In determining when to
release the valuation allowance established against the Company’s net deferred income tax assets, the Company considers all available
evidence, both positive and negative. Consistent with the Company’s policy, and because of the Company’s history of operating
losses, the Company does not currently recognize the benefit of all its deferred tax assets, including tax loss carry forwards, which
may be used to offset future taxable income. The Company continually assesses its ability to generate sufficient taxable income during
future periods in which deferred tax assets may be realized. When the Company believes it is more likely than not that it will recover
its deferred tax assets, the Company will reverse the valuation allowance as an income tax benefit in the statements of operations.
The U.S. GAAP method of accounting for uncertain
tax positions utilizes a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to
determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed
only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit,
determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement with tax authorities.
If a position does not meet the more likely than not threshold for recognition in step one, no benefit is recorded until the first subsequent
period in which the more likely than not standard is met, the issue is resolved with the taxing authorities or the statute of limitations
expires. Positions previously recognized are derecognized when the Company subsequently determines the position no longer is more likely
than not to be sustained. Evaluation of tax positions, their technical merits and measurements using cumulative probability are highly
subjective management estimates. Actual results could differ materially from these estimates.
On March 27, 2020, Congress enacted the Coronavirus
Aid, Relief and Economic Security ("CARES") Act to provide certain relief as a result of the Coronavirus Disease 2019 outbreak.
The Company maintains a full valuation allowance on its U.S. net deferred tax assets. Deferred tax asset remeasurement (tax expense) was
offset by a net decrease in valuation allowance, which resulted in no impact on the Company's income tax expense. Therefore, the Company
does not expect the provisions in the CARES Act will impact the Company’s consolidated financial statements.
On March 11, 2021, Congress enacted the American
Rescue Plan Act of 2021, the Company does not expect the provisions of this Act will impact the Company’s consolidated financial
statements.
Research and Development
Research and development expenses consist of costs
incurred for direct and overhead-related research expenses and are expensed as incurred. Costs to acquire technologies, including licenses,
which are utilized in research and development and that have no alternative future use are expensed when incurred. Technology developed
for use in the Company’s product candidates is expensed as incurred until technological feasibility has been established.
R&D costs for the years ended April 30, 2022,
and 2021 were $ 690,937 and $ 916,249 , respectively.
Stock-Based Compensation
The Company recognizes stock-based compensation
expense for only those awards ultimately expected to vest on a straight-line basis over the requisite service period of the award. The
Company estimates the fair value of stock options using a Black-Scholes-Merton valuation model. This model requires the input of highly
subjective assumptions, including the option's expected term and stock price volatility. In addition, judgment is also required in estimating
the number of stock-based awards that are expected to be forfeited. Forfeitures are estimated based on historical experience at the time
of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The assumptions used in calculating
the fair value of share-based payment awards represent management's best estimates, but these estimates involve inherent uncertainties
and the application of management's judgment. Thus, if factors change and the Company uses different assumptions, the stock-based compensation
expense could be materially different in the future.
F- 13
Concentration of Credit Risk
The Company has no significant off-balance-sheet
concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company
maintains most of its cash balance at a financial institution located in California. Accounts at this institution are insured by the Federal
Deposit Insurance Corporation up to $250,000. Uninsured balances aggregated approximately $ 35,000,000 and $ 1,912,000 at April 30, 2022
and 2021, respectively. The Company has not experienced any losses in such accounts. Management believes it is not exposed to any significant
credit risk on cash.
Foreign Currency Translation
The Company translates the financial statements
of its foreign subsidiaries from the local (functional) currencies to U.S. dollars in accordance with FASB ASC 830, Foreign Currency
Matters . All assets and liabilities of the Company’s foreign subsidiaries are translated at year-end exchange rates, while revenue
and expenses are translated at average exchange rates prevailing during the year. Adjustments for foreign currency translation fluctuations
are excluded from net loss and are included in other comprehensive income (loss). Gains and losses on short-term intercompany foreign
currency transactions are recognized as incurred.
NOTE 3 – ACCRUED EXPENSES
Accrued expenses at April 30, 2022, and 2021,
are summarized below:
Schedule of accrued expenses
2022
2021
Payroll related costs
$ 118,062
$ 490,904
R&D costs
377,155
–
Director and Officer insurance financing
–
50,805
Other
3,793
10,808
Total
$ 499,009
$ 552,517
The Director and Officer Insurance Policy for
the policy term of September 8, 2021, through September 8, 2022, was paid in full on August 8, 2021. The Company financed the Director
and Officer Insurance Policy for the policy term of March 8, 2021, through September 8, 2021. The financing agreement had an interest
rate of 4.85 % per annum and required eight monthly payments of $ 12,829 . The unpaid balances as of April 30, 2022 and 2021, of $ 0 and $ 50,805 ,
respectively, are included in accrued expenses.
