Annual Report for Fiscal Year Ending April 30, 2026 (Form 10-K)

You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and the notes thereto appearing elsewhere in this Annual Report. This discussion contains forward-looking statements reflecting our current expectations, whose actual outcomes involve risks and uncertainties. Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors, including those discussed in the sections entitled "Risk Factors" and "Special Note Regarding Forward-Looking Statements," and elsewhere in this Annual Report.

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

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.

The Black-Scholes option pricing model utilizes inputs which are highly subjective assumptions and generally require significant judgment. These assumptions include:

Certain of these 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.

Income Taxes. We recognize deferred income taxes for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled.

In accordance with Internal Revenue Code §382 ("IRC §382"), the future deductibility of our net operating losses ("NOLs") may be subject to an annual limitation in the event of a change in control as defined by applicable regulations. We have yet to complete a formal study to confirm NOLs are not limited in utilization per IRC §382 and may reduce applicable deferred tax assets upon completion of such a study, in future periods.

The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. We had no uncertain tax positions as of April 30, 2026.

Preferred Stock Classification. We analyze the terms of our preferred stock using Accounting Standards Codification ("ASC") 480, Distinguishing Liabilities from Equity, to determine whether our preferred stock should be classified as a liability or equity, and if classified as equity, permanent or temporary. Common criteria we consider are redemption provisions, conversion options, cumulative of mandatory fixed dividends, discretionary dividends based on earning, voting rights and collateral requirements.

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:

Our pipeline consists of two novel therapeutic drug candidates:

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 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.

Based on the results from our Phase IIA MAD study, we plan to initiate five clinical trials to determine relative increased lithium levels in the brain compared to a marketed lithium salt for healthy subject and patients diagnosed with mild to moderate Alzheimer's, 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 the amount of lithium needed for maintenance treatment of BD with a clinically relevant, lower AL001 lithium carbonate equivalent lithium dose. Such lithium dose mitigation could redefine the landscape of neuropsychiatric, neurodegenerative, and neurological treatment practices.

In August 2024, we announced a partnership with MGH and Harvard Medical School to conduct five Phase II imaging clinical trials. The purpose of these trials is to assess the comparative increase in lithium levels within the brain and its structures as opposed to a commonly marketed lithium salt among healthy subjects and patients afflicted with Alzheimer's, BD, MDD and PTSD.

In November 2024, we announced a full data set from a nonclinical study comparing brain and plasma lithium exposures between AL001 and lithium carbonate in Alzheimer's transgenic mice. This study was a precursor to the five clinical trials and showed that AL001 exhibited consistently higher lithium concentrations in brain tissues, particularly at lower doses, compared to lithium carbonate.

For these clinical trials, we partnered with Tesla Dynamic Coils BV to create a head coil to enable whole-brain imaging of lithium with remarkable resolution, allowing precise quantification within brain structures. The coil will be used to help identify the disease-specific target doses of AL001 that improve the balance of safety and efficacy compared to lithium carbonate. The coil will also be used to scan the entire brain, helping us clearly identify the different structures and important areas necessary for understanding how lithium works and moves within the brain. We announced completion of the head coil in February 2025.

In May 2025, we announced the initiation, enrollment and dosing of the first patient for the healthy human patients. This clinical trial has the following objectives:

In November 2025, we announced the completion of the clinical portion of this study and reported pharmacokinetics topline data in March 2026, with the following results: (1) Bioequivalence Confirmed: AL001 delivered 101% of total lithium blood exposure and 97% of peak lithium levels vs. standard lithium carbonate; (2) Superior Brain Penetration: AL001 showed numerically higher lithium concentrations in all measured brain regions, including whole brain; and (3) Faster Brain Uptake: AL001 reached peak brain concentration in 6.7 hours vs. 8.4 hours for standard lithium carbonate. In April 2026, we announced pharmacodynamic topline data of the healthy human subjects with the following results:

Full pharmacokinetics and pharmacodynamic results are expected in August 2026.

In March 2026, we announced the initiation of the Phase II Clinical Trial of AL001 "Lithium in Brain" Study in Patients with BD and expect to report topline data in the fourth quarter of 2026. The clinical trials for treatment of patients with MDD and PTSD are expected to commence in the fourth quarter of 2026, followed by Alzheimer's in the first quarter of 2027. These projected timelines reflect our commitment to advancing our clinical development programs across multiple neuropsychiatric and neurodegenerative indications.

On September 28, 2022, we submitted an Investigational New Drug ("IND") application to the U.S. Food and Drug Administration (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, with 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 a 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. On February 13, 2024, we received notice from Biorasi, LLC ("Biorasi"), the company formerly engaged as our contract research organization ("CRO"), terminating our contract with Biorasi. We are currently pursuing the engagement of a replacement CRO. Due to the scientific and operational complexities of the ALZN002 trial, along with the limited number of CROs with the expertise and capacity to complete the trial, we have experienced a delay in engaging a new CRO. We do not expect to restart this trial in first quarter of 2027.

The continuation of our current plan of operations with respect to completing our IND applications and 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.

Results of Operations

Results of Operations for the Year Ended April 30, 2026 Compared to the Year Ended April 30, 2025

The following table summarizes the results of our operations for the years ended April 30, 2026 and 2025:

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 years ended April 30, 2026 and 2025, and we do not anticipate that we will generate revenue for the foreseeable future.

Research and Development Expenses

Research and development expenses for the years ended April 30, 2026 and 2025 were $3.6 million and $1.4 million, respectively. As reflected in the table below, research and development expenses primarily consisted of professional fees, clinical trial fees, stock-based compensation expense, as well as other research and development expenses:

Professional Fees

During the years ended April 30, 2026 and 2025, we incurred professional fees of $625,000 and $656,000, respectively, which were primarily comprised of professional fees attributed to various types of scientific services, including FDA consulting services. The decrease relates to lower professional fees incurred during the year ended April 30, 2026, compared to professional fees incurred for the preparation for clinical trials for AL001 and ALZN002 during the year ended April 30, 2025.

Stock-Based Compensation Expense

During the year ended April 30, 2026, we incurred $47,000 in research and development stock-based compensation expense related to stock option grants to consultants. No such expense was incurred during the fiscal year ended April 30, 2025. The increase in research and development stock-based compensation expense for the year ended April 30, 2026, was a result of the expense recorded as a result of the vesting of newly granted stock options.

Clinical Trial Fees

During the years ended April 30, 2026 and 2025, we incurred clinical trial fees of $2.9 million and $716,000, respectively. Clinical trial fees for the year ended April 30, 2026 were for our Phase IIB clinical trial for AL001 for healthy subjects. Clinical trial fees for the year ended April 30, 2025 were for our Phase IIA clinical trial for AL001.

Other Research and Development Expenses

During the years ended April 30, 2026 and 2025, we incurred other fees of $23,000 and $43,000, respectively, which were primarily comprised of scientific materials required for our clinical trials.

General and Administrative Expenses

General and administrative expenses for the years ended April 30, 2026 and 2025 were $5.1 million and $3.1 million, respectively. As reflected in the table below, general and administrative expenses primarily consisted of the following expense categories: salary and benefits; professional fees; insurance; stock-based compensation expense; marketing fees; and Board fees. For the years ended April 30, 2026 and 2025, the remaining general and administrative expenses of $469,000 and $347,000, respectively, primarily consisted of payments for franchise taxes, depreciation, transfer agent fees, travel, and other office expenses, none of which is significant individually.

Salary and Benefits

During the years ended April 30, 2026 and 2025, we incurred $988,000 and $1.0 million, respectively, in employee-related expenses. As of April 30, 2026, we had four full-time and two part-time employees. The decrease in salary and benefits expense was a result of the reduction of one part-time employee during the year ended April 30, 2026.

Professional Fees

During the years ended April 30, 2026 and 2025, we incurred professional fees of $2.2 million and $618,000, respectively. During the year ended April 30, 2026, we incurred $1.9 million in legal fees, $190,000 in audit and tax fees, $95,000 in investor relations and $7,000 in other professional fees. During the year ended April 30, 2025, we incurred $243,000 in legal fees, $221,000 in audit and tax fees, $149,000 in investor relations and $5,000 in other professional fees. The increase in legal fees was a result of increased activity in our lawsuit against Biorasi for terminating their agreement. The trial in that lawsuit has commenced and is expected to be completed by the end of August 2026.

Insurance Expense

During the years ended April 30, 2026 and 2025, we incurred insurance expense of $236,000 and $259,000, respectively, which was primarily directors' and officers' insurance. The decrease in insurance expense was due to lower negotiated pricing with the same amount of coverage.

Stock-based Compensation Expense

During the years ended April 30, 2026 and 2025, we incurred stock-based compensation expense of $661,000 and $325,000, respectively, related to stock option grants to employees, directors and consultants. The increase in general and administrative stock-based compensation expense for the year ended April 30, 2026, was a result of the vesting of newly granted stock options.

Marketing Fees

During the years ended April 30, 2026 and 2025, we incurred marketing fees of $425,000 and $347,000, respectively, which was primarily expenses related to the marketing and branding of our company.

Current and Deferred Income Taxes

As of April 30, 2026 and 2025, we had deferred tax assets totaling $15.4 million and $15.3 million, respectively. The ultimate realization of deferred tax assets is dependent upon the existence, or generation, of taxable income in the periods when those temporary differences and net operating loss carryovers are deductible. Management considers the scheduled reversal of deferred tax liabilities, taxes paid in carryover years, projected future taxable income, available tax planning strategies, and other factors in making this assessment. Based on available evidence, management believes it is more likely than not that some or all of the deferred tax assets will not be realized. Accordingly, we have established a 100% valuation allowance. As a result of the full valuation allowance, we did not record an income tax benefit for the years ended April 30, 2026 and 2025.

Liquidity and Capital Resources

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has 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 begin significant deliveries of our products. We believe our current cash on hand is insufficient to fund our planned operations through one year after the date the 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 audited 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 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 April 30, 2026, we had cash of $711,000 and an accumulated deficit of $67.3 million. We have incurred recurring losses and reported a loss for the year ended April 30, 2026 totaling $8.8 million. 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:

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.

At-the-Market Offering

See Note 9 - Equity Transactions in the notes to the financial statements for a description of our fundraising activities.

Cash Flows

The following table summarizes our cash flows for the years ended April 30, 2026 and 2025:

Operating Activities

During the year ended April 30, 2026, net cash used in operating activities was $8.1 million. This consisted primarily of a net loss of $8.8 million and a decrease in our net operating assets and liabilities of $114,000, partially offset by stock-based compensation of $708,000 and depreciation of $110,000. The decrease in our net operating assets and liabilities was primarily due to an increase in accounts payable and accrued liabilities and an increase in prepaid expenses.

During the year ended April 30, 2025, net cash used in operating activities was $6.6 million. This consisted primarily of a net loss of $4.5 million and a decrease in our net operating assets and liabilities of $2.4 million, partially offset by stock-based compensation of $325,000. The decrease in our net operating assets and liabilities was primarily due to an increase in prepaid expenses and a decrease in accounts payable.

Investing Activities

During the year ended April 30, 2026, there were no investing activities. During the year ended April 30, 2025, net cash used in investing activities was $300,000 for the purchase of equipment and machinery used in our AL001 Phase II clinical trials.

Financing Activities

During the year ended April 30, 2026, net cash provided by financing activities was $4.1 million from the sale of convertible preferred stock and $800,000 from proceeds from an "at-the-market" offering ("ATM Offering").

During the year ended April 30, 2025, net cash provided by financing activities was $7.7 million from the sale of convertible preferred stock and $2.7 million from proceeds from the ATM Offering.

See Note 9 - Equity Transactions in the notes to the financial statements for a description of our financing activities.

Contractual Obligations

See the "Intellectual Property and Licensing Agreements" sub-section under Item 1. Business of this Annual Report.

Recent Accounting Standards

For information about recent accounting pronouncements that may impact our financial statements, please refer to Note 3 of Notes to Financial Statements under the heading "Recent Accounting Standards."