Alzamend Neuro, Inc 10-Q for FY2024 Q2
Alzamend Neuro, Inc. (ALZN)
About this 10-Q
Alzamend Neuro, Inc filed this 10-Q on December 15, 2023, covering the quarter ended October 31, 2023 (FY2024 Q2).
Headline figures
Quarter ended October 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $2.91M
- compared with a net loss of $3.11M a year earlier
- Diluted EPS
- -$0.44
- compared with -$0.48 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
| (Address of principal executive offices) | (Zip Code) | (Registrant’s telephone number, including area code) |
Securities registered under Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of each exchange on which registered |
Securities registered under Section 12(g) of the Act: None
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | o | Accelerated filer o |
| x | Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o
As of December 14, 2023 there were shares of registrant’s common stock, $0.0001 par value per share, outstanding.
Table of Contents
| Page | ||
| PART I. | FINANCIAL INFORMATION | 3 |
| Item 1. | Financial Statements (unaudited) | 3 |
| Condensed Balance Sheets | 3 | |
| Condensed Statements of Operations | 4 | |
| Condensed Statements of Stockholders’ (Deficit) Equity | 5 | |
| Condensed Statements of Cash Flows | 9 | |
| Notes to Condensed Financial Statements | 10 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 32 |
| Item 4. | Controls and Procedures | 32 |
| PART II | OTHER INFORMATION | 34 |
| Item 1. | Legal Proceedings | 34 |
| Item 1A. | Risk Factors | 34 |
| Item 2. | Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities. | 34 |
| Item 3. | Defaults Upon Senior Securities | 34 |
| Item 4. | Mine Safety Disclosures | 34 |
| Item 5. | Other Information | 34 |
| Item 6. | Exhibits | 35 |
| Signatures | 36 |
| 2 |
PART I – FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
Alzamend Neuro, Inc.
Condensed Balance Sheets
(Unaudited)
| October 31, 2023 | April 30, 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Prepaid expenses - related party | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Property, plant and equipment, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| TOTAL LIABILITIES, ALL CURRENT | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||
| Convertible Preferred stock, $
par value:
shares authorized; Series A Convertible Preferred Stock, $
stated value per share,
shares designated; nil issued and outstanding as of October 31, 2023 and April 30, 2023 | ||||||||
| Common stock, $ par value: shares authorized; and issued and outstanding as of October 31, 2023 and April 30, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Note receivable for common stock – related party | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY | ( | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 3 |
Alzamend Neuro, Inc.
Condensed Statements of Operations
(Unaudited)
| For the Three Months Ended October 31, | For the Six Months Ended October 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER EXPENSE, NET | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted net loss per common share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Basic and diluted weighted average common shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 4 |
Alzamend Neuro, Inc.
Condensed Statements of Stockholders’ Deficit
For the Three Months Ended October 31, 2023
(Unaudited)
| Series A Convertible | Additional | Note Receivable for | ||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-In | Common Stock - | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Related Party | Deficit | Total | |||||||||||||||||||||||||
| BALANCES, July 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Issuance of common stock for cash, net of issuance costs | - | |||||||||||||||||||||||||||||||
| Issuance of common stock for restricted stock awards | - | |||||||||||||||||||||||||||||||
| Subscription receivable payment received | - | - | ( | ) | ||||||||||||||||||||||||||||
| Stock-based compensation to employees and consultants | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| BALANCES, October 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 5 |
Alzamend Neuro, Inc.
Condensed Statements of Stockholders’ (Deficit) Equity
For the Three Months Ended October 31, 2022
(Unaudited)
| Series A Convertible | Additional | Note Receivable for | ||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-In | Common Stock - | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Related Party | Deficit | Total | |||||||||||||||||||||||||
| BALANCES, July 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Issuance of common stock for restricted stock awards | - | ( | ) | |||||||||||||||||||||||||||||
| Stock-based compensation to employees and consultants | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| BALANCES, October 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 6 |
Alzamend Neuro, Inc.
Condensed Statements of Stockholders’ (Deficit) Equity
For the Six Months Ended October 31, 2023
(Unaudited)
| Series A Convertible | Additional | Note Receivable for | ||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-In | Common Stock - | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Related Party | Deficit | Total | |||||||||||||||||||||||||
| BALANCES, April 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Issuance of common stock for cash, net of issuance costs | - | |||||||||||||||||||||||||||||||
| Issuance of common stock for restricted stock awards | - | |||||||||||||||||||||||||||||||
| Subscription receivable payment received | - | - | ( | ) | ||||||||||||||||||||||||||||
| Stock-based compensation to employees and consultants | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| BALANCES, October 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 7 |
Alzamend Neuro, Inc.
Condensed Statements of Stockholders’ Equity
For the Six Months Ended October 31, 2022
(Unaudited)
| Series A Convertible | Additional | Note Receivable for | ||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-In | Common Stock - | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Related Party | Deficit | Total | |||||||||||||||||||||||||
| BALANCES, April 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Issuance of common stock for restricted stock awards | - | ( | ) | |||||||||||||||||||||||||||||
| Stock-based compensation to employees and consultants | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| BALANCES, October 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 8 |
Alzamend Neuro, Inc.
Condensed Statements of Cash Flows
(Unaudited)
| For the Six Months Ended October 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Stock-based compensation to employees and consultants | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Prepaid expenses - related party | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from the issuance of common stock, net | ||||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 9 |
Alzamend Neuro, Inc.
Notes to Unaudited Condensed Financial Statements
| 1. | DESCRIPTION OF BUSINESS |
Organization
Alzamend Neuro, Inc. (the “Company” or “Alzamend”), is a clinical-stage biopharmaceutical company focused on developing novel products for the treatment of Alzheimer’s disease (“Alzheimer’s”), bipolar disorder (“BD”), major depressive disorder (“MDD”) and post-traumatic stress disorder (“PTSD”). With two current product candidates, Alzamend aims to bring treatments or cures to market at a reasonable cost as quickly as possible. The Company’s current pipeline consists of two novel therapeutic drug candidates: (i) a patented ionic cocrystal technology delivering a therapeutic combination of lithium, proline and salicylate, known as AL001, through two royalty-bearing exclusive worldwide licenses from the University of South Florida Research Foundation, Inc., as licensor (the “Licensor”); and (ii) a patented method using a mutant peptide sensitized cell as a cell-based therapeutic vaccine that seeks to restore the ability of a patient’s immunological system to combat Alzheimer’s, known as ALZN002, through a royalty-bearing exclusive worldwide license from the same Licensor.
The Company is devoting substantially all its efforts towards research and development of its two product candidates and raising capital. The Company has not generated any product revenue to date. The Company has financed its operations to date primarily through debt financings and through the sale of its common stock, par value $ per share (“Common Stock”). The Company expects to continue to incur net losses in the foreseeable future.
Reverse Stock Split
On October 27, 2023, pursuant to the authorization provided by the Company’s stockholders at a special meeting of stockholders, the Company filed an amendment to the Certificate of Incorporation to effectuate a reverse stock split of the Company’s issued and outstanding Common Stock by a ratio of one-for-fifteen (the “Reverse Split”). The Reverse Split did not affect the number of authorized shares of Common Stock, preferred stock or their respective par value per share. As a result of the Reverse Split, each fifteen shares of Common Stock issued and outstanding prior to the Reverse Split were converted into one share of common stock. The Reverse Split became effective in the State of Delaware on October 31, 2023. All share amounts in these condensed financial statements have been updated for all periods presented to reflect the Reverse Split.
| 2. | LIQUIDITY AND GOING CONCERN |
The accompanying condensed financial statements have been prepared on the basis that the Company will continue as a going concern. As of October 31, 2023, the Company had cash of $200,000, an accumulated deficit of $50.5 million and stockholders’ deficit of $2.7 million. For the three and six months ended October 31, 2023, the Company had net losses of $2.9 million and $6.4 million, respectively. For the six months ended October 31, 2023, cash used in operating activities was $4.8 million. Historically, the Company has financed its operations principally through issuances of equity and debt instruments.
The Company believes its current cash on hand is not sufficient to fund its planned operations through one year after the date the condensed financial statements are issued. These factors create substantial doubt about the Company’s ability to continue as a going concern for at least one year after the date that these condensed financial statements are issued.
The Company’s inability to continue as a going concern could have a negative impact on the company, including our ability to obtain needed financing. The Company’s condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should it be unable to continue as a going concern.
In order to continue as a going concern, the Company will need to raise additional funds. The Company has raised funds subsequent to the quarter end through an “at-the-market” offering, and plans to seek additional funding through public equity, including the “at-the-market” offering, private equity and debt financings. Additional funds may also be received from the exercise of warrants (Note 7) and the receipt of funds from the note receivable (Note 4). The terms of any additional financing may adversely affect the holdings or rights of the Company’s stockholders. If the Company is unable to obtain funding, it could be required to delay, reduce or eliminate research and development programs and planned clinical trials which could adversely affect the Company’s business operations.
| 10 |
| 3. | SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The accompanying condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim reports of companies filing as a smaller reporting company. These condensed financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Report on Form 10-K for the year ended April 30, 2023, filed with the SEC on July 27, 2023. In the opinion of management, the accompanying condensed interim financial statements include all adjustments necessary in order to make the condensed financial statements not misleading. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year or any other future period. Certain notes to the condensed financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Company’s Report on Form 10-K have been omitted. The accompanying condensed balance sheet at April 30, 2023 has been derived from the audited balance sheet at April 30, 2023 contained in such Form 10-K.
Accounting Estimates
The preparation of condensed financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of expenses during the reporting period. The Company’s significant accounting policies that involve significant judgment and estimates include stock-based compensation, warrant valuation, and valuation of deferred income taxes. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all
highly liquid investments with a remaining maturity of three months or less when purchased to be cash equivalents. As of October 31, 2023
and April 30, 2023, the Company had
Fair Value of Financial Instruments
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last is considered unobservable:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 assumptions: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including liabilities resulting from imbedded derivatives associated with certain warrants to purchase Common Stock.
