Risk Factors Update Summary

• The company reported a net cash decrease of $4,764,811 for 2024, compared to an increase of $12,134,541 in 2023. This change highlights severe liquidity challenges.
• We are not in compliance with Nasdaq's continued listing requirements, risking delisting due to a market value below $35 million.
• The company incurred a net loss of $14.9 million for the year ended April 30, 2024, compared to $12.4 million in 2023. This change might result in increased investor concern.
• The company incurred $382,000 in insurance expense for 2024, compared to $587,000 in 2023. This change might indicate increased financial pressure on operational costs.
• The company has not adopted hedging policies, which may expose it to financial risks.
• In May 2024, we entered a financing transaction that could yield significant funding, contingent on milestone achievements.
• Cash used in operating activities increased to $8.9 million in 2024 from $6.8 million in 2023, indicating worsening cash flow.
• The company sold convertible preferred stock to Ault Lending for $780,000, increasing capital. This change might result in enhanced liquidity for operational needs.
• The Series B Convertible Preferred Stock has a stated value of $1,000 per share, with a conversion price of $10.00. This could impact future equity structure significantly.
• The company has entered into an At-the-Market Issuance Sales Agreement to sell shares worth up to $9.8 million, indicating a need for immediate capital.
• The outstanding equity awards increased from 3,000 to 20,000 shares, impacting executive compensation.
• Our cash and cash equivalents decreased from $5.1 million to $376,000, impacting operational funding for the next twelve months.
• The accumulated deficit rose to $44.1 million as of April 30, 2024, up from $29.4 million in 2023, reflecting ongoing financial challenges.
• The Series B Convertible Preferred Stock allows Ault Lending to purchase up to $6 million, impacting future financing strategies significantly.
• The independent registered public accounting firm expressed substantial doubt about our ability to continue as a going concern.
• The company recorded the Series B Convertible Preferred Stock as mezzanine equity, reclassifying it as permanent equity for the period ended April 30, 2024. This change may affect financial reporting and investor perception.
• The company expects to continue incurring losses for the foreseeable future, raising concerns about its ability to sustain operations.
• The balance of the ALSF note was $14,883,295 as of April 30, 2023, raising liquidity concerns.
• The median employee compensation increased to $130,000 in 2024, reflecting potential changes in workforce dynamics and cost structures.
• A reverse stock split of one-for-fifteen was executed on October 31, 2023, potentially impacting share value and investor perception.
• The company has the right to purchase up to $6 million of Series B Convertible Preferred Stock in multiple closings, enhancing funding flexibility.
• The company reported negative cash flow from operations of $8.9 million, indicating financial instability.
• We reported 841,240 shares outstanding as of July 29, 2024, a decrease from 940,124 shares previously.
• The minimum royalties for AL001 License Agreements are set at $80,000 on the second anniversary of the first commercial sale. This could impact future revenue projections.
• Ault Lending acquired 1,220 shares of Series B Preferred Stock for $1.22 million, affecting capital structure.
• We incurred $3.2 million in clinical trial fees for the year ended April 30, 2024, up from $2.5 million.
• We received a “study may proceed” letter from the FDA for our IND applications for BD, MDD, and PTSD.