NOTE 4 – SMALL BUSINESS ADMINISTRATION
– PAYCHECK PROTECTION PROGRAM
On March 27, 2020, the CARES Act was enacted to
provide financial aid to family and businesses impacted by COVID-19. The Company participated in the CARES Act, and on April 15,
2020, the Company entered into a note payable with a bank under the Small Business Administration (“SBA”), Paycheck Protection
Program (“PPP”) in the amount of $ 75,200 . This PPP loan was to mature on April 15, 2022 , with a fixed interest rate of 1 %
per annum with interest deferred for six months. The PPP loan has an initial term of two years, is unsecured and guaranteed by the SBA.
The Company used the proceeds from the PPP loan
for qualifying expenses as defined in the PPP. The Company also applied for forgiveness of the PPP loan in accordance with the terms of
the CARES Act. The SBA issued a notice of PPP loan forgiveness with an effective date of April 28, 2021, forgiving the entire principal
of $ 75,200 and the accrued interest of $ 779 . The Company recognized the forgiveness of the PPP loan and accrued interest as Gain on forgiveness
of Paycheck Protection Program loan in the fiscal year ended April 30, 2021.
F- 14
NOTE 5 – COMMON STOCK TRANSACTIONS
A summary of the Company’s compensatory
stock activity and related weighted average grant date fair value information for the years ended April 30, 2022, and 2021, are as follows:
In January 2020, the Company awarded 4,400
shares of common stock to the executive officers of the Company as part of their compensation agreements for 2020. These shares
vest monthly over a twelve-month period and are subject to them continuing service under the agreements. During the years ended April
30, 2022, and 2021, the Company recorded a non-cash compensation expense in the amount of $ 0
and $ 179,521 ,
respectively. There were zero unvested shares as of April 30, 2022, and 2021, respectively.
During the year ended April 30, 2021, four
non-employee members of the Board were issued 1,333 shares
of common stock pursuant to their Director Letter Agreements (“DLAs”) in respect of their service during that year. The
shares were fully vested upon issuance. The Company recorded a non-cash expense of $ 4,342 and
$ 37,258 for
the years ended April 30, 2022, and 2021, respectively. There were zero unvested shares remaining related to such DLAs as of April
30, 2022, and 2021.
During the year ended April 30, 2021, four
consultants were issued 667 shares
of common stock pursuant to their consulting agreements with the Company. The shares vest monthly over a twelve-month period and are
subject to the consultants continuing to provide services under their consulting agreements. The Company recorded a non-cash
consulting expense in the amount of $ 0 and
$ 20,225 for
the years ended April 30, 2022, and 2021, respectively. There were zero unvested shares remaining related to these consulting
agreements as of April 30, 2022, and 2021.
During the year ended April 30, 2021, a
consultant was issued 333 shares
of common stock in respect of his services as the Chairman of the Company’s Medical and Scientific Advisory Board with vesting
subject to the consultant continuing to provide services to the Company. The Company recorded a non-cash consulting expense in the
amount of $ 3,542 and
$ 4,958 for
the years ended April 30, 2022, and 2021, respectively. There were zero unvested shares remaining related to his compensation
arrangement as of April 30, 2022, and 2021.
In January 2021, the Company awarded 4,400 shares
of common stock to the executive officers of the Company as part of their compensation agreements for 2021. These shares vest
monthly over a twelve-month period and are subject to the executive officers continuing to provide service under their compensation
agreements. During the years ended April 30, 2022, and 2021, the Company recorded a non-cash compensation expense in the amounts of
$ 29,480 and
$ 14,740 ,
respectively. There were zero and 2,933 unvested
shares as of April 30, 2022, and 2021, respectively.
During the year ended April 30, 2022, four non-employee
members of the Board were issued 1,336 shares of common stock pursuant to their DLAs in respect of their service during that year. The
shares were fully vested upon issuance. The Company recorded a non-cash expense of $ 24,212 for the year ended April 30, 2022. There were
zero unvested shares remaining related to such DLAs as of April 30, 2022, and 2021.
During the year ended April 30, 2022, four
consultants were issued 668 shares
of common stock pursuant to their consulting agreements with the Company. The shares vest monthly over a twelve-month period and are
subject to the consultants continuing to provide services under their consulting agreements. The Company recorded a non-cash
consulting expense in the amount of $ 9,576 for
the year ended April 30, 2022. There were zero unvested shares remaining related to these consulting agreements as of April 30,
2022.
During the year ended April 30, 2022, a
consultant was issued 334 shares
of common stock in respect of his services as the Chairman of the Company’s Medical and Scientific Advisory Board with vesting
subject to the consultant continuing to provide services to the Company. The Company recorded a non-cash consulting expense in the
amount of $ 1,059 for
the year ended April 30, 2022. There were zero unvested shares remaining related to his compensation arrangement as of April 30,
2022.
