Alzamend Neuro Inc
For the period ended Jan 31, 2025. Filed Mar 10, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jan 31, 2025 · Filed Mar 10, 2025
ALZN$1.41-9.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-10-31; filed 2024-12-11.
0001214659-24-020264
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-01-31; filed 2025-03-10.
0001214659-25-004123
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 118 previous paragraphs and 126 current paragraphs.
82 unchanged; 33 reworded; 7 added; 2 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 40 previous and 36 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Results of Operations for the Nine Months Ended January 31, 2025 and 2024
Current report
Series C Preferred Financing
Current report
On February 28, 2025, we and Orchid entered into a securities purchase & exchange agreement (the “New Orchid SPA”) for the (i) exchange of 97.7511 shares of Series A Convertible Preferred Stock for an equal number of shares of the Company’s Series C convertible preferred stock (the “Series C Convertible Preferred Stock”) and (ii) purchase of up to 500 shares of Series C Convertible Preferred Stock and warrants to purchase up to 1,000,000 shares of Common Stock in several tranche closings.
Current report
On March 3, 2025, Orchid exchanged the 97.7511 shares of Series A Convertible Preferred Stock it owned for an equal number of shares of Series C Convertible Preferred Stock (the “Exchange”). In addition, in connection with the Exchange, Orchid received from the Company warrants to purchase 1,000,000 shares of Common Stock and Orchid canceled all warrants previously issued to it, which were exercisable for an aggregate of 640,000 shares of Common Stock. Finally, as a result of the Exchange, the Old Orchid SPA, and all rights and obligations thereto, were canceled.
Current report
Pursuant to the New Orchid SPA, Orchid shall purchase up to 500 shares of Series C Convertible Preferred Stock as follows:
Current report
Milestone met and payment made
Current report
Milestone met and payment made
Removed paragraphs (2)
Previous report
Results of Operations for the Six Months Ended October 31, 2024 and 2023
Previous report
Marketing Fees
Reworded paragraphs (33)
Previous wording
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.
Current wording
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 earnings, voting rights and collateral requirements.
Previous wording
Research and development expenses for the three months ended October 31, 2024 and 2023 were $311,000 and $2.1 million, respectively. As reflected in the table below, research and development expenses primarily consisted of professional fees and clinical trial fees:
Current wording
Research and development expenses for the three months ended January 31, 2025 and 2024 were $447,000 and $1.9 million, respectively. As reflected in the table below, research and development expenses primarily consisted of professional fees and clinical trial fees:
Previous wording
During the six months ended October 31, 2024 and 2023, we incurred professional fees of $365,000 and $2.1 million, 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 related to minimal clinical trial activities.
Current wording
During the three months ended January 31, 2025 and 2024, we incurred professional fees of $135,000 and $560,000, 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 given the reduction in clinical trial activities.
Previous wording
During the three months ended October 31, 2024 and 2023, we incurred clinical trial fees of $124,000 and $795,000, respectively. Clinical trial fees for the three months ended October 31, 2024 were for our initial set-up for our Phase IIA brain imaging study with Massachusetts General. Clinical trial fees for the three months ended October 31, 2023 were for our Phase IIA clinical trial for AL001 and our Phase I/IIA clinical trial for ALZN002.
Current wording
During the three months ended January 31, 2025 and 2024, we incurred clinical trial fees of $298,000 and $1.3 million, respectively. Clinical trial fees for the three months ended January 31, 2025 were for our initial set-up for our Phase IIA brain imaging study with Massachusetts General. Clinical trial fees for the three months ended January 31, 2024 were for our Phase IIA clinical trial for AL001 and our Phase I/IIA clinical trial for ALZN002.
Previous wording
During the three months ended October 31, 2024 and 2023, we incurred research and development stock-based compensation expense of nil and $143,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the three months ended October 31, 2024 was a result of fewer stock options vesting during the period compared to the prior year period.
Current wording
During the three months ended January 31, 2025 and 2024, we incurred research and development stock-based compensation expense of nil and $71,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the three months ended January 31, 2025 was a result of fewer stock options vesting during the period compared to the prior year period.
Previous wording
During the three months ended October 31, 2024 and 2023, we incurred other fees of $6,000 and $14,000, respectively, which were primarily comprised of scientific materials required for our clinical trials.
Current wording
During the three months ended January 31, 2025 and 2024, we incurred other fees of $14,000 and $27,000, respectively, which were primarily comprised of scientific materials required for our clinical trials.
