Clinical Development - Alzamend Neuro submitted an Investigational New Drug (IND) application for AL001 to the FDA on June 30, 2021, and received a "Study May Proceed" letter for a Phase I study on July 28, 2021[115]. - The Phase I clinical trial for AL001 demonstrated positive topline data, with participants receiving a single dose equivalent to 150mg lithium carbonate, potentially allowing for treatment of over 40 million Americans suffering from Alzheimer's[121][122]. - Alzamend Neuro's preclinical candidate AL002 has transitioned to an extensive program of preclinical study, with positive toxicology results and a proposed combined Phase 1/2 study agreed upon by the FDA[119][120]. - The company plans to initiate the clinical trial of AL002 as soon as possible after IND approval, now expected in the second quarter of 2022[120]. - The company aims to pursue investigational new drug applications for bipolar disorder, depression, and post-traumatic stress disorder indications[124]. - Alzamend Neuro's novel approach to combat Alzheimer's involves immunotherapy, aiming to prevent, treat, and potentially cure the disease[106]. Financial Performance - Research and development expenses for the three months ended January 31, 2022, were $873,653, a 273% increase from $234,262 in the same period of 2021[137]. - General and administrative expenses for the three months ended January 31, 2022, totaled $1,682,913, reflecting a 91% increase from $881,397 in the prior year[129]. - The net loss for the three months ended January 31, 2022, was $2,572,865, representing a 130% increase compared to a net loss of $1,118,884 for the same period in 2021[128]. - The company did not generate any revenue during the three months ended January 31, 2022, and does not anticipate generating revenue in the foreseeable future[128]. - Stock compensation expense for the three months ended January 31, 2022, was $1,024,693, an 85% increase from $553,314 in the same period of 2021[130]. - Professional fees for the three months ended January 31, 2022, amounted to $145,780, a 28% decrease from $202,970 in the prior year[130]. - Total operating expenses for the nine months ended January 31, 2022, were $8,446,739, a significant increase from $3,731,912 in the same period of 2021[144]. - The company reported a net loss of $8.5 million for the nine months ended January 31, 2022, compared to a net loss of $3.8 million for the same period in 2021[159]. - Cash and cash equivalents as of January 31, 2022, were $11.8 million, with an accumulated deficit of $25.3 million[159]. - Net cash used in operating activities was $5.1 million for the nine months ended January 31, 2022, compared to $1.5 million in the same period of 2021[165]. Capital and Funding - The company raised $12.9 million from its IPO, which closed on June 17, 2021[161]. - The company expects to continue incurring losses and will need to raise additional capital until it can generate sufficient revenues[161]. - Alzamend Neuro's current operations require additional capital to fund ongoing preclinical and clinical testing, regulatory approvals, and development of manufacturing capabilities[125]. Licensing and Milestones - The company has entered into a Standard Exclusive License Agreement for AL002, which includes a 4% royalty on net sales of products developed from the licensed technology[173]. - Milestone payments for the AL001 License include $10 million due upon FDA approval, with various other payments totaling $1.25 million and $500,000 at different stages of clinical trials[174]. - For the AL002 License, milestone payments include $1 million due upon the first patient treated in a Phase III clinical trial and $10 million upon FDA BLA approval[175]. - Additional AL001 Licenses require milestone payments totaling $8 million due upon the first commercial sale, with other payments at various clinical trial stages[178]. Operational Considerations - The company is currently maintaining pre-COVID-19 operational levels despite potential adverse impacts from recent events like the Omicron variant[172]. - The company is closely monitoring the impact of government responses to COVID-19 on its operations[172]. - The company has no off-balance sheet arrangements that materially affect its financial condition or operations[179]. - Recent accounting standards may impact the company's financial statements, as detailed in Note 3 of the Notes to Unaudited Condensed Financial Statements[180]. - The company has not identified any market risks that are applicable due to its status as a smaller reporting company[181]. Stock and Compensation - Stock-based compensation is recognized on a straight-line basis over the requisite service period, with costs based on the grant date fair value estimated using the Black-Scholes model[108]. - The fair market value of Alzamend Neuro's common stock is determined based on the closing price on the date of grant following the IPO in June 2021[114]. - Stock compensation expense for general and administrative purposes was $2.8 million for the nine months ended January 31, 2022, up 67% from $1.7 million in 2021[148]. - Professional fees increased to $678,000 for the nine months ended January 31, 2022, a 24% rise from $547,000 in the same period of 2021[149].