In January 2022, the Company awarded 4,400 shares
of common stock to the executive officers of the Company as part of their compensation agreements for 2022. These shares vest monthly
over a twelve-month period and are subject to the executive officers continuing to provide service under their compensation agreements.
During the year ended April 30, 2022, the Company recorded a non-cash compensation expense in the amounts of $ 3,667 . There were 2,933
unvested shares as of April 30, 2022.
On March 1, 2021, the Company received notices
of cashless exercises of 26 warrant agreements. The cashless exercises resulted in the issuance of 29,144 shares of restricted common
stock.
F- 15
All shares were issued without registration under
the Securities Act in reliance upon the exemption afforded by Section 4(a)(2) of the Securities Act.
On September 28, 2017, an S-3 Registration
Statement (“Second S-3”) was declared effective by the Commission for the Company to sell from time to time in one or more
public offerings of up to $50 million of its securities on a “shelf offering” basis. During the year ended April 30, 2021,
the Company sold and issued approximately 462,000 shares of common stock, at prices ranging from approximately $15 to $45 per share. Net
of underwriting discounts, legal, accounting, and other offering expenses, the Company received proceeds of approximately $ 4.7 million
from the sale of these shares for the year ended April 30, 2021. On April 9, 2021, the Third S-3 (“Third S-3”) was declared
effective by the Commission for a public offering of up to $100 million on a “shelf offering” basis. During the year ended
April 30, 2022, the Company sold and issued approximately 19.1 million shares of common stock, at prices ranging from $4.25 to $5.00 per
share. Net of underwriting discounts, legal, accounting, and other offering expenses, the Company received approximately $ 87.4 million
from the sale of these shares and the exercise of approximately 2.5 million warrant shares for the year ended April 30, 2022.
A summary of the Company’s non-vested restricted
stock activity and related weighted average grant date fair value information for the last two years ended April 30, 2022, are as follows:
Schedule of non-vested restricted stock activity
Shares
Weighted
Average
Grant Date
Fair Value
Unvested, at April 30, 2020
3,067
82.76
Granted
6,733
17.01
Vested
( 6,867 )
39.61
Expired
–
–
Unvested, at April 30, 2021
2,933
10.05
Granted
6,738
6.80
Vested
( 6,738 )
10.09
Expired
–
–
Unvested, at April 30, 2022
2,933
$ 2.50
NOTE 6 – STOCK OPTIONS AND WARRANTS
2021 Equity Incentive Plan
Effective June 30, 2021, the Company implemented
the 2021 Equity Incentive Plan (“2021 Equity Plan”) as approved by the Company’s stockholders. The 2021 Equity Plan
is administered by the Compensation Committee of the Board and has 166,667 shares available under this plan. The 2021 Equity Plan can
issue various types of awards, as follows: stock options, stock appreciation rights, restricted stock, restricted stock units, and cash
or other stock-based awards. The 2021 Equity Plan is available to be issued to employees, directors, consultants, and other individuals
who provide services to the Company. An incentive stock options (“ISOs”) can only be granted to employees and shall not exceed
10-years (5-years in the case of ISOs granted to any 10% shareholder).
Stock Options
As of April 30, 2022, the Company had 40,900
outstanding stock options to its directors and officers (collectively, “Employee Options”) and consultants
(“Non-Employee Options”).
During the years ended April 30, 2022, and 2021,
the Company granted 7,334 and 7,333 Employee Options, respectively.
The fair value of the Employee Options at the
date of grant was estimated using the Black-Scholes-Merton option-pricing model, based on the following weighted average assumptions:
Assumptions for options
Years Ended April 30,
2022
2021
Risk-free interest rate
1.1 %
0.4 %
Expected volatility
129 %
97 %
Expected lives (years)
2.7
2.7
Expected dividend yield
0.00 %
0.00 %
F- 16
The Company’s computation of expected volatility
is based on the historical daily volatility of its publicly traded stock. For stock option grants issued during the years ended April
30, 2022, and 2021, the Company used a calculated volatility for each grant. The Company lacks adequate information about the exercise
behavior now and has determined the expected term assumption under the simplified method provided for under ASC 718, which averages the
contractual term of the Company’s stock options of five years with the average vesting term of two and one-half years for an average
of three years. The dividend yield assumption of zero is based upon the fact the Company has never paid cash dividends and presently has
no intention of paying cash dividends. The risk-free interest rate used for each grant is equal to the U.S. Treasury rates in effect at
the time of the grant for instruments with a similar expected life.
During the years ended April 30, 2022, and 2021,
the Company granted no Non-Employee Options.