The fair values of warrants are determined using the Black-Scholes valuation model, a “Level 3” fair value measurement, based on the estimated fair value of Common Stock, volatility based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities, the expected life based on the remaining contractual term of the warrants and the risk free interest rate based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the warrants’ contractual life.
Property and Equipment, Net
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of five years. Significant additions and improvements are capitalized, while repairs and maintenance are charged to expense as incurred.
| 11 |
Research and Development Expenses
Research and development costs are expensed as incurred. Research and development costs consist of scientific consulting fees, clinical trial fees and lab supplies, as well as fees paid to other entities that conduct certain research and development activities on behalf of the Company.
The Company has acquired and may continue to acquire the rights to develop and commercialize new product candidates from third parties. The upfront payments to acquire license, products or rights, as well as any future milestone payments, are immediately recognized as research and development expense provided that there is no alternative future use of the rights in other research and development projects.
The Company recognizes stock-based compensation expense for stock options on a straight-line basis over the requisite service period and account for forfeitures as they occur. The Company’s stock-based compensation costs are based upon the grant date fair value of options estimated using the Black-Scholes option pricing model. To the extent any stock option grants are made subject to the achievement of a performance-based milestone, management evaluates when the achievement of any such performance-based milestone is probable based on the relative satisfaction of the performance conditions as of the reporting date.
The Company recognizes stock-based compensation expense for restricted stock units on a straight-line basis over the requisite service period and account for forfeitures as they occur. The Company’s stock-based compensation for restricted stocks is based upon the estimated fair value of the Common Stock.
The Black-Scholes option pricing model utilizes inputs which are highly subjective assumptions and generally require significant judgment. Certain of such assumptions involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and the Company uses significantly different assumptions or estimates, the Company’s stock-based compensation could be materially different.
Warrants
The Company accounts for stock warrants as either equity instruments, derivative liabilities, or liabilities in accordance with FASB ASC 480, Distinguishing Liabilities from Equity and FASB ASC 815, Derivatives and Hedging, depending on the specific terms of the warrant agreement.
The Company utilizes FASB ASC 260, Earnings per Share. Basic loss per share is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted loss per common share reflects the potential dilution that could occur if convertible preferred stock, options and warrants were to be exercised or converted or otherwise resulted in the issuance of Common Stock that then shared in the earnings of the entity.
Since the effects of outstanding stock options, restricted stock units and warrants are anti-dilutive in the periods presented, shares of Common Stock underlying these instruments have been excluded from the computation of loss per common share.
The following sets forth the number of shares of Common Stock underlying outstanding stock options, restricted stock units and warrants that have been excluded from the computation of loss per common share:
| Schedule of antidilutive securities excluded from computation of earnings per share | ||||||||
| For the Six Months Ended October 31, | ||||||||
| 2023 | 2022 | |||||||
| Stock options (1) | ||||||||
| Restricted stock units | ||||||||
| Warrants | ||||||||
| (1) |
| 12 |
Recent Accounting Standards
From time to time, new accounting pronouncements are issued by the FASB and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective are not expected to have a material impact on the Company’s financial position or results of operations upon adoption.
The Company has considered all other recently issued accounting standards and does not believe the adoption of such standards will have a material impact on its condensed financial statements.
| 4. | NOTE RECEIVABLE FOR COMMON STOCK, RELATED PARTY |
On April 30, 2019, the Company
and Ault Life Sciences Fund, LLC (“ALSF”) entered into a securities purchase agreement for the purchase of shares
of Common Stock for a total purchase price of $
5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets were as follows:
| Schedule of prepaid expenses and other current assets | ||||||||
| October 31, 2023 | April 30, 2023 | |||||||
| Prepaid clinical trial fees | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Other prepaid expenses | ||||||||
| Total prepaid expenses and other current assets | $ | $ | ||||||
Prepaid clinical trial fees
at October 31, 2023 and April 30, 2023 represented the unused portion of the prepaid clinical trial fees. On June 14, 2023, the Company purchased directors’ and officers’
insurance for 12 months in the amount of $
| 6. | STOCK-BASED COMPENSATION |
2016 Stock Incentive Plan
On April 30, 2016, the Company’s stockholders approved the Company’s 2016 Stock Incentive Plan (the “Plan”). The Plan provides for the issuance of a maximum of shares of Common Stock to be offered to the Company’s directors, officers, employees, and consultants. On March 1, 2019, the Company’s stockholders approved an additional shares to be available for issuance under the Plan. Options granted under the Plan have an exercise price equal to or greater than the fair value of the underlying Common Stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. The options expire between five and years from the date of grant. Restricted stock awards granted under the Plan are subject to a vesting period determined at the date of grant.
2021 Stock Incentive Plan
In February 2021, the Company’s board of directors (the “Board”) adopted, and the stockholders approved, the Alzamend Neuro, Inc. 2021 Stock Incentive Plan (the “2021 Plan”). The 2021 Plan authorizes the grant to eligible individuals of (1) stock options (incentive and non-statutory), (2) restricted stock, (3) stock appreciation rights, or SARs, (4) restricted stock units, and (5) other stock-based compensation.
| 13 |
Stock Subject to the 2021 Plan. The maximum number of shares of Common Stock that may be issued under the 2021 Plan is 666,667 shares, which number will be increased to the extent that compensation granted under the 2021 Plan is forfeited, expires or is settled for cash (except as otherwise provided in the 2021 Plan). Substitute awards (awards made or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company that the Company acquires or any subsidiary of the Company or with which the Company or any subsidiary combines) will not reduce the shares authorized for grant under the 2021 Plan, nor will shares subject to a substitute award be added to the shares available for issuance or transfer under the 2021 Plan.
All options that the Company grants are granted at the per share fair value on the grant date. Vesting of options differs based on the terms of each option. The Company has valued the options at their date of grant utilizing the Black-Scholes option pricing model. As of the date of issuance of these options, there was not an active public market for the Company’s shares. Accordingly, the fair value of the underlying options was determined based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options as calculated using the simplified method. The expected life of the options used was based on the contractual life of the option granted. Stock-based compensation is a non-cash expense because the Company settles these obligations by issuing shares of Common Stock from its authorized shares instead of settling such obligations with cash payments.
A summary of stock option activity for the six months ended October 31, 2023 is presented below:
| Schedule of share-based payment arrangement, option, activity | ||||||||||||||||||||
| Outstanding Options | ||||||||||||||||||||
| Shares Available for Grant | Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | ||||||||||||||||
| Balance at April 30, 2023 | $ | $ | ||||||||||||||||||
| Options granted | $ | - | ||||||||||||||||||
| Options exercised | $ | - | ||||||||||||||||||
| Options expired | ( | ) | $ | - | ||||||||||||||||
| Balance at October 31, 2023 | $ | $ | ||||||||||||||||||
| Options vested and expected to vest at October 31, 2023 | $ | $ | ||||||||||||||||||
| Options exercisable at October 31, 2023 | $ | $ | ||||||||||||||||||
The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e., the difference between the estimated fair value on the respective date and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their options.
Restricted stock unit activity for the six months ended October 31, 2023 is presented below:
| Shares | Weighted Average Grant Date Fair Value | ||||||||
| Unvested at April 30, 2023 | $ | ||||||||
| Granted | |||||||||
| Vested | ( | ) | |||||||
| Cancelled | |||||||||
| Unvested at October 31, 2023 | $ | ||||||||
Performance Contingent Stock Options Granted to Employee
On November 26, 2019, the Board granted performance- and market-contingent awards to certain key employees and a director. These grants were made outside of the Plan. These awards have an exercise price of $22.50 per share. These awards have multiple separate market triggers for vesting based upon either (i) the successful achievement of tiered target closing prices on a national securities exchange for 90 consecutive trading days later than 180 days after the Company’s initial public offering (“IPO”) for its Common Stock, or (ii) tiered target prices for a change in control transaction. The target prices ranged from $150 per share to $600 per share. , the unvested portion of the performance options will be reduced by 25%.
| 14 |
On November 22, 2022, the Compensation Committee of the Board modified the performance criteria for these awards. The target price range is now $150 per share to $300 per share. Additionally, if the stock price milestones are now not achieved by November 27, 2026, as opposed to within three years, the unvested portion of the performance options will be reduced by 25%. Due to the significant risks and uncertainties associated with achieving the market-contingent awards, as of October 31, 2023, the Company believed that the achievement of the requisite performance conditions was not probable and, as a result, no compensation cost has been recognized for these awards.
On November 29, 2022, the Compensation Committee of the Board granted 133,333 performance-based stock option to the Chief Executive Officer at an exercise price of $17.55 per share, of which 50% vest upon the completion and announcement of topline data from the Company’s Phase II clinical trial of AL001 within three years from grant date and the remaining 50% vest upon the completion and announcement of topline data from the Company’s Phase I/IIA clinical trial of ALZN002 within four years from the grant date. During the three months ended January 31, 2023, the Company believed that it was probable that the performance condition of the completion and announcement of topline data from the Company’s Phase II clinical trial of AL001 would be achieved and had recognized the related stock-based compensation. As of October 31, 2023, the Company believed that the achievement of the second performance condition was not probable and, as a result, no compensation cost has been recognized related to Phase I/IIA of ALZN002.
Performance Contingent Stock Options Granted to TAMM Net
On March 23, 2021, the Company issued performance-based stock options to certain team members at TAMM Net, Inc. (“TAMM Net”) to purchase an aggregate of 30,000 shares of Common Stock at a per share exercise price of $22.50 per share, of which 50% would vest upon the completion of Phase I of AL001 by March 31, 2022, and the remaining 50% would vest upon completion of Phase I/IIA of ALZN002 by December 31, 2022.
The performance goal of completing Phase I of AL001 was achieved on March 22, 2022, and the Company recognized stock-based compensation related to the completion of Phase I of AL001 over the implied service period to complete this milestone.
On January 19, 2023, the Board modified the performance criteria for these awards. The remaining 50% of the grant will now vest upon the completion and announcement of topline data of the first cohort from a Phase I/IIA clinical trial of ALZN002 on/or before March 31, 2024. Due to the significant risks and uncertainties associated with achieving the completion of Phase I/IIA for ALZN002, as of October 31, 2023, the Company believed that the achievement of the requisite performance conditions was not probable and, as a result, no compensation cost has been recognized for these awards related to ALZN002.