Financial Performance - Research and development expenses for the three months ended October 31, 2021, were $1,750,050, a 268% increase from $474,913 in the same period of 2020[127] - General and administrative expenses for the three months ended October 31, 2021, were $1,833,884, a 123% increase from $823,033 in the same period of 2020[127] - Total operating expenses for the three months ended October 31, 2021, were $3,583,934, compared to $1,297,946 for the same period in 2020, reflecting a significant increase[127] - The net loss for the three months ended October 31, 2021, was $3,599,929, compared to a net loss of $1,354,097 for the same period in 2020, representing a 166% increase[127] - The basic and diluted net loss per common share for the three months ended October 31, 2021, was $(0.04), compared to $(0.02) for the same period in 2020[127] - Total operating expenses for the six months ended October 31, 2021, were $5.9 million, a significant increase from $2.6 million in the same period of 2020[146] - General and administrative expenses for the six months ended October 31, 2021, were $3.2 million, a 76% increase from $1.8 million in the prior year[148] - The company recorded a net loss of $5.9 million for the six months ended October 31, 2021, compared to a net loss of $2.7 million in the same period of 2020, representing a 122% increase in losses[146] - The company reported a net loss of $5.9 million for the six months ended October 31, 2021, compared to a net loss of $2.7 million for the same period in 2020[161] - The company expects to continue incurring losses for the foreseeable future and needs to raise additional capital until it can generate sufficient revenues[164] Revenue Generation - The company did not generate any revenues during the three months ended October 31, 2021, and does not anticipate generating revenue for the foreseeable future[129] - The company did not generate any revenue during the six months ended October 31, 2021, and does not anticipate generating revenue in the foreseeable future[147] Research and Development - The company submitted an Investigational New Drug (IND) application for AL001 to the FDA on June 30, 2021, and received a "Study May Proceed" letter on July 28, 2021[119] - The Phase I relative bioavailability study for AL001 began in September 2021, with topline data expected in mid to late December 2021[121] - The company has an additional preclinical candidate, AL002, which has transitioned to an extensive program of preclinical study and evaluation[122] - The FDA has agreed to a combined Phase 1/2 study for AL002, with the IND filing now expected in the second quarter of 2022[124] - Research and development expenses for the six months ended October 31, 2021, totaled $2.7 million, a 240% increase from $784,000 in the same period of 2020[155] - The company incurred interest expense of $30,000 for the six months ended October 31, 2021, related to a convertible promissory note[160] - The company experienced delays in drug development and manufacturing activities due to COVID-19, impacting clinical protocol development[173] - The Phase I relative bioavailability study for AL001 commenced on September 10, 2021, to determine safe dosing for future studies[163] Expenses - Stock compensation expense for the three months ended October 31, 2021, was $1.2 million, a 114% increase from $547,000 in the same period of 2020[132] - Professional fees for the three months ended October 31, 2021, were $232,000, up 40% from $166,000 in the prior year[133] - Research and development stock compensation expense for the three months ended October 31, 2021, was $111,000, a 410% increase from $22,000 in the same period of 2020[142] - Total general and administrative expenses for the six months ended October 31, 2021, included $1.8 million in stock compensation expense, a 58% increase from $1.1 million in the same period of 2020[149] - Professional fees increased by 197% to $2.1 million in the six months ended October 31, 2021, compared to $710,000 in 2020, primarily due to costs associated with the Phase I relative bioavailability study for AL001[157] Cash and Financing - As of October 31, 2021, the company had cash of $13.6 million and an accumulated deficit of $22.8 million[161] - Net cash provided by financing activities was $14.9 million for the six months ended October 31, 2021, primarily from the IPO proceeds of approximately $12.9 million[171] Licensing and Royalties - The company has accrued $65,000 in license fees related to the IND application submitted on June 30, 2021, and $190,000 for the first dosing of patients in the Phase I study for AL001[158] - The company has milestone payments totaling $9,600,000 related to the AL001 license agreements, with specific due dates tied to clinical trial events[181] - A royalty payment of 3% is required for License 18110, while License 1811 requires a 1.5% royalty on net sales of products developed from the licensed technology[181] Accounting and Reporting - The company does not have any off-balance sheet arrangements that materially affect its financial condition or operations[182] - Recent accounting standards may impact the company's financial statements, as detailed in Note 3 of the Notes to Unaudited Condensed Financial Statements[183] - The company is classified as a smaller reporting company, which exempts it from certain market risk disclosures[185]