A summary of the Company’s stock option
activity and related information for the two years ended April 30, 2022 are shown below:
Schedule of stock option activity
Options
Weighted
Average
Exercise
Price per Share
Weighted
Average
Grant Date
Fair Value
per Share
Outstanding, April 30, 2020
44,800
$ 94.36
$ 94.155
Issued
7,333
13.90
13.90
Forfeited
( 10,800 )
94.81
93.90
Outstanding, April 30, 2021
41,333
79.97
79.97
Issued
7,334
5.34
5.34
Forfeited
( 7,767 )
148.20
148.20
Outstanding, April 30, 2022
40,900
$ 53.05
$ 53.05
Exercisable, April 30, 2022
36,900
$ 58.53
$ –
Vested and expected to vest
40,900
$ 53.05
$ –
A summary of the activity for unvested stock
options during the years ended April 30, 2022, and 2021 is as follows:
Unvested stock option activity
Options
Weighted
Average
Grant Date
Fair Value
per Share
Unvested, April 30, 2020
4,133
$ –
Issued
7,334
13.90
Vested
( 7,467 )
–
Forfeited
–
–
Unvested, April 30, 2021
4,000
–
Issued
7,334
5.34
Vested
( 7,767 )
–
Forfeited
–
–
Unvested, April 30, 2022
4,000
$ 2.50
F- 17
The Company recorded $ 44,800
and $ 176,568
of stock-based compensation related to the issuance of Employee Options to certain officers and directors in exchange for services
during the years ended April 30, 2022, and 2021, respectively. At April 30, 2022, there remained $ 7,777
of unrecognized compensation expense related to unvested Employee Options granted to officers and directors, to be recognized
as expense over a weighted-average period of the remaining eight months in the calendar year. The unvested options vest at 500 shares
per month and are expected to be fully vested on December 31, 2022.
The following table summarizes the outstanding
stock options by exercise price at April 30, 2022:
Schedule of options by exercise price
Exercise Price
Number of
Options
Outstanding
Weighted
Average
Remaining
Contractual Life
(Years) of
Outstanding
Options
Weighted
Average
Exercisable
Price Per Share
Number of
Options
Exercisable
Weighted Average
Exercise Price Per Share
of Exercisable
Options
$
87.00
1,634
0.13
$
87.00
1,634
$
87.00
$
109.35
1,200
0.19
$
109.35
1,200
$
109.35
$
133.50
800
0.22
$
133.50
800
$
133.50
$
82.95
333
0.22
$
82.95
333
$
82.95
$
83.70
6,000
0.40
$
83.70
6,000
$
83.70
$
80.10
800
1.35
$
80.10
800
$
80.10
$
80.85
667
0.50
$
80.85
667
$
80.85
$
102.45
333
0.58
$
102.45
333
$
102.45
$
97.35
333
0.72
$
97.35
333
$
97.35
$
74.25
6,000
1.13
$
74.25
6,000
$
74.25
$
57.00
800
2.40
$
57.00
800
$
57.00
$
60.60
667
1.00
$
60.60
667
$
60.60
$
55.50
333
1.09
$
55.50
333
$
55.50
$
51.00
333
1.22
$
51.00
333
$
51.00
$
61.20
6,000
1.61
$
61.20
6,000
$
61.20
$
36.00
667
1.50
$
36.00
667
$
36.00
$
37.05
333
1.59
$
37.05
333
$
37.05
$
15.75
333
1.72
$
15.70
333
$
15.70
$
10.05
6,000
2.20
$
10.05
6,000
$
10.05
$
26.55
667
2.00
$
26.55
667
$
26.55
$
16.20
333
2.09
$
16.20
333
$
16.20
$
3.19
334
2.22
$
3.19
334
$
3.19
$
2.50
6,000
2.81
$
2.50
2,000
$
2.50
Total
40,900
1.21
$
53.05
36,900
$
58.53
The aggregate intrinsic value of outstanding options
as of April 30, 2022, was $ 0 . This represents options whose exercise price was less than the closing fair market value of the Company’s
common stock on April 30, 2022, of approximately $ 2.33 per share.
F- 18
Warrants
The warrants issued by the Company are equity
classified. The fair value of the warrants was recorded as additional paid-in-capital, and no further adjustments are made.
The Company concluded the following warrants met
the permanent equity criteria classification as they are freestanding financial instruments that are legally detachable and separately
exercisable from the shares of common stock with which they were issued. The warrants are immediately exercisable and do not embody an
obligation for the Company to repurchase the shares. The warrants also permit the holders to receive a fixed number of shares upon exercise
and do not provide any guarantee of value or return.
The Company elected to early adopt ASU No. 2020-06
Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity
(Subtopic 815-40) as of May 1, 2021. The early adoption of ASU No.2020-06 had an immaterial effect on the Company’s consolidated
financial statements.