Performance Contingent Stock Options Granted to Consultants
On October 14, 2021, the Company issued performance-based stock options to two consultants to purchase an aggregate of shares of Common Stock with an exercise price of $36.30 per share, of which 3,333 vest upon completion of each of the Phase II clinical trials of AL001 for a BD indication, AL001 for a PTSD indication, AL001 for an MDD indication and ALZN002 for an Alzheimer’s indication.
On January 19, 2023, the Board modified the performance criteria for these awards. The revised grant will vest 25% if the Company (a) completes and announces topline data from a Phase II clinical trial of AL001 and ALZN002, as applicable, that would support a new drug application for the drug candidate and the indication listed below, and (b) obtained a “Study May Proceed” letter from the U.S. Food and Drug Administration (“FDA”) for the additional Investigational New Drug (“IND”) on/or before December 31, 2023, as follows: (i) AL001 – bipolar disorder; (ii) AL001- major depressive disorder; (iii) AL001 – post-traumatic stress disorder; and (iv) ALZN002 – Alzheimer’s disease.
During the three months ended October 31, 2023, the Company filed INDs for BD and MDD and received “Study May Proceed” letter for BD in October 2023 and MDD in November 2023. As a result, 50% of the performance grant vested and the Company recognized stock-based compensation related to the vesting and the probability of achieving the MDD criteria. As of October 31, 2023, the Company believed that the achievement of the remaining requisite performance conditions was not probable and, as a result, no compensation cost has been recognized for these awards related to Phase II of AL001 – post-traumatic stress disorder and ALZN002 – Alzheimer’s disease.
Stock-Based Compensation Expense
The Company’s results of operations included expenses relating to stock-based compensation for three and six months ended October 31, 2023 and 2022 comprised as follows:
| Schedule of stock-based compensation | ||||||||||||||||
| For the Three Months Ended October 31, | For the Six Months Ended October 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total stock-based compensation | $ | $ | $ | $ | ||||||||||||
| 15 |
As of October 31, 2023, total unamortized stock-based compensation expense related to unvested employee and non-employee awards that are expected to vest was $. The weighted-average period over which such stock-based compensation expense will be recognized was approximately years.
| 7. | WARRANTS |
The following table summarizes information about Common Stock warrants outstanding and exercisable at October 31, 2023:
| Schedule of common stock warrants outstanding | |||||||||||||||||||
| Outstanding | Exercisable | ||||||||||||||||||
| Weighted | |||||||||||||||||||
| Average | Weighted | Weighted | |||||||||||||||||
| Remaining | Average | Average | |||||||||||||||||
| Exercise | Number | Contractual | Exercise | Number | Exercise | ||||||||||||||
| Price | Outstanding | Life (years) | Price | Exercisable | Price | ||||||||||||||
| $ | $ | $ | |||||||||||||||||
| $ | $ | $ | |||||||||||||||||
| $ | $ | $ | |||||||||||||||||
| $ | $ | $ | |||||||||||||||||
| $ | $ | $ | |||||||||||||||||
| 8. | COMMITMENTS AND CONTINGENCIES |
Contractual Obligations
On July 2, 2018, the Company entered into two Standard Exclusive License Agreements with Sublicensing Terms for AL001 with the Licensor and its affiliate, the University of South Florida (the “AL001 Licenses”), pursuant to which the Licensor granted the Company a royalty bearing exclusive worldwide licenses limited to the field of Alzheimer’s, under United States Patent Nos. (i) 9,840,521, entitled “Organic Anion Lithium Ionic Cocrystal Compounds and Compositions”, filed September 24, 2015 and granted December 12, 2017, and (ii) 9,603,869, entitled “Lithium Co-Crystals for Treatment of Neuropsychiatric Disorders”, filed May 21, 2016 and granted March 28, 2017. On February 1, 2019, the Company entered into the First Amendments to the AL001 Licenses, on March 30, 2021, the Company entered into the Second Amendments to the AL001 Licenses and on June 8, 2023, the Company entered into the Third Amendments to the AL001 Licenses (collectively, the “AL001 License Agreements”). The Third Amendments to the AL001 Licenses modified the timing of the payments for the license fees.
The AL001 License Agreements require that the Company pay combined royalty payments of 4.5% on net sales of products developed from the licensed technology for AL001. The Company has already paid an initial license fee of $200,000 for AL001. As an additional licensing fee for the license of the AL001 technologies, the Licensor received 148,528 shares of Common Stock. Minimum royalties for AL001 License Agreements are $40,000 on the first anniversary of the first commercial sale, $80,000 on the second anniversary of the first commercial sale and $100,000 on the third anniversary of the first commercial sale and every year thereafter, for the life of the AL001 License Agreements.
On May 1, 2016, the Company entered into a Standard Exclusive License Agreement with Sublicensing Terms for ALZN002 with the Licensor (the “ALZN002 License”), pursuant to which the Licensor granted the Company a royalty bearing exclusive worldwide license limited to the field of Alzheimer’s Immunotherapy and Diagnostics, under United States Patent No. 8,188,046, entitled “Amyloid Beta Peptides and Methods of Use”, filed April 7, 2009 and granted May 29, 2012. On August 18, 2017, the Company entered into the First Amendment to the ALZN002 License, on May 7, 2018, the Company entered into the Second Amendment to the ALZN002 License, on January 31, 2019, the Company entered into the Third Amendment to the ALZN002 License, on January 24, 2020, the Company entered into the Fourth Amendment to the ALZN002 License, on March 30, 2021, the Company entered into the Fifth Amendment to the ALZN002 License, on April 17, 2023, the Company entered into the Sixth Amendment to the ALZN002 License and on December 11, 2023, the Company entered into the Seventh Amendment to the ALZN002 License (collectively, the “ALZN002 License Agreement”). The Seventh Amendment to the ALZN002 License modified the timing of the payments for the license fees.
| 16 |
The ALZN002 License Agreement requires the Company to pay royalty payments of 4% on net sales of products developed from the licensed technology for ALZN002. The Company has already paid an initial license fee of $200,000 for ALZN002. As an additional licensing fee for the license of ALZN002, the Licensor received 240,120 shares of Common Stock. Minimum royalties for ALZN002 are $20,000 on the first anniversary of the first commercial sale, $40,000 on the second anniversary of the first commercial sale and $50,000 on the third anniversary of the first commercial sale and every year thereafter, for the life of the ALZN002 License Agreement.
On November 19, 2019, the Company entered into two Standard Exclusive License Agreements with Sublicensing Terms for two additional indications of AL001 with the Licensor (the “November AL001 License”), pursuant to which the Licensor granted the Company a royalty bearing exclusive worldwide licenses limited to the fields of (i) neurodegenerative diseases excluding Alzheimer’s and (ii) psychiatric diseases and disorders. On March 30, 2021, the Company entered into the First Amendments to the November AL001 License and on April 17, 2023, the Company entered into the Second Amendments to the November AL001 License (collectively, the “November AL001 License Agreements”). The Second Amendments to the November AL001 License modified the timing of the payments for the license fees.
The November AL001 License Agreements require the Company to pay royalty payments of 3% on net sales of products developed from the licensed technology for AL001 in those fields. The Company paid an initial license fee of $20,000 for the additional indications. Minimum royalties for November AL001 License Agreements are $40,000 on the first anniversary of the first commercial sale, $80,000 on the second anniversary of the first commercial sale and $100,000 on the third anniversary of the first commercial sale and every year thereafter, for the life of the November AL001 License Agreements.
These license agreements have an indefinite term that continue until the later of the date no licensed patent under the applicable agreement remains a pending application or enforceable patent, the end date of any period of market exclusivity granted by a governmental regulatory body, or the date on which the Company’s obligations to pay royalties expire under the applicable license agreement. Under the various license agreements, if the Company fails to meet a milestone by its specified date, Licensor may terminate the license agreement. The Licensor was also granted a preemptive right to acquire such shares or other equity securities that may be issued from time to time by the Company while the Licensor remains the owner of any equity securities of the Company.
Additionally, the Company is required to pay milestone payments on the due dates to the Licensor for the license of the AL001 technologies and for the ALZN002 technology, as follows:
Original AL001 Licenses:
| Schedule of contractual obligation, fiscal year maturity | |||||
| Payment | Due Date | Event | |||
| $ | * | |
Pre-IND meeting | ||
| $ | * | IND application filing | |||
| $ | * | Upon first dosing of patient in a clinical trial | |||
| $ | * | Upon completion of first clinical trial | |||
| $ | Upon first patient treated in a Phase III clinical trial | ||||
| $ | Upon FDA approval | ||||
| * |
ALZN002 License:
| Payment | Due Date | ||
| $ | * | ||
| $ | |||
| $ | |||
| $ | |||
| $ | |||
| * |
| 17 |
Additional AL001 Licenses:
| Payment | Due Date | Event | |||
| $ | Upon first patient treated in a Phase III clinical trial | ||||
| $ | First commercial sale | ||||
| 9. | EQUITY TRANSACTIONS |
The Company is authorized to issue shares of Preferred Stock $ par value. The Board has designated shares as the Series A Convertible Preferred Stock. The rights, preferences, privileges and restrictions on the remaining authorized shares of Preferred Stock have not been determined. The Board is authorized to create a new series of preferred shares and determine the number of shares, as well as the rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred shares.
Series A Convertible Preferred Stock
As of October 31, 2023, there were no shares of Series A Convertible Preferred Stock issued or outstanding.
Common Stock
ALSF Investment
On April 30, 2019, the Company
and ALSF entered into a securities purchase agreement (the “SPA”) for the purchase of shares of Common Stock for a
total purchase price of $, or $ per share with warrants with a
At-the-Market Offering
On September 8, 2023, the Company entered into an At-the-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC, as sales agent to sell shares of its Common stock, having an aggregate offering price of up to approximately $9.8 million (the “Shares”) from time to time, through an “at the market offering” (the “ATM Offering”) as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). On September 8, 2023, the Company filed a prospectus supplement with the SEC relating to the offer and sale of up to approximately $9.8 million in shares of Common Stock in the ATM Offering.