Previous wording
General and administrative expenses for the three months ended October 31, 2024 and 2023 were $1.0 million and $0.9 million, respectively. As reflected in the table below, general and administrative expenses primarily consisted of the following expense categories: salaries and benefits; professional fees; insurance; stock-based compensation expense; marketing fees; as well as board of director fees. For the three months ended October 31, 2024 and 2023, the remaining general and administrative expenses of $83,000 and $93,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, travel and entertainment and other office expenses, none of which was significant individually.
Current wording
General and administrative expenses for the three months ended January 31, 2025 and 2024 were $590,000 and $750,000, respectively. As reflected in the table below, general and administrative expenses primarily consisted of the following expense categories: salaries and benefits; professional fees; insurance; stock-based compensation expense; marketing fees; as well as board of director fees. For the three months ended January 31, 2025 and 2024, the remaining general and administrative expenses of $116,000 and $99,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, travel and entertainment and other office expenses, none of which was significant individually.
Previous wording
During the six months ended October 31, 2024 and 2023, we incurred $554,000 and $379,000, respectively, in employee-related expenses. The increase in salaries and benefits was due to a bonus paid to our chief executive officer. As of October 31, 2024, we had four full-time and three part-time employees.
Current wording
During each of the three months ended January 31, 2025 and 2024, we incurred $227,000 in employee-related expenses. As of January 31, 2025, we had four full-time and three part-time employees.
Previous wording
During the three months ended October 31, 2024 and 2023, we incurred professional fees of $149,000 and $284,000, respectively. During the three months ended October 31, 2024, we incurred $96,000 in audit fees, $35,000 in legal fees, $14,000 in tax preparation fees, and $2,000 in consulting fees. During the three months ended October 31, 2023, we incurred $92,000 in audit fees, $89,000 in investor relations fees, 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. The decrease in professional fees was due mainly to lower investor relations and legal fees.
Current wording
During the three months ended January 31, 2025 and 2024, we incurred professional fees of $62,000 and $185,000, respectively. During the three months ended January 31, 2025, we incurred $35,000 in legal fees, $22,000 in audit fees and $5,000 in investor relations fees. During the three months ended January 31, 2024, we incurred $54,000 in audit fees, $52,000 in investor relations fees, $30,000 in legal fees, $30,000 consulting, $13,000 in related party consulting, and $6,000 in Sarbanes-Oxley compliance fees. The decrease in professional fees was due mainly to lower audit, investor relations, consulting and related party consulting fees.
Previous wording
During the three months ended October 31, 2024 and 2023, we incurred insurance expense of $60,000 and $89,000, respectively, which was primarily directors’ and officers’ insurance.
Current wording
During the three months ended January 31, 2025 and 2024, we incurred insurance expense of $60,000 and $88,000, respectively, which was primarily directors’ and officers’ insurance.
Previous wording
During the three months ended October 31, 2024 and 2023, we incurred general and administrative stock-based compensation expense of $81,000 and $176,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the three months ended October 31, 2024, was a result of fewer stock options vesting during the period compared to the prior year period.
Current wording
During the three months ended January 31, 2025 and 2024, we incurred general and administrative stock-based compensation expense of $81,000 and $115,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the three months ended January 31, 2025, was a result of fewer stock options vesting during the period compared to the prior year period.
Previous wording
The following table summarizes the results of our operations for the six months ended October 31, 2024 and 2023:
Current wording
The following table summarizes the results of our operations for the nine months ended January 31, 2025 and 2024:
Previous wording
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, 2024 and 2023, and we do not anticipate that we will generate revenue for the foreseeable future.
Current wording
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 nine months ended January 31, 2025 and 2024, and we do not anticipate that we will generate revenue for the foreseeable future.
Previous wording
Research and development expenses for the six months ended October 31, 2024 and 2023 were $518,000 and $4.4 million, respectively. As reflected in the table below, research and development expenses primarily consisted of professional fees and clinical trial fees:
Current wording
Research and development expenses for the nine months ended January 31, 2025 and 2024 were $965,000 and $6.3 million, respectively. As reflected in the table below, research and development expenses primarily consisted of professional fees and clinical trial fees:
Previous wording
During the three months ended October 31, 2024 and 2023, we incurred professional fees of $181,000 and $1.0 million, 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 related to minimal clinical trial activities.
Current wording
During the nine months ended January 31, 2025 and 2024, we incurred professional fees of $500,000 and $2.7 million, 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 related to minimal clinical trial activities.