Effective August 12, 2021, the Company issued
Common Stock Warrant Agreements (“Common Warrants”) with respect to the First Offering. The Company issued Common Warrants
to purchase 4,028,528
shares of common stock based upon the underwriting agreement with H.C. Wainwright & Co., LLC (“Wainwright”). The
Common Warrants have a term of five years with an exercise price of $ 4.25
per warrant share, are fully vested upon issuance and have a cashless exercise feature. Using the Black-Scholes-Merton option
pricing model, the Company determined the aggregate fair value of these Common Warrants to be approximately $ 9,385,000
and comprises the non-cash equity issuance costs as presented on the Consolidated Statements of Cash Flows of $34,477,000.
Additionally, with respect to the First Offering,
the Company issued common stock warrant agreements to Wainwright (“Underwriter Warrants”) to purchase 264,706
shares of common stock. The Underwriter Warrants have a term of five years with an exercise price of $ 5.3125
per warrant share, are fully vested upon issuance and have a cashless exercise feature. Using the Black-Scholes-Merton option
pricing model, the Company determined the aggregate fair value of these Underwriter Warrants to be approximately $ 601,000
and comprises the non-cash equity issuance costs as presented on the Consolidated Statements of Cash Flows of $34,477,000.
Effective August 12, 2021, the Company issued
899,027
pre-funded warrants (“Pre-funded Warrants”) to purchase common stock and Common Warrants based upon the underwriting
agreement with Wainwright with respect to the First Offering. The Pre-funded Warrants required a payment upon issuance of $4.249 per
warrant share and are fully vested upon issuance. The Company received approximately $ 3,820,000
from the issuance of the Pre-funded Warrants. The Pre-funded Warrants have an exercise price of $0.001 per share, are exercisable
immediately, have a cashless exercise feature and do not have an expiration date. In August 2021, all 899,027
of the Pre-funded Warrants issued under the underwriting agreement were exercised. The Company received $ 899
as a result of the exercise of the Pre-funded Warrants and issued 899,027 shares of common stock as a result of the exercise notices.
There was no additional effect on the Pre-funded Warrants as they were fully exercised.
Effective August 23, 2021, the Company issued
additional Common Stock Warrant Agreements (“Series A Warrants”) with respect to its Registered Direct Public offering. The
Company issued Series A Warrants to purchase 7,000,000
shares of common stock based upon the Securities Purchase Agreement with certain institutional investors. The Series A Warrants
have a term of five years with an exercise price of $ 5.00
per warrant share, are fully vested upon issuance, have a cashless exercise feature and are exercisable immediately. Using the
Black-Scholes-Merton option pricing model, the Company determined the aggregate fair value of these Series A Warrants to be approximately
$ 21,340,000
and comprises the non-cash equity issuance costs as presented on the Consolidated Statements of Cash Flows of $34,477,000.
Effective August 23, 2021, the Company
issued additional Common Stock Warrant Agreements (“Placement Agent Warrants”) with respect to its Registered Direct
Public Offering. The Company issued Placement Agent Warrants to purchase 1,050,000
shares of common stock to Wainwright or its designees based upon Wainwright acting as placement agent. The Placement Agent Warrants
have a term of five years with an exercise price of $ 6.25
per warrant share, are fully vested upon issuance, have a cashless exercise feature and are exercisable immediately. Using the
Black-Scholes-Merton option pricing model, the Company determined the aggregate fair value of these Placement Agent Warrants to be
approximately $ 3,151,000
and comprises the non-cash equity issuance costs as presented on the
Consolidated Statements of Cash Flows of $34,477,000.
Effective August 23, 2021, the Company issued
Pre-funded Warrants pursuant to the Registered Direct Offering to purchase 5,570,000
shares of common stock in the amount of approximately $ 27,844,000
which required payments upon issuance of $4.999 per warrant share. The Pre-funded Warrants have an exercise price of $ 0.001
per share, are fully vested upon issuance, are immediately exercisable, have a cashless exercise feature and do not have an expiration
date. As of April 30, 2022, 4,620,000
of the Pre-funded Warrants have been exercised for aggregate gross proceeds of $ 4,620,
which resulted in the issuance of 4,620,000 shares. As of April 30, 2022, the remaining unexercised Pre-funded Warrants were 950,000
shares that can be exercised for $950. The Company received $4,749,050 pursuant to the issuance of the Pre-funded Warrants and these
shares remain unissued as of April 30, 2022, (see Note 13 – Subsequent Events).
F- 19
In August 2021, the Company received
twenty-seven cash exercise notices relating to the Common Warrants with respect to the First Offering totaling 2,522,387 warrant shares.
The Company received approximately $ 10,720,000 and issued 2,522,387 shares of common stock as a result of the exercise notices.