The offer and sale of the Shares will be made pursuant to the Company’s effective “shelf” registration statement on Form S-3 and an accompanying base prospectus contained therein (Registration Statement No. 333-273610) filed with the SEC on August 2, 2023 and declared effective by the SEC on August 10, 2023.
During the six months ended October 31, 2023, the Company sold an aggregate of 6,149 shares of Common Stock pursuant to the ATM Offering for gross proceeds of $19,000.
| 10. | OTHER RELATED PARTY TRANSACTIONS |
| 11. | SUBSEQUENT EVENTS |
During
the period between November 1, 2023 through December 14, 2023, the Company sold an aggregate of shares of Common Stock pursuant
to the ATM Offering for gross proceeds of $
On December 11, 2023, the Company entered into the Seventh Amendment to the ALZN002 License. The Seventh Amendment to the ALZN002 License modified the timing of the payments for the license fees.
| 18 |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
You should read the following management’s discussion and analysis of financial condition and results of operations in conjunction with our unaudited condensed financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or the SEC, on July 27, 2023.
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This section should be read in conjunction with our unaudited condensed financial statements and related notes included in Part I, Item 1 of this report. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.
These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
In this Quarterly Report, unless the context requires otherwise, references to the “Company,” “Alzamend,” “we,” “our company” and “us” refer to Alzamend Neuro, Inc., a Delaware corporation.
Overview
We were incorporated on February 26, 2016, as Alzamend Neuro, Inc. under the laws of the State of Delaware. We were formed to acquire and commercialize patented intellectual property and know-how to prevent, treat and potentially cure the crippling and deadly Alzheimer’s. With our two product candidates, we aim to bring treatment or cures not only for Alzheimer’s, but also, bipolar disorder (“BD”), major depressive disorder (“MDD”) and post-traumatic stress disorder (“PTSD”). Existing Alzheimer’s treatments only temporarily relieve symptoms but do not, to our knowledge, slow or halt the underlying worsening of the disease. We have developed a novel approach to combat Alzheimer’s through immunotherapy.
Critical Accounting Policies and Estimates
Research and Development Expenses. Research and development costs are expensed as incurred. Research and development costs consist of scientific consulting fees and lab supplies, as well as fees paid to other entities that conduct certain research and development activities on behalf of our company.
We have acquired and may continue to acquire the rights to develop and commercialize new product candidates from third parties. The upfront payments to acquire license, product or rights, as well as any future milestone payments, are immediately recognized as research and development expense provided that there is no alternative future use of the rights in other research and development projects.
Stock-Based Compensation. We maintain a stock-based compensation plan as a long-term incentive for employees, non-employee directors and consultants. The plan allows for the issuance of incentive stock options, non-qualified stock options, restricted stock units, and other forms of equity awards.
We recognize stock-based compensation expense for stock options on a straight-line basis over the requisite service period and account for forfeitures as they occur. Our stock-based compensation costs are based upon the grant date fair value of options estimated using the Black-Scholes option pricing model. To the extent any stock option grants are made subject to the achievement of a performance-based milestone, management evaluates when the achievement of any such performance-based milestone is probable based on the relative satisfaction of the performance conditions as of the reporting date.
| 19 |
The Black-Scholes option pricing model utilizes inputs which are highly subjective assumptions and generally require significant judgment. These assumptions include:
| · | Fair Value of Common Stock. See the subsection titled “Common Stock Valuations” below. |
| · | Risk-Free Interest Rate. The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option. |
| · | Expected Volatility. Because we do not have a sufficient trading history for our common stock (“Common Stock”), the expected volatility was estimated based on the average volatility for comparable publicly traded life sciences companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on the similar size, stage in life cycle or area of specialty. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available. |
| · | Expected Term. The expected term represents the period that the stock-based awards are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term), as we do not have sufficient historical data to use any other method to estimate expected term. |
| · | Expected Dividend Yield. We have never paid dividends on our Common Stock and have no plans to pay dividends on our Common Stock. Therefore, we used an expected dividend yield of zero. |
Certain of such assumptions involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our stock-based compensation could be materially different.
Common Stock Valuations. Prior to our initial public offering (“IPO”) in June 2021, there was no public market for our Common Stock, and, as a result, the fair value of the shares of Common Stock underlying our stock-based awards was estimated on each grant date by our Board. To determine the fair value of our Common Stock underlying option grants, our Board considered, among other things, input from management, and our Board’s assessment of additional objective and subjective factors that it believed were relevant, and factors that may have changed from the date of the most recent valuation through the date of the grant. These factors included, but were not limited to:
| · | our results of operations and financial position, including our levels of available capital resources; |
| · | our stage of development and material risks related to our business; |
| · | progress of our research and development activities; |
| · | our business conditions and projections; |
| · | the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as recently completed mergers and acquisitions of peer companies; |
| · | the lack of marketability of our Common Stock as a private company; |
| · | the prices at which we sold shares of our Common Stock to outside investors in arms-length transactions; |
| · | the likelihood of achieving a liquidity event for our security holders, such as an IPO or a sale of our company, given prevailing market conditions; |
| · | trends and developments in our industry; and |
| · | external market conditions affecting the life sciences and biotechnology industry sectors. |
Following the closing of our IPO, our Board determined the fair market value of our Common Stock based on the closing price of our Common Stock as reported on the date of grant.
| 20 |
Plan of Operations
We intend to develop and commercialize therapeutics that are better than existing treatments and have the potential to significantly improve the lives of individuals afflicted by Alzheimer’s, BD, MDD and PTSD. To achieve these goals, we are pursuing the following key business strategies:
| · | Advance clinical development of AL001 for Alzheimer’s, BD, MDD and PTSD treatment; |
| · | Advance clinical development of ALZN002 for Alzheimer’s treatment; |
| · | Expand our pipeline of pharmaceuticals to include additional indications for AL001 and delivery methods; |
| · | Focus on translational and functional endpoints to efficiently develop product candidates; and |
| · | Optimize the value of AL001 and ALZN002 in major markets. |
Our pipeline consists of two novel therapeutic drug candidates:
| · | AL001 - A patented ionic cocrystal technology delivering a therapeutic combination of lithium, salicylate and proline through three royalty-bearing exclusive worldwide licenses from the University of South Florida Research Foundation, Inc., as licensor (the “Licensor”); and |
| · | ALZN002 - A patented method using a mutant peptide sensitized cell as a cell-based therapeutic vaccine that seeks to restore the ability of a patient’s immunological system to combat Alzheimer’s through a royalty-bearing exclusive worldwide license from the Licensor. |
Our most advanced product candidate (lead product) licensed and in clinical development in humans is AL001, an ionic cocrystal of lithium for the treatment of Alzheimer’s, BD, MDD and PTSD. Based on our preclinical data involving mice models, AL001 treatment prevented cognitive deficits, depression and irritability and is superior in improving associative learning and memory and irritability compared with lithium carbonate treatments, supporting the potential of this lithium formulation for the treatment of Alzheimer’s, BD, MDD and PTSD in humans. Lithium has been marketed for more than 35 years and human toxicology regarding lithium use has been well characterized, potentially mitigating the regulatory burden for safety data.
On May 5, 2022, we initiated a multiple-dose, steady-state, double-blind, ascending dose safety, tolerability, pharmacokinetic clinical trial of AL001 in patients with mild to moderate Alzheimer’s and healthy subjects. We completed the Phase IIA clinical trial patient dosing in March 2023 and announced positive topline data in June 2023.
We announced that we successfully identified a maximum tolerated dose (“MTD”) for development of AL001 from a multiple-ascending dose study as assessed by an independent safety review committee. This dose, providing lithium at a lithium carbonate equivalent dose of 240 mg 3-times daily (“TID”), is designed to be unlikely to require lithium therapeutic drug monitoring (“TDM”). Also, this MTD is risk mitigated for the purpose of treating fragile populations, such as Alzheimer’s patients.
Lithium is a commonly prescribed drug for manic episodes in BD type 1 as well as maintenance therapy of BD in patients with a history of manic episodes. Lithium is also prescribed off-label for MDD, BD and treatment of PTSD, among other disorders. Lithium was the first mood stabilizer approved by the U.S. Food and Drug Administration (“FDA”) and is still a first-line treatment option (considered the “gold standard”) but is underutilized perhaps because of the need for TDM. Lithium was the first drug that required TDM by regulatory authorities in product labelling because the effective and safe range of therapeutic drug blood concentrations is narrow and well defined for treatment of BD when using lithium salts. Excursions above this range can be toxic, and below can impair effectiveness.
| 21 |
Based on the results from our Phase IIA MAD study, we plan to initiate two safety and efficacy clinical trials in subjects with mild to moderate dementia of the Alzheimer’s type. Additionally, we are investigating the potential of AL001 for patients suffering from BD, MDD and PTSD, and submitted Investigational New Drug (“IND”) applications to the FDA for these indications. The IND for BD was filed in August 2023 and we received a “study may proceed” letter from the FDA in September 2023. The IND for MDD was filed in October 2023 and we received a “study may proceed” letter from the FDA in November 2023. The IND for PTSD was filed in November 2023. After FDA permission to proceed on the INDs, we intend to initiate clinical trials at the MTD to determine relative increased lithium levels in the brain compared to a marketed lithium salt for BD, MDD and PTSD, based on published mouse studies that predict that lithium can be given at lower doses for equivalent therapeutic benefit when treating with AL001. For example, the goal is to replace a 300 mg TID lithium carbonate dose for treatment of BD with a 240 mg TID AL001 lithium equivalent, which represents a daily decrease of 20% of lithium given to a patient.
We submitted a pre-IND meeting request for ALZN002 and supporting briefing documents to the Center for Biological Evaluation and Research of the FDA on July 30, 2021. We received a written response relating to the pre-IND from the FDA providing a path for Alzamend’s planned clinical development of ALZN002 on September 30, 2021. The FDA agreed to allow Alzamend to submit an IND to conduct a combined Phase I/II study.