Financial Performance - The net loss for the three months ended July 31, 2021, was $2,319,867, compared to a net loss of $1,316,752 for the same period in 2020, reflecting an increase of $1,003,115[128]. - Basic and diluted net loss per common share was $(0.03) for the three months ended July 31, 2021, compared to $(0.02) in the prior year[128]. - The company reported a net loss of $2.3 million for the three months ended July 31, 2021, compared to a net loss of $1.3 million for the same period in 2020[151]. - During the three months ended July 31, 2021, net cash used in operating activities was $1.2 million, compared to $205,000 for the same period in 2020[156]. - The company expects to continue incurring losses and needs to raise additional capital until it can generate sufficient revenues[155]. Expenses - Research and development expenses increased by 197% to $916,408 for the three months ended July 31, 2021, compared to $308,846 for the same period in 2020[128]. - General and administrative expenses rose by 38% to $1,389,831 for the three months ended July 31, 2021, up from $1,009,461 in the prior year[128]. - The total operating expenses for the three months ended July 31, 2021, were $2,306,239, an increase of $987,932 compared to $1,318,307 in 2020[128]. - Stock compensation expense for the three months ended July 31, 2021, was $597,705, a slight increase of 5% from $569,620 in the same period of 2020[132]. - Professional fees increased by 69% to $300,122 for the three months ended July 31, 2021, compared to $177,793 in the prior year[132]. - Professional fees for the three months ended July 31, 2021, were $705,000, representing a 174% increase from $257,000 in the same period of 2020[144]. - The company incurred $114,000 in regulatory filing services, $79,000 in audit fees, and $29,000 in legal fees during the three months ended July 31, 2021[138]. - The company accrued $65,000 in license fees during the three months ended July 31, 2021, related to its IND application submitted on June 30, 2021[146]. Revenue Generation - The company did not generate any revenue during the three months ended July 31, 2021, and does not anticipate generating revenue for the foreseeable future[130]. Capital and Funding - The company raised approximately $14.4 million from its IPO, which closed on June 17, 2021[154]. - As of July 31, 2021, the company had cash of $15.6 million and an accumulated deficit of $19.2 million[151]. Drug Development and Regulatory Milestones - The company submitted an IND application for AL001 to the FDA on June 30, 2021, and received a study may proceed letter for a Phase I study on July 28, 2021[122]. - AL002 has transitioned from early-stage development to an extensive preclinical study program, with a comprehensive report received on July 23, 2021[123]. - The company has met the Pre-IND meeting and IND application filing milestones for AL001, with potential termination of the license agreement if future milestones are not met[171]. - Milestone payments for AL001 include $50,000 upon IND application filing and $10,000,000 upon FDA approval, with various other payments totaling $1,250,000 for Phase II and III clinical trials[167][168]. - The company experienced delays in drug development and manufacturing activities due to COVID-19, impacting clinical protocol development[164]. Licensing Agreements - The company has entered into a Standard Exclusive License Agreement for AL002 with a royalty-bearing exclusive worldwide license, requiring a 4% royalty on net sales and an initial license fee of $100,000[166]. - The company is required to pay a 3% royalty on net sales for License 18110 and a 1.5% royalty for License 1811, with initial license fees totaling $200,000 due in 2018[170]. Operational Status - The company expects to return to normal operations for the remainder of the calendar year following temporary office closures due to health recommendations[165]. - There are no off-balance sheet arrangements that materially affect the company's financial condition or operations[172].

Company Stage and Revenue Generation - The company is at a preclinical stage with no products approved for commercial sale and has not generated any revenue to date[132]. - The company has two product candidates, AL001 and AL002, which require extensive clinical evaluation and regulatory approval before generating revenue[133]. - The company does not anticipate generating revenue for a few years at the earliest and may not achieve profitability for several years after generating material revenue[133]. Financial Obligations and Costs - The company has paid initial license fees of $200,000 for both AL001 and AL002, with additional royalty payments of 4% and 4.5% on net sales respectively[139]. - Minimum royalties for AL001 are set at $25,000 in 2023, $45,000 in 2024, and $70,000 in 2025, while for AL002 they are $20,000 in 2022, $40,000 in 2023, and $50,000 in 2024[139]. - The company has met certain milestone payments for AL001, including $50,000 for the Pre-IND meeting and $65,000 for the IND application filing[140]. Regulatory Approval and Compliance - The company plans to submit AL001 and AL002 for regulatory approval, which is critical for financing and strategic collaborations[149]. - Regulatory approval for AL001 and AL002 is uncertain and requires significant resources, with potential delays impacting commercialization[166]. - Compliance with FDA regulations and potential changes in laws could impose additional costs and lengthen review times for AL001 and AL002[183]. Clinical Trials and Development Risks - The success of AL001 and AL002 is dependent on timely completion of clinical trials and regulatory approval, as well as market acceptance[150]. - Clinical trials for AL001 and AL002 are expected to be expensive and time-consuming, with potential for delays or cancellations[173]. - There is a high rate of failure for drug candidates in clinical trials, which could significantly impact the company's operations and reputation[171]. Market Competition and Challenges - The company expects substantial competition in the market, which may hinder its ability to successfully develop and commercialize its products[197]. - The company faces significant competition from major pharmaceutical and biotechnology firms, including Celgene, Merck, and Novartis, for its product candidates AL001 and AL002[198]. - Competitors may develop safer, more effective, or less expensive products, potentially reducing the company's market opportunity[199]. Intellectual Property and Legal Risks - The company relies on a combination of patents and trade secrets to protect its intellectual property, which is critical for its product candidates[212]. - There is uncertainty regarding the patentability of the company's product candidates, which could impact its ability to commercialize AL001 and AL002[213]. - The company may face costly litigation to enforce its intellectual property rights, which could distract management and harm its business[203]. Management and Operational Risks - The company is highly dependent on key personnel, and the loss of any senior management or scientific staff could adversely affect product development and commercialization efforts[196]. - The company may experience difficulties in hiring qualified personnel due to intense competition in the biopharmaceutical field[262]. - The company has identified a material weakness in internal control over financial reporting, which could adversely affect investor confidence and the value of common stock[252]. Financial Reporting and Compliance - The company anticipates significant additional costs related to building its accounting and financial infrastructure, which may include professional fees and internal costs[274]. - Failure to comply with Section 404 of the Sarbanes-Oxley Act could result in the inability to produce timely and accurate financial statements, potentially harming the business and investor confidence[276]. - The company expects to incur increased legal, accounting, and compliance costs as a result of operating as a public company, which may impact its financial performance[280]. SEC Investigation and Legal Exposure - The company is currently under investigation by the SEC, the consequences of which remain unknown[223]. - The SEC is conducting an investigation into Ault Global Holdings, Inc. regarding potential violations of the Securities Act and the Exchange Act, with no established timeline for the investigation's conclusion[224]. - The company faces potential product liability exposure related to AL001 and AL002, which could result in substantial liabilities and impact commercialization efforts[227]. Stockholder and Market Considerations - Beneficial ownership of the shares of common stock by directors and executive officers represents approximately 45.76% of the outstanding shares, allowing these stockholders to influence management decisions[229]. - The market price of the company's common stock may be volatile due to various factors, including regulatory approvals and product sales performance[237]. - The concentration of voting power may delay or prevent changes in control of the company, potentially affecting stockholder interests[234].