Previous wording
During the six months ended October 31, 2024 and 2023, we incurred clinical trial fees of $124,000 and $2.0 million, respectively. Clinical trial fees for the six months ended October 31, 2024 were for our initial set-up for our Phase IIA brain imaging study with Massachusetts General. Clinical trial fees for the six months ended October 31, 2023 were for our Phase IIA clinical trial for AL001 and our Phase I/IIA clinical trial for ALZN002.
Current wording
During the nine months ended January 31, 2025 and 2024, we incurred clinical trial fees of $422,000 and $3.3 million, respectively. Clinical trial fees for the nine months ended January 31, 2025 were for our initial set-up for our Phase IIA brain imaging study with Massachusetts General. Clinical trial fees for the nine months ended January 31, 2024 were for our Phase IIA clinical trial for AL001 and our Phase I/IIA clinical trial for ALZN002.
Previous wording
During the six months ended October 31, 2024 and 2023, we incurred research and development stock-based compensation expense of nil and $143,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the six months ended October 31, 2024 was a result of fewer stock options vesting during the period compared to the prior year period.
Current wording
During the nine months ended January 31, 2025 and 2024, we incurred research and development stock-based compensation expense of nil and $214,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the nine months ended January 31, 2025 was a result of fewer stock options vesting during the period compared to the prior year period.
Previous wording
During the six months ended October 31, 2024 and 2023, we incurred other fees of $28,000 and $66,000, respectively, which were primarily comprised of scientific materials required for our clinical trials.
Current wording
During the nine months ended January 31, 2025 and 2024, we incurred other fees of $42,000 and $93,000, respectively, which were primarily comprised of scientific materials required for our clinical trials.
Previous wording
General and administrative expenses for the six months ended October 31, 2024 and 2023 were $1.8 million and $2.1 million, respectively. As reflected in the table below, general and administrative expenses primarily consisted of the following expense categories: salaries and benefits; professional fees; insurance; stock-based compensation expense; marketing fees; as well as board of director fees. For the six months ended October 31, 2024 and 2023, the remaining general and administrative expenses of $145,000 and $177,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, travel and entertainment and other office expenses, none of which was significant individually.
Current wording
General and administrative expenses for the nine months ended January 31, 2025 and 2024 were $2.4 million and $2.8 million, respectively. As reflected in the table below, general and administrative expenses primarily consisted of the following expense categories: salaries and benefits; professional fees; insurance; stock-based compensation expense; marketing fees; as well as board of director fees. For the nine months ended January 31, 2025 and 2024, the remaining general and administrative expenses of $262,000 and $276,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, travel and entertainment and other office expenses, none of which was significant individually.
Previous wording
During the three months ended October 31, 2024 and 2023, we incurred $326,000 and $226,000, respectively, in employee-related expenses. The increase in salaries and benefits was due to a bonus paid to our chief executive officer. As of October 31, 2024, we had four full-time and three part-time employees.
Current wording
During the nine months ended January 31, 2025 and 2024, we incurred $780,000 and $606,000, respectively, in employee-related expenses. The increase in salaries and benefits was due to a bonus paid to our chief executive officer. As of January 31, 2025, we had four full-time and three part-time employees.
Previous wording
During the six months ended October 31, 2024 and 2023, we incurred professional fees of $371,000 and $435,000, respectively. During the six months ended October 31, 2024, we incurred $151,000 in audit fees, $109,000 in legal fees, $86,000 in investor relations fees, $22,000 in tax preparation fees, and $2,000 in consulting fees. During the six months ended October 31, 2023, we incurred $170,000 in audit fees, $118,000 in investor relations fees, $69,000 in legal fees, $29,000 in tax preparation fees, $24,000 in related party consulting, and $17,000 in Sarbanes-Oxley compliance fees. The decrease in professional fees was due mainly to lower audit, investor relations, related party consulting and Sarbanes-Oxley compliance fees partially offset by higher legal fees.
Current wording
During the nine months ended January 31, 2025 and 2024, we incurred professional fees of $433,000 and $620,000, respectively. During the nine months ended January 31, 2025, we incurred $173,000 in audit fees, $144,000 in legal fees, $92,000 in investor relations fees, $22,000 in tax preparation fees, and $2,000 in consulting fees. During the nine months ended January 31, 2024, we incurred $224,000 in audit fees, $170,000 in investor relations fees, $99,000 in legal fees, $38,000 in related party consulting, $34,000 in consulting fees, $30,000 in tax preparation fees and $24,000 in Sarbanes-Oxley compliance fees. The decrease in professional fees was due mainly to lower audit, investor relations, consulting fees, related party consulting and Sarbanes-Oxley compliance fees partially offset by higher legal fees.