On September 28, 2022, we submitted an IND application to the FDA for ALZN002 and received a “study may proceed” letter on October 31, 2022. The product candidate is an immunotherapy vaccine designed to treat mild to moderate dementia of the Alzheimer’s type. ALZN002 is a proprietary “active” immunotherapy product, which means it is produced by each patient’s immune system. It consists of autologous DCs that are activated white blood cells taken from each individual patient so that they can be engineered outside of the body to attack Alzheimer’s-related amyloid-beta proteins. These DCs are pulsed with a novel amyloid-beta peptide (E22W) designed to bolster the ability of the patient’s immune system to combat Alzheimer’s; the goal being to foster tolerance to treatment for safety purposes while stimulating the immune system to reduce the brain’s beta-amyloid protein burden, resulting in reduced Alzheimer’s signs and symptoms. Compared to passive immunization treatment approaches that use foreign blood products (such as monoclonal antibodies), active immunization with ALZN002 is anticipated to offer a more robust and long-lasting effect on the clearance of amyloid. This could provide a safer approach due to its reliance on autologous immune components, using each individual patient’s own white blood cells rather than foreign cells and/or blood products.
On April 3, 2023, we announced the initiation of a Phase I/IIA clinical trial for ALZN002 to treat mild to moderate dementia of the Alzheimer’s type. The purpose of this trial is to assess the safety, tolerability, and efficacy of multiple ascending doses of ALZN002 compared with that of placebo in 20-30 subjects with mild to moderate morbidity. The primary goal of this clinical trial is to determine an appropriate dose of ALZN002 for treatment of patients with Alzheimer’s in a larger Phase IIB efficacy and safety clinical trial, which Alzamend expects to initiate within three months of receiving data from the initial trial.
The continuation of our current plan of operations with respect to conducting the series of human clinical trials for each of our therapeutics requires us to raise additional capital to fund our operations.
Because our working capital requirements depend upon numerous factors, including the progress of our preclinical and clinical testing, timing and cost of obtaining regulatory approvals, changes in levels of resources that we devote to the development of manufacturing and marketing capabilities, competitive and technological advances, status of competitors, and our ability to establish collaborative arrangements with other organizations, we will require additional financing to fund future operations.
On September 26, 2023, we received a notice from the staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, for the previous 30 consecutive business days, the minimum Market Value of Listed Securities (“MVLS”) for our Common Stock was below the $35 million minimum MVLS requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2) (the “MVLS Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have 180 calendar days, or until March 25, 2024, to regain compliance with the MVLS Rule. To regain compliance with the MVLS Rule, the MVLS for our Common Stock must close at $35 million or more for a minimum of 10 consecutive business days at any time during this 180-day period. If we regain compliance with the MVLS Rule, Nasdaq will provide us with written confirmation and will close the matter. If we do not regain compliance with the rule by March 25, 2024, Nasdaq will provide notice that our Common Stock will be delisted from the Nasdaq Capital Market. In the event of such notification, the Nasdaq rules permit us an opportunity to appeal Nasdaq’s determination.
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Results of Operations
Results of Operations for the Three Months Ended October 31, 2023 and 2022
The following table summarizes the results of our operations for the three months ended October 31, 2023 and 2022.
| For the Three Months Ended October 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Research and development | $ | 1,996,783 | $ | 1,532,985 | $ | 463,798 | 30 | % | ||||||||
| General and administrative | 904,939 | 1,573,418 | (668,479 | ) | -42 | % | ||||||||||
| Total operating expenses | 2,901,722 | 3,106,403 | (204,681 | ) | -7 | % | ||||||||||
| Loss from operations | (2,901,722 | ) | (3,106,403 | ) | 204,681 | -7 | % | |||||||||
| OTHER EXPENSE, NET | ||||||||||||||||
| Interest expense | (4,311 | ) | (3,588 | ) | (723 | ) | 20 | % | ||||||||
| Total other expense, net | (4,311 | ) | (3,588 | ) | (723 | ) | 20 | % | ||||||||
| NET LOSS | $ | (2,906,033 | ) | $ | (3,109,991 | ) | $ | 203,958 | -7 | % | ||||||
| Basic and diluted net loss per common share | $ | (0.44 | ) | $ | (0.48 | ) | $ | 0.04 | * | |||||||
| Basic and diluted weighted average common shares outstanding | 6,563,784 | 6,499,230 | ||||||||||||||
| * | Not meaningful |
Revenue
We currently have only two product candidates, AL001 and ALZN002. These products are in the clinical stage of development and will require extensive clinical study, review and evaluation, regulatory review and approval, significant marketing efforts and substantial investment before either or both of them, and any respective successors, will provide us with any revenue. We did not generate any revenues during the three months ended October 31, 2023 and 2022, and we do not anticipate that we will generate revenue for the foreseeable future.
Research and Development Expenses
Research and development expenses for the three months ended October 31, 2023 and 2022 were $2.0 million and $1.5 million, respectively. As reflected in the table below, research and development expenses primarily consisted of professional fees, clinical trial fees and licenses and fees.
| For the Three Months Ended October 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Professional fees | $ | 1,045,212 | $ | 915,861 | $ | 129,351 | 14 | % | ||||||||
| Clinical trial fees | 794,676 | 551,771 | 242,905 | 44 | % | |||||||||||
| Licenses and fees | - | 50,000 | (50,000 | ) | -100 | % | ||||||||||
| Stock-based compensation | 142,603 | - | 142,603 | * | ||||||||||||
| Other research and development expenses | 14,292 | 15,353 | (1,061 | ) | -7 | % | ||||||||||
| Total research and development expenses | $ | 1,996,783 | $ | 1,532,985 | $ | 463,798 | 30 | % | ||||||||
* Not meaningful
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Professional Fees
During the three months ended October 31, 2023 and 2022, we incurred professional fees of $1.0 million and $900,000, respectively, which were principally comprised of professional fees attributed to various types of scientific services, including FDA consulting services. The increase relates to higher professional fees incurred related to IND preparation for the additional indications for AL001.
Clinical Trial Fees
During the three months ended October 31, 2023 and 2022, we incurred clinical trial fees of $795,000 and $552,000, respectively. Clinical trial fees for the three months ended October 31, 2023, consisted of $455,000 for our Phase IIA clinical trial for AL001 and $340,000 for our Phase IIA clinical trial for ALZN002. Clinical trial fees for the three months ended October 31, 2022 were for our Phase I clinical trial for AL001.
Licenses and Fees
There are certain initial license fees and milestone payments required to be paid to the University of South Florida and the Licensor, for the licenses of the technologies, pursuant to the terms of the License Agreement with Sublicensing Terms.
Stock-Based Compensation Expense
During the three months ended October 31, 2023, we incurred research and development stock-based compensation of $143,000, related to stock option grants to consultants. The increase in research and development stock compensation expense for the three months ended October 31, 2023 was a result of the vesting of performance stock options grants.
Other Research and Development Expenses
During the three months ended October 31, 2023 and 2022, we incurred other fees of $14,000 and $15,000, respectively, which were principally comprised of scientific materials required for our clinical trials.
General and Administrative Expenses
General and administrative expenses for the three months ended October 31, 2023 and 2022 were $905,000 and $1.6 million, respectively. As reflected in the table below, general and administrative expenses primarily consisted of the following expense categories: stock-based compensation expense; marketing fees; professional fees; insurance; as well as salaries and benefits. For the three months ended October 31, 2023 and 2022, the remaining general and administrative expenses of $131,000 and $129,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, travel and entertainment, board of director fees and other office expenses, none of which is significant individually.
| For the Three Months Ended October 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Stock-based compensation expense | $ | 175,733 | $ | 715,639 | $ | (539,906 | ) | -75 | % | |||||||
| Professional fees | 283,585 | 133,105 | 150,480 | 113 | % | |||||||||||
| Insurance | 88,988 | 129,573 | (40,585 | ) | -31 | % | ||||||||||
| Salary and benefits | 225,934 | 219,132 | 6,802 | 3 | % | |||||||||||
| Marketing fees | - | 247,334 | (247,334 | ) | -100 | % | ||||||||||
| Other general and administrative expenses | 130,699 | 128,635 | 2,064 | 2 | % | |||||||||||
| Total general and administrative expenses | $ | 904,939 | $ | 1,573,418 | $ | (668,479 | ) | -42 | % | |||||||
Stock-Based Compensation Expense
During the three months ended October 31, 2023 and 2022, we incurred general and administrative stock-based compensation expense of $175,733 and $716,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation for the three months ended October 31, 2023 was a result of fewer stock options vesting during the period compared to the prior year.
Professional Fees
During the three months ended October 31, 2023 and 2022, we incurred professional fees of $284,000 and $133,000, respectively, which were principally comprised of the following items:
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Three Months Ended October 31, 2023
| · | During the three months ended October 31, 2023, we incurred $92,000 in audit fees, $89,000 in investor relations, $67,000 in legal fees, $13,000 in tax preparation fees, $12,000 in related party consulting and $11,000 in Sarbanes-Oxley compliance fees. |
Three Months Ended October 31, 2022
| · | During the three months ended October 31, 2022, we recorded an expense of $70,000 in connection with the five-year consulting agreement with Spartan Capital; and |
| · | During the three months ended October 31, 2022, we incurred $20,000 in audit fees, $13,000 in related party consulting, $11,000 in Sarbanes-Oxley compliance fees, $7,000 in tax preparation fees and $12,000 in other professional fees. |
Insurance Expense
During the three months ended October 31, 2023 and 2022, we incurred insurance expense of $89,000 and $130,000, respectively, which was primarily directors’ and officers’ insurance.
Salaries and Benefits
During the three months ended October 31, 2023 and 2022, we incurred $226,000 and $219,000, respectively, in employee-related expenses. As of October 31, 2023, we had four full-time and three part-time employees.
Marketing Fees
During the three months ended October 31, 2022, we incurred marketing fees of $247,000, which was primarily expenses related to the marketing and brand development agreement with Ault Alliance, Inc. (“AAI”), a related party.