Series A Warrants and Placement Agent Warrants
were issued pursuant to the Securities Purchase Agreement dated as of August 19, 2021. At the time, the Series A Warrants and the Placement
Agent Warrants were issued, neither the Series A Warrants, the Placement Agent Warrants nor the underlying common stock was registered
pursuant to the Securities Act. The Company registered the common stock underlying the Series A Warrants and the Placement Agent Warrants
pursuant to a Registration Statement on Form S-3 (“Registration Statement”) filed with the Commission on November 8, 2021.
The Registration Statement became effective on November 17, 2021.
A summary of the Company’s warrant activity
and related information for the two years ended April 30, 2022, are shown below:
Schedule of warrant activity
Warrants
Weighted
Average
Exercise Price
Per Share
Outstanding, April 30, 2020
31,927
$ 75
Issued
22,911
–
Exercised
( 40,524 )
–
Expired
( 11,333 )
–
Outstanding, April 30, 2021
2,981
58.70
Issued
18,812,261
–
Exercised
( 8,041,414 )
–
Expired
( 1,093 )
–
Outstanding, April 30, 2022
10,772,735
–
Exercisable, April 30, 2022
10,772,735
$ 4.59
The following table summarizes additional information
concerning warrants outstanding and exercisable at April 30, 2022:
Schedule of warrants outstanding and exercisable
Exercise Prices
Number of
Warrant Shares
Exercisable at
April 30, 2022
Weighted
Average
Remaining
Contractual
Life Years
Weighted
Average
Exercise Price Per Share
$ 37.50
1,333
0.24
$ 45.00
555
0.06
$ 4.25
1,506,141
4.28
$ 5.3125
264,706
4.28
$ 5.00
7,000,000
4.32
$ 6.25
1,050,000
4.31
$ 0.001
950,000
–
10,772,735
4.31
$
4.59
NOTE 7 – LEGAL PROCEEDINGS
The Company is not currently a party to any pending
legal proceedings, material or otherwise. There are no legal proceedings to which any property of the Company is subject.
F- 20
NOTE 8 – RELATED PARTY TRANSACTIONS
The Company had the following related party transactions
during the years ended April 30, 2022, and 2021, respectively.
The Company owns 14.3 % of the equity in SG Austria
and is reported on the cost method of accounting. SG Austria has two subsidiaries: (i) Austrianova; and (ii) Austrianova Thailand. The
Company purchased products and services from these subsidiaries in the approximate amounts of $ 323,000 and $ 405,000 in the years ended
April 30, 2022, and 2021, respectively.
In April 2014, the Company entered the Vin-de-Bona
Consulting Agreement pursuant to which it agreed to provide professional consulting services to the Company. Vin-de-Bona is owned by Prof.
Günzburg and Dr. Salmons, both of whom are involved in numerous aspects of the Company’s scientific endeavors relating to cancer
and diabetes (Prof. Gunzburg is the Chairman of Austrianova, and Dr. Salmons is the Chief Executive Officer and President of Austrianova).
The term of the agreement is for 12 months, automatically renewable for successive 12-month terms. After the initial term, either party
can terminate the agreement by giving the other party 30 days’ written notice before the effective date of termination. The agreement
has been automatically renewed annually. The amounts incurred for the years ended April 30, 2022, and 2021, were approximately $ 114,000
and $ 82,000 , respectively. In addition, during the years ended April 30, 2022, and 2021, the Company issued 167 and 167 shares of common
stock, respectively, to Dr. Salmons. The Company recorded a noncash consulting expense of approximately $ 400 and $ 5,000 relating to these
share issuances for the years ended April 30, 2021 and 2020, respectively.
NOTE 9 – COMMITMENTS AND CONTINGENCIES
The Company acquires assets still in development
and enters R&D arrangements with third parties that often require milestone and royalty payments to the third-party contingent upon
the occurrence of certain future events linked to the success of the asset in development. Milestone payments may be required, contingent
upon the successful achievement of an important point in the development lifecycle of the pharmaceutical product (e.g., approval of the
product for marketing by a regulatory agency). If required by the license agreements, the Company may have to make royalty payments based
upon a percentage of the sales of the pharmaceutical products if regulatory approval for marketing is obtained.
Office Lease
In May 2019, the Company entered into a lease
for its office space in Laguna Hills, California for a one-year lease for the leased premises. The term of the lease expired on August
31, 2020.
On May 28, 2020, the Company entered into an additional
six-month lease of this office space, commencing on September 1, 2020. The term of the new lease expired on February 28, 2021.
On May 24, 2021, the Company entered into an additional
six-month lease of this office space, commencing on September 1, 2021, which expires on February 28, 2022.