Previous wording
During the six months ended October 31, 2024 and 2023, we incurred insurance expense of $139,000 and $207,000, respectively, which was primarily directors’ and officers’ insurance.
Current wording
During the nine months ended January 31, 2025 and 2024, we incurred insurance expense of $199,000 and $294,000, respectively, which was primarily directors’ and officers’ insurance.
Previous wording
During the six months ended October 31, 2024 and 2023, we incurred general and administrative stock-based compensation expense of $163,000 and $545,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the six months ended October 31, 2024, was a result of fewer stock options vesting during the period compared to the prior year period.
Current wording
During the nine months ended January 31, 2025 and 2024, we incurred general and administrative stock-based compensation expense of $244,000 and $660,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the nine months ended January 31, 2025, was a result of fewer stock options vesting during the period compared to the prior year period.
Previous wording
During the six months ended October 31, 2024 and 2023, we incurred marketing fees of $344,000 and $207,000, respectively. The increase was due to a marketing program launched to promote our company and our stock during the six months ended October 31, 2024.
Current wording
During the nine months ended January 31, 2025 and 2024, we incurred marketing fees of $344,000 and $247,000, respectively. The increase was due to a marketing program launched to promote our company and our stock during the nine months ended January 31, 2025.
Previous wording
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, 2024, we had cash of $4.1 million, working capital of $3.5 million, an accumulated deficit of $56.4 million and stockholders’ equity of $3.8 million. For the three and six months ended October 31, 2024, we had net losses of $1.4 million and $2.4 million, respectively. For the six months ended October 31, 2024, cash used in operating activities was $4.5 million. Historically, we have financed our operations principally through issuances of equity and debt instruments.
Current wording
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 January 31, 2025, we had cash of $3.4 million, working capital of $3.2 million, an accumulated deficit of $57.4 million and stockholders’ equity of $3.4 million. For the three and nine months ended January 31, 2025, we had net losses of $1.0 million and $3.4 million, respectively. For the nine months ended January 31, 2025, cash used in operating activities was $5.9 million. Historically, we have financed our operations principally through issuances of equity and debt instruments.
Previous wording
On May 8, 2024, we and Orchid Finance, LLC (“Orchid”), entered into a securities purchase agreement (the “Orchid SPA”) for the purchase of up to 2,500 shares of Series A Convertible Preferred Stock (“Series A Convertible Preferred Stock”) and warrants to purchase shares up to 2,500,000 shares of common stock in several tranche closings.
Current wording
On May 8, 2024, we and Orchid Finance, LLC (“Orchid”), entered into a securities purchase agreement (the “Old Orchid SPA”) for the purchase of up to 2,500 shares of Series A Convertible Preferred Stock (“Series A Convertible Preferred Stock”) and warrants to purchase shares up to 2,500,000 shares of common stock in several tranche closings.
Previous wording
The Registration Statement registering for resale the shares of common stock issuable upon conversion of the Series A Convertible Preferred Stock and exercise of the warrants was declared effective on July 9, 2024. In addition, we agreed to use our best efforts to hold a special meeting of our stockholders within 90 days of the execution date of the Orchid SPA for purposes of seeking stockholder approval of the issuance of all the shares of common stock issuable upon conversion of the Series A Convertible Preferred Stock and the exercise of the warrants in excess of the “Nasdaq Limit,” which is 19.99% of our shares of common stock issued and outstanding on the execution date of the Orchid SPA. We held a special meeting of stockholders on July 8, 2024, at which time, the stockholders approved the issuance of all the shares of common stock issuable upon conversion of the Series A Convertible Preferred Stock and the exercise of the warrants in excess of the “Nasdaq Limit.”
Current wording
The Old Registration Statement, which registered for resale the shares of common stock issuable upon conversion of the Series A Convertible Preferred Stock and exercise of the warrants, was declared effective on July 9, 2024. In addition, we agreed to use our best efforts to hold a special meeting of our stockholders within 90 days of the execution date of the Orchid SPA for purposes of seeking stockholder approval of the issuance of all the shares of common stock issuable upon conversion of the Series A Convertible Preferred Stock and the exercise of the warrants in excess of the “Nasdaq Limit,” which is 19.99% of our shares of common stock issued and outstanding on the execution date of the Orchid SPA. We held a special meeting of stockholders on July 8, 2024, at which time, the stockholders approved the issuance of all the shares of common stock issuable upon conversion of the Series A Convertible Preferred Stock and the exercise of the warrants in excess of the “Nasdaq Limit.”
Previous wording
The Series A Convertible Preferred Stockhas a stated value of $10,000 per share (“Series A Stated Value”) and accrues dividendsat the rate of 15% per annum, payable quarterly in arrears in cash or paid-in-kind shares, in Orchid’s sole discretion. Each share of Series A Convertible Preferred Stock is convertible into a number of shares of common stock determined by dividing the Series A Stated Valueby(y) the greater of (i) the Floor Price and (ii) the lesser of (A) $15.00 and (B) 80% of the lowest closing price of our common stock during the three trading days immediately prior to the date of conversion into conversion shares (the “Series AConversion Price”). The Series AConversion Price is subject to adjustment in the event of an issuance of common stock at a price per share lower than the Series AConversion Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events. The holders of the Series A Convertible Preferred Stock are entitled to vote with the common stock as a single class on an as-converted basis, subject to applicable law provisions of the Delaware General Corporation Law and Nasdaq, provided however, that for purposes of complying with Nasdaq regulations, the conversion price, for purposes of determining the number of votes the holder of Series B Convertible Preferred Stock is entitled to cast, shall not be lower than $5.63 (the “Series A Voting Floor Price”), which represents the closing sale price of the common stock on the trading day immediately prior to the date of execution of the Orchid SPA. The Series A Voting Floor Price shall be adjusted for stock dividends, stock splits, stock combinations and other similar transactions.
Current wording
The Series A Convertible Preferred Stockhas a stated value of $10,000 per share (“Series A Stated Value”) and accrues dividendsat the rate of 15% per annum, payable quarterly in arrears in cash or paid-in-kind shares, in Orchid’s sole discretion. Each share of Series A Convertible Preferred Stock is convertible into a number of shares of common stock determined by dividing the Series A Stated Valueby(y) the greater of (i) the Floor Price and (ii) the lesser of (A) $15.00 and (B) 80% of the lowest closing price of our common stock during the three trading days immediately prior to the date of conversion into conversion shares (the “Series AConversion Price”). The Series AConversion Price is subject to adjustment in the event of an issuance of common stock at a price per share lower than the Series AConversion Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events. The holders of the Series A Convertible Preferred Stock are entitled to vote with the common stock as a single class on an as-converted basis, subject to applicable law provisions of the Delaware General Corporation Law and Nasdaq, provided however, that for purposes of complying with Nasdaq regulations, the conversion price, for purposes of determining the number of votes the holder of Series A Convertible Preferred Stock is entitled to cast, shall not be lower than $5.63 (the “Series A Voting Floor Price”), which represents the closing sale price of the common stock on the trading day immediately prior to the date of execution of the Orchid SPA. The Series A Voting Floor Price shall be adjusted for stock dividends, stock splits, stock combinations and other similar transactions.
Previous wording
During the six months ended October 31, 2024, we sold an aggregate of 755,888 shares of common stock pursuant to the ATM Offering for gross and net proceeds of $1.2 million. From November 1, 2024 to December 10, 2024, we sold an aggregate of 201,543 shares of common stock pursuant to the ATM Offering for gross and net proceeds of $280,000.
Current wording
During the nine months ended January 31, 2025, we sold an aggregate of 1,321,468 shares of common stock pursuant to the ATM Offering for gross proceeds of $2.0 million and net proceeds of $1.9 million. From February 1, 2025 to March 7, 2025, we sold an aggregate of 800,673 shares of common stock pursuant to the ATM Offering for gross proceeds of $869,000 and net proceeds of $843,000.
Previous wording
The following table summarizes our cash flows for the six months ended October 31, 2024 and 2023:
Current wording
The following table summarizes our cash flows for the nine months ended January 31, 2025 and 2024:
Previous wording
During the six months ended October 31, 2024, net cash used in operating activities was $4.5 million. This consisted primarily of a net loss of $2.4 million and a decrease in our net operating assets and liabilities of $2.3 million, partially offset by non-cash charges of $197,000. The non-cash charges primarily consisted of stock-based compensation expense. The decrease in our net operating assets and liabilities was due to a decrease in accounts payable and accrued liabilities and an increase in prepaid expenses and other current assets.