Results of Operations for the Six Months Ended October 31, 2023 and 2022
The following table summarizes the results of our operations for the six months ended October 31, 2023 and 2022.
| For the Six Months Ended October 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Research and development | $ | 4,362,920 | $ | 2,908,940 | $ | 1,453,980 | 50 | % | ||||||||
| General and administrative | 2,064,732 | 3,233,005 | (1,168,273 | ) | -36 | % | ||||||||||
| Total operating expenses | 6,427,652 | 6,141,945 | 285,707 | 5 | % | |||||||||||
| Loss from operations | (6,427,652 | ) | (6,141,945 | ) | (285,707 | 5 | % | |||||||||
| OTHER EXPENSE, NET | ||||||||||||||||
| Interest expense | (6,147 | ) | (5,120 | ) | (1,027 | ) | 20 | % | ||||||||
| Total other expense, net | (6,147 | ) | (5,120 | ) | (1,027 | ) | 20 | % | ||||||||
| NET LOSS | $ | (6,433,799 | ) | $ | (6,147,065 | ) | $ | (286,734 | ) | 5 | % | |||||
| Basic and diluted net loss per common share | $ | (0.98 | ) | $ | (0.95 | ) | $ | (0.03 | ) | * | ||||||
| Basic and diluted weighted average common shares outstanding | 6,563,230 | 6,499,008 | ||||||||||||||
| * | Not meaningful |
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Revenue
We currently have only two product candidates, AL001 and ALZN002. These products are in the clinical stage of development and will require extensive clinical study, review and evaluation, regulatory review and approval, significant marketing efforts and substantial investment before either or both of them, and any respective successors, will provide us with any revenue. We did not generate any revenues during the six months ended October 31, 2023 and 2022, and we do not anticipate that we will generate revenue for the foreseeable future.
Research and Development Expenses
Research and development expenses for the six months ended October 31, 2023 and 2022 were $4.4 million and $2.9 million, respectively. As reflected in the table below, research and development expenses primarily consisted of professional fees, clinical trial fees and licenses and fees.
| For the Six Months Ended October 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Professional fees | $ | 2,114,802 | $ | 2,109,035 | $ | 5,768 | 0 | % | ||||||||
| Clinical trials | 2,039,794 | 575,271 | 1,464,523 | 255 | % | |||||||||||
| Licenses and fees | - | 55,000 | (55,000 | ) | -100 | % | ||||||||||
| Stock-based compensation | 142,603 | - | 142,603 | * | ||||||||||||
| Other research and development expenses | 65,721 | 169,634 | (103,914 | ) | -61 | % | ||||||||||
| Total research and development expenses | $ | 4,362,920 | $ | 2,908,940 | $ | 1,453,980 | 50 | % | ||||||||
* Not meaningful
Professional Fees
During each of the six months ended October 31, 2023 and 2022, we incurred professional fees of $2.1 million, which were principally comprised of professional fees attributed to various types of scientific services, including FDA consulting services.
Clinical Trial Fees
During the six months ended October 31, 2023 and 2022, we incurred clinical trial fees of $2.0 million and $575,000, respectively. Clinical trial fees for the six months ended October 31, 2023 consisted of $1.4 million for our Phase IIA clinical trial for AL001 and $650,000 for our Phase IIA clinical trial for ALZN002. Clinical trial fees for the six months ended October 31, 2022 were for our Phase I clinical trial for AL001.
Licenses and Fees
There are certain initial license fees and milestone payments required to be paid to the University of South Florida and the Licensor, for the licenses of the technologies, pursuant to the terms of the License Agreement with Sublicensing Terms.
Stock-Based Compensation Expense
During the six months ended October 31, 2023, we incurred research and development stock-based compensation of $143,000, related to stock option grants to consultants. The increase in research and development stock compensation expense for the six months ended October 31, 2023 was a result of the vesting of performance stock options grants
Other Research and Development Expenses
During the six months ended October 31, 2023 and 2022, we incurred other fees of $66,000 and $170,000, respectively, which were principally comprised of scientific materials required for our clinical trials.
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General and Administrative Expenses
General and administrative expenses for the six months ended October 31, 2023 and 2022 were $2.1 million and $3.2 million, respectively. As reflected in the table below, general and administrative expenses primarily consisted of the following expense categories: stock-based compensation expense; marketing fees; professional fees; insurance; as well as salaries and benefits. For the six months ended October 31, 2023 and 2022, the remaining general and administrative expenses of $252,000 and $257,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, travel and entertainment, board of director fees and other office expenses, none of which is significant individually.
| For the Six Months Ended October 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Stock-based compensation expense | $ | 545,113 | $ | 1,582,978 | $ | (1,037,865 | ) | -66 | % | |||||||
| Professional fees | 434,764 | 376,505 | 58,259 | 15 | % | |||||||||||
| Insurance | 206,684 | 326,000 | (119,316 | ) | -37 | % | ||||||||||
| Salary and benefits | 379,258 | 442,909 | (63,651 | ) | -14 | % | ||||||||||
| Marketing fees | 247,334 | 247,934 | (600 | ) | 0 | % | ||||||||||
| Other general and administrative expenses | 251,579 | 256,679 | (5,100 | ) | -2 | % | ||||||||||
| Total general and administrative expenses | $ | 2,064,732 | $ | 3,233,005 | $ | (1,168,273 | ) | -36 | % | |||||||
Stock-Based Compensation Expense
During the six months ended October 31, 2023 and 2022, we incurred general and administrative stock-based compensation expense of $545,000 and $1.6 million, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation for the six months ended October 31, 2023 was a result of fewer stock options vesting during the period compared to the prior year.
Professional Fees
During the six months ended October 31, 2023 and 2022, we incurred professional fees of $435,000 and $376,000, respectively, which were principally comprised of the following items:
Six Months Ended October 31, 2023
| · | During the six months ended October 31, 2023, we incurred $170,000 in audit fees, $118,000 in investor relations, $69,000 in legal fees, $29,000 in tax preparation fees, $24,000 in related party consulting, $17,000 in Sarbanes-Oxley compliance fees and $8,000 in other professional fees. |
Six Months Ended October 31, 2022
| · | During the six months ended October 31, 2022, we recorded an expense of $140,000 in connection with the five-year consulting agreement with Spartan Capital; and |
| · | During the six months ended October 31, 2022, we incurred $100,000 in audit fees, $41,000 in Sarbanes-Oxley compliance fees, $25,000 in related party consulting, $25,000 in tax preparation fees and $43,000 in other professional fees. |
Insurance Expense
During the six months ended October 31, 2023 and 2022, we incurred insurance expense of $207,000 and $326,000, respectively, which was primarily directors’ and officers’ insurance.
Salaries and Benefits
During the six months ended October 31, 2023 and 2022, we incurred $379,000 and $443,000, respectively, in employee-related expenses. As of October 31, 2023, we had four full-time and three part-time employees.
Marketing Fees
During the six months ended October 31, 2023 and 2022, we incurred marketing fees of $247,000 and $248,000, respectively, which was primarily expenses related to the marketing and brand development agreement with AAI, a related party.
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Liquidity and Capital Resources
The accompanying condensed financial statements have been prepared assuming that we will continue as a going concern. We have incurred recurring net losses and operations have not provided sufficient cash flows. We believe that we will continue to incur operating and net losses each quarter until at least the time we are able to generate revenues from operations. We believe our current cash on hand is insufficient to fund our planned operations through one year after the date the condensed financial statements are issued. These factors create substantial doubt about our ability to continue as a going concern for at least one year after the date that our condensed financial statements are issued.
Our inability to continue as a going concern could have a negative impact on our company, including our ability to obtain needed financing. We intend to finance our future development activities and our working capital needs largely through the sale of equity securities with some additional funding from other sources, including debt financing, until such time as funds provided by operations are sufficient to fund working capital requirements. Our condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should we be unable to continue as a going concern. As of October 31, 2023, we had cash of $200,000, an accumulated deficit of $50.5 million and stockholders’ deficit of $2.7 million. We have incurred recurring losses and reported losses for the three and six months ended October 31, 2023 totaling $2.9 million and $6.4 million, respectively. In the past, we have financed our operations principally through sales of equity securities and debt instruments.
We will need to obtain substantial additional funding in the future for our clinical development activities and continuing operations. If we are unable to raise capital when needed or on favorable terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts. Our future capital requirements will depend on many factors, including:
| · | successful enrollment in and completion of clinical trials; |
| · | our ability to establish agreements with third-party manufacturers for clinical supply for our clinical trials and, if our product candidates are approved, commercial manufacturing; |
| · | our ability to maintain our current research and development programs and establish new research and development programs; |
| · | addition and retention of key research and development personnel; |
| · | our efforts to enhance operational, financial, and information management systems, and hire additional personnel, including personnel to support development of our product candidates; |
| · | negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter and performing our obligations in such collaborations; |
| · | the timing and amount of milestone and other payments we may receive under our collaboration arrangements; |
| · | our eventual commercialization plans for our product candidates; |
| · | the costs involved in prosecuting, defending, and enforcing patent claims and other intellectual property claims; and |
| · | the costs and timing of regulatory approvals. |
A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.
On September 8, 2023, we entered into an At-the-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC, as sales agent to sell shares of our Common stock, having an aggregate offering price of up to approximately $9.8 million (the “Shares”) from time to time, through an “at the market offering” (the “ATM Offering”) as defined in Rule 415 under the Securities Act. On September 8, 2023, we filed a prospectus supplement with the SEC relating to the offer and sale of up to approximately $9.8 million in shares of Common Stock in the ATM Offering.
During the six months ended October 31, 2023, we sold an aggregate of 6,149 shares of Common Stock pursuant to the ATM Offering for gross proceeds of $19,000. During the period between November 1, 2023 through December 14, 2023, we sold an aggregate of 651,046 shares of Common Stock pursuant to the ATM Offering for gross proceeds of $849,000.