In October 2021, the Company moved the Company’s
headquarter from Laguna Hills, California to Las Vegas. Nevada. In doing so, the Company entered into a lease for office space in Las
Vegas, Nevada. The term of the lease expires on April 30, 2022.
In January 2022, the Company entered into an additional
six-month lease of the Las Vegas, Nevada office space, commencing on May 1, 2022, which expires on October 31, 2022.
Rent expenses for these offices for the years
ended April 30, 2022, and 2021, were $ 19,341 and $ 20,429 , respectively.
The following table summarizes the Company’s
aggregate future minimum lease payments required under the operating lease as of:
Schedule of future minimum lease payments
Year Ending April 30,
Amount
2023
$ 2,052
$ 2,052
F- 21
Material Agreements
The Company’s material agreements are identified
and summarized in Note 1 – Nature of Business – Company Background.
Compensation Agreements
The Company entered into executive compensation
agreements with its three executive officers in March 2015, each of which was amended in December 2015 and March 2017. Each agreement
has a term of two years with annual extensions thereafter unless the Company or the officer provides written notification of termination
at least ninety days prior to the end of the term or subsequent extensions. The Company also entered a compensation agreement with a Board
member in April 2015 which continued in effect until amended in May 2017.
The Company entered into amended and restated
executive compensation agreements with two executive officers with an effective date of January 1, 2022 (“Amendment Date”).
Each agreement has a term of three (3) years from the Amendment Date (“Initial Term”) and has automatic renewals of one (1)
year (“Renewal Term”) unless the Company or the officer provides written notice of termination at least ninety (90) days prior
to the end of the Initial Term or the Renewal Term.
In May 2017, the Company amended the compensation
agreement with the Board members and the terms continue in effect until a member is no longer on the Board.
The Company has four independent directors. Each
director receives the same compensation: (i) $12,500 in cash for each calendar quarter of service on the Board; (ii) 333 fully paid, non-assessable
shares of the Company’s restricted common stock (“Shares”) annually; and (iii) a five-year option to purchase 333 Shares
annually at an exercise price equal to the fair market value of the Shares on the date of grant. The Shares and the option Shares fully
vest on the date of the grants.
NOTE 10 - INCOME TAXES
At April 30, 2022, the Company had federal
and state net operating loss carryforwards of approximately $ 52,382,000
and $ 48,619,000 ,
respectively, available to offset against future taxable income; these operating loss carryforwards expire in 2021 through 2038.
Internal Revenue Code section 382 imposes an annual limitation for the utilization of tax attributes if there is an “ownership
changes.” Based upon the equity activity during the year ended April 30, 2022, the Company had an ownership change in August
2021. Accordingly, it is more likely than not that section 382 will impose a restrictive limitation on the utilization of the
Company’s federal tax attributes and would require the net operating loss carryforward to be written down. The Company is
currently working through its section 382 study.
Current tax laws limit the amount of loss available
to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future
taxable income may be limited. Based on the assessment of all available evidence including, but not limited to, the Company’s limited
operating history in its core business and lack of profitability, uncertainties of the commercial viability of its technology, the impact
of government regulations and healthcare reform initiatives and other risks normally associated with biotechnology companies, the Company
has concluded that is more likely than not that these operating loss carryforwards will not be realized. Accordingly, 100% of the deferred
tax valuation allowance has been recorded against these assets.
Deferred income taxes reflect the net effect of temporary differences
between the financial reporting carrying amounts of assets and liabilities and income tax carrying amounts of assets and liabilities.
The components of the Company’s deferred tax assets and liabilities are as follows:
Schedule of deferred tax assets and liabilities
April 30,
2022
2021
Deferred tax assets:
Net operating loss carryforwards
$ 15,138,850
13,804,439
Stock compensation
584,321
2,547,274
Other
35,230
146,486
Total deferred tax assets
15,758,401
16,498,199
Valuation allowance
( 15,758,401 )
( 16,498,199 )
Net deferred tax assets
$ –
$ –
For all years presented, the Company did not recognize
any deferred tax assets or liabilities. The net change in valuation allowance for the years ended April 30, 2022, and 2021, was a decrease
of $ 739,798 and an increase of $ 969,241 , respectively.
F- 22
The provision for income taxes differs from the
provision computed by applying the Federal statutory rate to net loss before income taxes as follows:
Schedule of provision for income taxes
Years Ended April 30,
2022
2021
Federal benefit at statutory rate
$ ( 890,224 )
( 745,760 )
State income taxes, net of Federal taxes
( 362,448 )
( 303,631 )
Permanent differences
20,508
78,258
Provision related to change in valuation allowance
( 739,798 )
969,241
Expired stock options
1,976,324
–
Net valuation allowance for state tax deductions
–
–
Other, net
( 4,362 )
1,892
Provision for income taxes
$ –
$ –
There have been no changes to the Company’s
liability for unrecognized tax benefits during the year ended April 30, 2022.
The Company files its income tax returns in the
U.S. Federal jurisdiction and various state jurisdictions. As of the year ended April 30, 2022, the tax returns for 2016 through 2021
remain open to examination by the Internal Revenue Service and various state tax authorities.
The Company’s policy is to recognize any
interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of the years ended April 30, 2022,
and 2021, the Company had accrued no interest or penalties related to uncertain tax positions.
NOTE 11 – EARNINGS PER SHARE
Basic earnings (loss) per share is computed by
dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Diluted earnings
per share is computed by dividing net income by the weighted average number of shares and potentially dilutive shares of common stock
outstanding during the period increased to include the number of additional shares of common stock that would be outstanding if the potentially
dilutive securities had been issued. Potential shares of common stock outstanding principally include stock options and warrants. During
the years ended April 30, 2022, and 2021, the Company incurred losses. Accordingly, the effect of any common stock equivalent would be
anti-dilutive during those periods and are not included in the calculation of diluted weighted average number of shares outstanding.
The table below sets forth the basic loss per
share calculations:
Earnings per share calculations
Years Ended April 30,
2022
2021
Net loss
$
( 4,239,161
)
$
( 3,551,236
)
Basic weighted average number of shares outstanding
15,521,654
1,448,285
Diluted weighted average number of shares outstanding
15,521,654
1,448,285
Basic and diluted loss per share
$
( 0.27
)
$
( 2.45
)
The table below sets forth these potentially
dilutive securities:
Schedule of potentially dilutive securities
Years Ended April 30,
2022
2021
Excluded options
40,900
41,333
Excluded warrants
10,772,735
2,981
Total excluded options and warrants
10,813,635
44,314
F- 23
NOTE 12 – PREFERRED STOCK
The Company has authorized 10,000,000 shares of
preferred stock, with a par value of $ 0.0001 , of which one share has been designated as "Series A Preferred Stock". As of April
30, 2022, there are no shares of preferred stock issued and outstanding.
The description of the Series A Preferred Stock
below is qualified in its entirety by reference to the Company’s Articles of Incorporation, as amended.
The Series A Preferred Stock has the following
features:
·
There is one share of preferred stock designated as Series A Preferred Stock;
·
The Series A Preferred Stock has a number of votes at any time equal to the number of votes then held by all other shareholders of the Company having a right to vote on any matter plus one. The Certificate of Designations that designated the terms of the Series A Preferred Stock cannot be amended without the consent of the holder of the Series A Preferred Stock;
·
The Company may redeem the Series A Preferred Stock at any time for a redemption price of $1.00 paid to the holder of the share of Series A Preferred Stock; and
·
The Series A Preferred Stock has no rights of transfer, conversion, dividends, preferences upon liquidation or participation in any distributions to shareholders.
NOTE 13 – SUBSEQUENT EVENTS
In May 2022, the Board granted the Company’s
Chief Executive Officer and Chief Financial Officer stock options of 529,000 and 201,860, respectively, and restricted stock units of
150,800 and 57,540, respectively. These grants were made subject to an increase in the Company’s authorized shares of common stock.
The Company is planning to increase the authorized shares of common stock at its 2022 annual shareholders meeting.
In May 2022, the Board of Directors authorized
a Share Repurchase Program whereby the Company would repurchase the Company’s common stock at the discretion of the Company’s
Chief Executive Officer, depending on market conditions over a two-year period, in the amount of up to $10 million. The repurchases shall
follow the applicable laws, including the Nevada Revised Statutes and Federal securities laws and in a manner to comply with the provisions
of Rule 10b-18 under the Securities Act or any subsequent superseding or amending rule. As of July 28, 2022, there has been 851,981 shares
of the Company’s common stock repurchased at an approximate cost of $2,091,000, including commissions.
On July 7, 2022, the Company received a notice
of exercise relating to the Pre-funded Warrants pursuant to the registered direct offering in the amount of $880 which resulted in the
issuance of 880,000 shares of common stock.
F- 24
PHARMACYTE BIOTECH, INC.
SCHEDULE II — VALUATION AND QUALIFYING
ACCOUNTS
Years Ended April 30, 2022 and 2021
Schedule of valuation and qualifying accounts
Description
Balance at
Beginning of
Year
Additions
Charged to
Costs and
Expenses
Charged to
Other
Accounts
Deductions
Balance at
End of Year
Reserve Deducted in the Balance Sheets from the Asset to which it applies:
Allowance for Deferred Tax Assets
Year ended April 30, 2022
$
16,498,199
–
( 739,798 )
–
15,758,401
Year ended April 30, 2021
$
15,528,958
–
969,241
–
16,498,199
F- 25