Current wording
During the nine months ended January 31, 2025, net cash used in operating activities was $5.9 million. This consisted primarily of a net loss of $3.4 million and a decrease in our net operating assets and liabilities of $2.8 million, partially offset by non-cash charges of $300,000. The non-cash charges primarily consisted of stock-based compensation expense. The decrease in our net operating assets and liabilities was due to a decrease in accounts payable and accrued liabilities and an increase in prepaid expenses and other current assets.
Previous wording
During the six months ended October 31, 2024, net cash used in investing activities was $90,000 from the purchase of equipment. We purchased equipment, which measures lithium levels in the brain, to be used in the AL001 clinical trial.
Current wording
During the nine months ended January 31, 2025, net cash used in investing activities was $90,000 from the purchase of equipment. We purchased equipment, which measures lithium levels in the brain, to be used in the AL001 clinical trials.
Previous wording
During the six months ended October 31, 2024, net cash provided by financing activities was $8.3 million. This consisted of $7.1 million from the sale of Series A Convertible Preferred Stock and $1.2 million from the sale of common stock from our ATM Offering.
Current wording
During the nine months ended January 31, 2025, net cash provided by financing activities was $9.0 million. This consisted of $7.1 million from the sale of Series A Convertible Preferred Stock and $1.9 million from the sale of common stock from our ATM Offering.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Notwithstanding the foregoing, Orchid has the ability to invest any amount in its sole discretion in advance of the dates set. In the event that the average closing price of the common stock during the three trading days preceding the date of a tranche closing shall not be equal to or greater than $0.10 a share (the “Series C Floor Price”), then the applicable closing shall be delayed until such time as the price meets the required threshold.
Current report — wording carried from elsewhere
The New Orchid SPA may be terminated by either us or Orchid in the event that the Registration Statement has not been declared effective by the Securities and Exchange Commission by April 15, 2025. In addition, we agreed to use our best efforts to hold a meeting of our stockholders within 90 days of the execution date of the New Orchid SPA for purposes of seeking stockholder approval of the issuance of all the shares of common stock issuable upon conversion of the Series C Convertible Preferred Stock and the exercise of the warrants in excess of the “Nasdaq Limit,” which is 19.99% of our shares of common stock issued and outstanding on the execution date of the New Orchid SPA. We intend to hold our annual meeting of stockholders on April 25, 2025, at which time, the stockholders will be asked approved the issuance of all the shares of common stock issuable upon conversion of the Series C Convertible Preferred Stock and the exercise of the warrants in excess of the “Nasdaq Limit.”
Current report — wording carried from elsewhere
The Series C Convertible Preferred Stockhas a stated value of $10,000 per share (“Series C Stated Value”) and accrues dividendsat the rate of 15% per annum, payable quarterly in arrears in cash or paid-in-kind shares, in Orchid’s sole discretion. Each share of Series C Convertible Preferred Stock is convertible into such number of shares of Common Stock equal to (x) the stated value of the Series C Convertible Preferred Stock being converted plus all accrued but unpaid dividends, divided by (y) the greater of (i) the Series C Floor Price, and (ii) the lesser of (A) $15.00 and (B) 80% of the lowest closing price of the Common Stock during the three (3) trading days immediately prior to the date of conversion (the “Series CConversion Price”). The Series CConversion Price is subject to adjustment in the event of an issuance of common stock at a price per share lower than the Series CConversion Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events. The holders of the Series C Convertible Preferred Stock are entitled to vote with the common stock as a single class on an as-converted basis, subject to applicable law provisions of the Delaware General Corporation Law and Nasdaq, provided however, that for purposes of complying with Nasdaq regulations, the conversion price, for purposes of determining the number of votes the holder of Series C Convertible Preferred Stock is entitled to cast, shall not be lower than $0.8375 (the “Series C Voting Floor Price”), which represents the closing sale price of the common stock on the trading day immediately prior to the date of execution of the New Orchid SPA. The Series C Voting Floor Price shall be adjusted for stock dividends, stock splits, stock combinations and other similar transactions.
Current report — wording carried from elsewhere
The warrants have an exercise price of $0.92125 (the “Series CExercise Price”) and are exercisable upon issuance and have a five-year term, expiring on the fifth anniversary of issuance. The Series CExercise Price is subject to adjustment in the event of an issuance of common stock at a price per share lower than the Series CExercise Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events. The warrants are exercisable on a cashless basis in the event that there is not then an effective resale registration statement for the common stock issuable upon exercise of the warrants.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
During the three months ended October 31, 2024 and 2023, we incurred marketing fees of $304,000 and nil, respectively. The increase was due to a marketing program launched to promote our company and our stock during the three months ended October 31, 2024.