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Cash Flows
The following table summarizes our cash flows for the six months ended October 31, 2023 and 2022:
| For the Six Months Ended October 31, | ||||||||
| 2023 | 2022 | |||||||
| Net cash provided by (used in): | ||||||||
| Operating activities | $ | (4,811,624 | ) | $ | (4,880,999 | ) | ||
| Investing activities | (147,243 | ) | - | |||||
| Financing activities | 18,087 | - | ||||||
| Net decrease in cash and cash equivalents | $ | (4,940,780 | ) | $ | (4,880,999 | ) | ||
Operating Activities
During the six months ended October 31, 2023, net cash used in operating activities was $4.8 million. This consisted primarily of a net loss of $6.4 million partially offset by an increase in our net operating assets and liabilities of $909,000 and non-cash charges of $714,000. The non-cash charges primarily consisted of stock-based compensation expense. The increase in our net operating assets and liabilities was due to an increase in accounts payable and accrued liabilities, an increase in prepaid expenses and other current assets and a decrease in prepaid expenses - related party.
Investing Activities
During the six months ended October 31, 2023, net cash used in investing activities was $147,000 from the purchase of machinery and equipment. We purchased equipment, which draws blood from patients and separates the monocytes from their blood, to be used in the ALZN002 clinical trial.
Financing Activities
During the six months ended October 31, 2023, net cash provided by financing activities was $18,000 from proceeds from the ATM Offering.
Contractual Obligations
On July 2, 2018, we entered into two Standard Exclusive License Agreements with Sublicensing Terms for AL001 with the Licensor and its affiliate, the University of South Florida (the “AL001 Licenses”), pursuant to which the Licensor granted us a royalty bearing exclusive worldwide licenses limited to the field of Alzheimer’s, under United States Patent Nos. (i) 9,840,521, entitled “Organic Anion Lithium Ionic Cocrystal Compounds and Compositions”, filed September 24, 2015 and granted December 12, 2017, and (ii) 9,603,869, entitled “Lithium Co-Crystals for Treatment of Neuropsychiatric Disorders”, filed May 21, 2016 and granted March 28, 2017. On February 1, 2019, we entered into the First Amendments to the AL001 Licenses, on March 30, 2021, we entered into the Second Amendments to the AL001 Licenses and on June 8, 2023, we entered into the Third Amendments to the AL001 Licenses (collectively, the “AL001 License Agreements”). The Third Amendments to the AL001 Licenses modified the timing of the payments for the license fees.
The AL001 License Agreements require that we pay combined royalty payments of 4.5% on net sales of products developed from the licensed technology for AL001. We have already paid an initial license fee of $200,000 for AL001. As an additional licensing fee for the license of the AL001 technologies, the Licensor received 148,528 shares of our common stock. Minimum royalties for AL001 License Agreements are $40,000 on the first anniversary of the first commercial sale, $80,000 on the second anniversary of the first commercial sale and $100,000 on the third anniversary of the first commercial sale and every year thereafter, for the life of the AL001 License Agreements.
On May 1, 2016, we entered into a Standard Exclusive License Agreement with Sublicensing Terms for ALZN002 with the Licensor (the “ALZN002 License”), pursuant to which the Licensor granted us a royalty bearing exclusive worldwide license limited to the field of Alzheimer’s Immunotherapy and Diagnostics, under United States Patent No. 8,188,046, entitled “Amyloid Beta Peptides and Methods of Use”, filed April 7, 2009 and granted May 29, 2012. On August 18, 2017, we entered into the First Amendment to the ALZN002 License, on May 7, 2018, we entered into the Second Amendment to the ALZN002 License, on January 31, 2019, we entered into the Third Amendment to the ALZN002 License, on January 24, 2020, we entered into the Fourth Amendment to the ALZN002 License, on March 30, 2021, we entered into the Fifth Amendment to the ALZN002 License, on April 17, 2023, we entered into the Sixth Amendment to the ALZN002 License and on December 11, 2023, we entered into the Seventh Amendment to the ALZN002 License (collectively, the “ALZN002 License Agreement”). The Seventh Amendment to the ALZN002 License modified the timing of the payments for the license fees.
| 29 |
The ALZN002 License Agreement requires us to pay royalty payments of 4% on net sales of products developed from the licensed technology for ALZN002. We have already paid an initial license fee of $200,000 for ALZN002. As an additional licensing fee for the license of ALZN002, the Licensor received 240,120 shares of our common stock. Minimum royalties for ALZN002 are $20,000 on the first anniversary of the first commercial sale, $40,000 on the second anniversary of the first commercial sale and $50,000 on the third anniversary of the first commercial sale and every year thereafter, for the life of the ALZN002 License Agreement.
On November 19, 2019, we entered into two Standard Exclusive License Agreements with Sublicensing Terms for two additional indications of AL001 with the Licensor (the “November AL001 License”), pursuant to which the Licensor granted us a royalty bearing exclusive worldwide licenses limited to the fields of (i) neurodegenerative diseases excluding Alzheimer’s and (ii) psychiatric diseases and disorders. On March 30, 2021, we entered into the First Amendments to the November AL001 License and on April 17, 2023, we entered into the Second Amendments to the November AL001 License (collectively, the “November AL001 License Agreements”). The Second Amendments to the November AL001 License modified the timing of the payments for the license fees.
The November AL001 License Agreements require us to pay royalty payments of 3% on net sales of products developed from the licensed technology for AL001 in those fields. We paid an initial license fee of $20,000 for the additional indications. Minimum royalties for November AL001 License Agreements are $40,000 on the first anniversary of the first commercial sale, $80,000 on the second anniversary of the first commercial sale and $100,000 on the third anniversary of the first commercial sale and every year thereafter, for the life of the November AL001 License Agreements.
These license agreements have an indefinite term that continue until the later of the date no licensed patent under the applicable agreement remains a pending application or enforceable patent, the end date of any period of market exclusivity granted by a governmental regulatory body, or the date on which the licensee’s obligations to pay royalties expire under the applicable license agreement. Under our various license agreements, if we fail to meet a milestone by its specified date, Licensor may terminate the license agreement. The Licensor was also granted a preemptive right to acquire such shares or other equity securities that may be issued from time to time by us while the Licensor remains the owner of any equity securities of our company.
Additionally, we are required to pay milestone payments on the due dates to the Licensor for the license of the AL001 technologies and for the ALZN002 technology, as follows:
Original AL001 Licenses:
| Payment | Due Date | Event | |||
| $ | 50,000 | * | Completed September 2019 | Pre-IND meeting | |
| $ | 65,000 | * | Completed June 2021 | IND application filing | |
| $ | 190,000 | * | Completed December 2021 | Upon first dosing of patient in a clinical trial | |
| $ | 500,000 | * | Completed March 2022 | Upon completion of first clinical trial | |
| $ | 1,250,000 | March 2025 | Upon first patient treated in a Phase III clinical trial | ||
| $ | 10,000,000 | 8 years from the effective date of the agreement | Upon FDA NDA approval | ||
| * | Milestone met and completed |
ALZN002 License:
| Payment | Due Date | ||
| $ | 50,000 | * | Upon IND application - completed January 2022 |
| $ | 50,000 | Upon first dosing of patient in first Phase I clinical trial |
|
| $ | 500,000 | Upon completion of first Phase IIb clinical trial |
|
| $ | 1,000,000 | Upon first patient treated in a Phase III clinical trial |
|
| $ | 10,000,000 | Upon fist commercial sale |
|
| * | Milestone met and completed |
| 30 |
Additional AL001 Licenses:
| Payment | Due Date | Event | |||
| $ | 2,000,000 | March 2026 | Upon first patient treated in a Phase III clinical trial | ||
| $ | 16,000,000 | August 1, 2029 | First commercial sale | ||
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Recent Accounting Standards
None.
| 31 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Because we are a smaller reporting company, this section is not applicable.
| ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
Our principal executive officer and principal financial officer, with the assistance of other members of the Company’s management, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon our evaluation, each of our principal executive officer and principal financial officer has concluded that the Company’s internal control over financial reporting was not effective as of the end of the period covered by this Quarterly Report on Form 10-Q because the Company has not yet completed its remediation of the material weakness previously identified and disclosed in the Company’s Annual Report on Form 10-K for the year ended April 30, 2023, the end of its most recent fiscal year.
Specifically, management has identified the following material weaknesses:
| 1. | we do not have sufficient resources in our accounting function, which restricts our ability to perform sufficient reviews and approval of manual journal entries posted to the general ledger and to consistently execute review procedures over general ledger account reconciliations, financial statement preparation and accounting for non-routine transactions; and |
| 2. | our primary user access controls (i.e., provisioning, de-provisioning, privileged access and user access reviews) to ensure appropriate authorization and segregation of duties that would adequately restrict user and privileged access to the financially relevant systems and data to appropriate personnel were not designed and/or implemented effectively. We did not design and/or implement sufficient controls for program change management to certain financially relevant systems affecting our processes. |
A material weakness is a control deficiency or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
Planned Remediation
We are implementing measures designed to improve our internal control over financial reporting to remediate material weaknesses, including the following:
| · | Formalizing our internal control documentation and strengthening supervisory reviews by our management; and |
| · | Adding additional accounting personnel and segregating duties amongst accounting personnel. |
Management continues to work to improve its controls related to our material weaknesses, specifically relating to user access and change management surrounding our information technology systems and applications. Management will continue to implement measures to remediate material weaknesses, such that these controls are designed, implemented, and operating effectively. The remediation actions include: (i) enhancing design and documentation related to both user access and change management processes and control activities; and (ii) developing and communicating additional policies and procedures to govern the area of information technology change management. In order to achieve the timely implementation of the above, management has commenced the following actions and will continue to assess additional opportunities for remediation on an ongoing basis:
| · | Engaging a third-party specialist to assist management with improving the Company’s overall control environment, focusing on change management and access controls; and |
| · | Implementing new applications and systems that are aligned with management’s focus on creating strong internal controls. |
| 32 |
We are currently working to improve and simplify our internal processes and implement enhanced controls, as discussed above, to address the material weaknesses in our internal control over financial reporting and to remedy the ineffectiveness of our disclosure controls and procedures. These material weaknesses will not be considered to be remediated until the applicable remediated controls are operating for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Despite the existence of these material weaknesses, we believe that the condensed financial statements included in the period covered by this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles.
Changes in Internal Control
Except as detailed above, during the quarter ended October 31, 2023, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
From time to time, we may be subject to legal proceedings. We are not currently a party to or aware of any proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
| ITEM 1A. | RISK FACTORS |
The risks described in Part I, Item 1A, “Risk Factors,” in our 2023 Annual Report on Form 10-K, could materially and adversely affect our business, financial condition and results of operations, and the trading price of our Common Stock could decline. These risk factors do not identify all risks that we face - our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. The Risk Factors section of our 2023 Annual Report on Form 10-K remains current in all material respects.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES |
None.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
| ITEM 5. | OTHER INFORMATION |
None.
| 34 |
| ITEM 6. | EXHIBITS |
*Filed herewith.
** This certification will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.
| 35 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ALZAMEND NEURO, INC. | |||
| Date: December 15, 2023 | By: |
/s/ Stephan Jackman Stephan Jackman | |
| Date: December 15, 2023 | By: |
/s/ David J. Katzoff David J. Katzoff |
36
Exhibit 3.2
Delaware Page 1 The First State I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "ALZAMEND NEURO, INC. ", FILED IN THIS OFFICE ON THE TENTH DAY OF JUNE, A. D. 2016, AT 4:36 O'CLOCK P.M. A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS. 5976073 8100 SR# 20164412054 You may verify this certificate online at corp.delaware.gov/authver.shtml Authentication: 2024 73970 Date: 06-10-16
State of Delaware Secretary of State DMslon of Corporations . Deli"ered 04:36 PM 06/1012016 FILED 04:36 PM 06/1012016 STATE OF DELA\VARE CERTIFICATE OF AMENDMENT SR 20164412054 ? File~umber 5976073 OF CERTIFICATE OF INCORPORATION The corporation organized and existing m1der and by virtue of the General Corporation Law of the State of Delaware does hereby certify: FIRST: That the Board of Directors of Alza,mend Neuro, Inc. duly adopted, by unanimous vlritten consent pursuant to Sectio11 l41{f) of the General Corporation Law of the State of Delaivare, a resolution setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and recommending said amendment to the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Fourth Article thereof so that, as amended, said Article shall be and read as follows: FOURTH: The Corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares which the Corporation is authorized to issue is 310,000,000 shares. 300,000,000 shares shall be Common Stock, each having a par value of $0.0001. 10,000,000 shares shall be Preferred Stock, each having a par value of $0,0001. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby expressly authorized to provide for the issue of all or any of the shares of the Preferred Stock in one or more series, and to fix the number of shares and to det2rmine or alter for each such series, such voting powers, full or limited, or no voting powers, a.nd such designation, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such shares and as may be permitted by the DGCL. The Board of Directors is also expressly authorized to increase or decrease the number of shares of any series subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series. SECOND: That thereafter, in accordance with Section 228 of the General Corporation Law of the State of Delaware, shareholders of the corporation holding the necessary number of shares as required by statute adopted and approved the amendment by written consent. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this certificate to be signed this 27th day of May, 2016. Philip E. Mansour President and CEO
Exhibit 3.3
DelawareThe First StatePage 1 5976073 8100Authentication: 204437303SR# 20208738716Date: 12-29-20You may verify this certificate online at corp.delaware.gov/authver.shtmlI, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "ALZAMEND NEURO, INC.", FILED IN THIS OFFICE ON THE TWENTY-SECOND DAY OF DECEMBER, A.D. 2020, AT 10:21 O`CLOCK P.M.
STATE OF DELAWARE CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Alzamend Neuro, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify: FIRST: That the Board of Directors of the Corporation (the "Board") duly adopted, by unanimous written consent pursuant to Section 141 (f) of the General Corporation Law of the State of Delaware, a resolution setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and recommending said amendment to the stockholders of the Corporation for consideration thereof. SECOND: That, in accordance with the unanimous written consent of the Board, the Fourth Article of the Corporation's Certificate oflncorporation is hereby amended by adding the following section to the end of the Fourth Article to read as follows, subject to compliance with applicable law: "On June 28, 2018 (the "Effective Date"), the issued shares of Common Stock, with a par value of $0.0001 per share ("Old Common Stock"), outstanding or held as treasury shares as of the close of business on the Effective Date, shall automatically without any action on the part of the holders of the Old Common Stock be reverse split (the "Split") on a one-for-four basis so that four (4) shares of Old Common Stock shall be converted into and reconstituted as one (1) share of Common Stock, with a par value of$0.000I per share ("New Common Stock"). In lieu of issuing fractional shares as a result of the Reverse Split, the Corporation will round up to the next whole share of the Common Stock. Each holder of a certificate or certificates which immediately prior to the Effective Date represented outstanding shares of Old Common Stock (the "Old Certificates") shall, from and after the Effective Date, be entitled to receive a certificate or certificates (the "New Certificates") representing the shares of New Common Stock into which the shares of Old Common Stock formerly represented by such Old Certificates are reclassified under the terms hereof. Until surrender, each Old Certificate will continue to be valid and represent New Common Stock equal to one-fourth the number of shares of Old Common Stock including any fractional shares. Prior to the Effective Date, there are 197,114,804 issued and outstanding shares of Old Common Stock and 102,885,196 authorized but unissued shares of Common Stock. On the Effective Date, there will be 49,278,701 issued and outstanding shares of New Common Stock and 250,721,299 authorized but unissued shares ofNew Common Stock. The 197,114,804 shares of Old Common Stock are hereby changed into 49,278,701 shares ofNew Common Stock at the rate of one-for-four." THIRD: That, thereafter, in accordance with Section 228 of the General Corporation Law of the State of Delaware, shareholders of the Corporation holding the necessary number of shares as required by statute adopted and approved the amendment by written consent. FOURTH: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. FIFTH: That said amendment is effective as of June 18, 2018 for accounting purposes only. IN WITNESS WHEREOF, said Corporation has caused this Certificate of Amendment to be signed this 22nd day of December 2020. State of Delaware Secretary of State Division of Corporations Delivered 10:21 PM 12/22/2020 FILED 10:21 PM 12/22/2020 SR 20208738716 -File Number 5976073 Isl Stephan Jackman Stephan Jackman, Chief Executive Officer
Exhibit 10.2
Page 1 of 2 SEVENTH AMENDMENT TO LICENSE AGREEMENT Agreement # LIC16118 This Seventh Amendment, is made and entered into on the 11th day of December, 2023 ("Effective Date"), by and between the UNIVERSITY OF SOUTH FLORIDA RESEARCH FOUNDATION, INC. (hereinafter referred to as "Licensor"), a corporation not for profit under Chapter 617 Florida Statutes, and a direct support organization of the University of South Florida pursuant to section 1004.28 Florida Statutes, and Alzamend Neuro, Inc., classified as a corporation organized and existing under the laws of Delaware (hereinafter referred to as "Licensee"). WHEREAS, on May 1, 2016, Licensor and Licensee entered in a license agreement relating to the utilization of Patent Rights ("License Agreement associated with USF Technology referenced as 09A021_Cao; WHEREAS, a Sixth Amendment to the License Agreement was made effective April 17, 2023; and WHEREAS, the parties desire to further amend the License Agreement in this Seventh Amendment to the License Agreement. NOW, THEREFORE, the parties agree as follows: Capitalized terms in this Seventh Amendment shall have the same meaning as set forth in the License Agreement, unless defined otherwise in this Seventh Amendment. All other terms and conditions of the License Agreement shall continue in full force and effect. This Seventh Amendment, together with the License Agreement constitutes the entire agreement between the parties hereto regarding the subject matter hereof and supersedes any prior and/or contemporaneous agreement(s), understanding(s) and/or negotiation(s). 1. Section 4.4.2 is deleted in its entirety and replaced with the following: 4.4.2 In addition to all other payments required under this License Agreement, Licensee agrees to pay Licensor milestone payments, as follows: Payment Due Date $50,000.00 Upon first dosing of patient in first Phase I Clinical Trial $500,000.00 $1,000,000.00 Upon Completion of first Phase IIb Clinical Trial Upon first patient treated in a Phase III Clinical Trial
Page 2 of 2 Sublicenses. In respect to Sublicenses granted by Licensee under 2.2.1 above, Licensee shall pay to Licensor an amount equal to what Licensee would have been required to pay to Licensor had Licensee sold the amount of Licensed Product or Licensed Process sold by such Sublicensee. In addition, if Licensee receives any fees, minimum royalties, milestone payments, or other payments arising from the Sublicense, and such payments are not earned royalties as defined in Section 4.3 above, then Licensee shall pay Licensor fifty percent (50%) of such payments within thirty (30) days of receipt thereof. Such payments shall not be allocated, off-set or otherwise reduced as a result of including rights other than those licensed hereunder in such permitted written Sublicense. Licensee shall not receive from Sublicensees anything of value in lieu of cash payments in consideration arising from any Sublicense under this Agreement without the express prior written permission of Licensor. IN WITNESS WHEREOF, the parties have set their hands and seals and duly executed this Sixth Amendment as of the Effective Date identified in the preamble above. $10,000,000.00 Upon First Commercial Sale UNIVERSITY OF SOUTH FLORIDA RESEARCH FOUNDATION, INC. ALZAMEND NEURO, INC. _______________________________________ ___________________________________ Michele Tyrpak J.D. Stephan Jackman Director, Technology Transfer Office CEO Date:___________________________________ Date:_______________________________ 12 / 11 / 2023
EXHIBIT 31.1
CERTIFICATION
I, Stephan Jackman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Alzamend Neuro, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: December 15, 2023
| /s/ Stephan Jackman | |
| Name: Stephan Jackman | |
| Title: Chief Executive Officer | |
| (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION
I, David J. Katzoff, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Alzamend Neuro, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: December 15, 2023
| /s/ David J. Katzoff | |
| Name: David J. Katzoff | |
| Title: Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Alzamend Neuro, Inc. (the “Company”) on Form 10-Q for the period ended October 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| Date: December 15, 2023 | |
| By: /s/ Stephan Jackman | |
| Name: Stephan Jackman | |
| Title: Chief Executive Officer | |
| (Principal Executive Officer) |
| Date: December 15, 2023 | |
| By: /s/ David J. Katzoff | |
| Name: David J. Katzoff | |
| Title: Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |