S-1/A: Alzamend Neuro Seeks to Raise Capital Through Resale of Common Stock by Orchid Finance LLC

Alzamend Neuro is registering for resale up to 125,000,000 shares of its common stock by Orchid Finance LLC, obtained through conversion of preferred shares and exercise of warrants.

Summary

• Alzamend Neuro has filed an amendment to its Form S-1 registration statement to allow Orchid Finance LLC to resell up to 125,000,000 shares of the company's common stock.
• These shares consist of 105,000,000 shares issuable upon conversion of Series A Convertible Preferred Stock and 20,000,000 shares issuable upon exercise of warrants.
• Orchid Finance LLC committed to purchase up to 2,500 Preferred Shares and warrants to purchase up to 20,000,000 Warrant Shares, subject to stockholder approval.
• Alzamend Neuro will not receive any proceeds from the sale of these shares by Orchid Finance LLC, except if the warrants are exercised.
• The company's common stock trades on The Nasdaq Capital Market under the symbol ALZN, with the last reported sales price on June 25, 2024, at $0.39 per share.
• Alzamend Neuro is a smaller reporting company and an emerging growth company, which allows it to comply with certain reduced public company reporting requirements.
• The company is pursuing clinical development of AL001 for Alzheimers, BD, MDD and PTSD treatment and ALZN002 for Alzheimers treatment.
• The company has received a notice from Nasdaq regarding minimum Market Value of Listed Securities (MVLS) and bid price deficiencies and is working to regain compliance.
• The company has entered into a Purchase Agreement with the Selling Stockholder, pursuant to which the Selling Stockholder has committed to purchase up to $25 million of Preferred Shares, subject to the satisfaction of certain Milestones.

Sentiment

Score: 4

Explanation: The document presents a mixed sentiment. While there are potential positives such as the commitment from Orchid Finance LLC and ongoing clinical trials, the company faces significant risks including Nasdaq compliance issues and the need for additional funding. The reliance on a single selling stockholder and potential dilution also contribute to a cautious outlook.

Positives

• The company has potential access to up to $25 million in gross proceeds from the sale of Preferred Shares to the Selling Stockholder upon achievement of certain milestones.
• The company has received 'study may proceed' letters from the FDA for IND applications for AL001 for BD, MDD and PTSD.
• The company is actively working to regain compliance with Nasdaq listing requirements.

Negatives

• The company will not receive any proceeds from the sale of shares of common stock by the Selling Stockholder, provided, that we would receive certain proceeds in the event that the Selling Stockholder elects to exercise its Warrants.
• The company has received deficiency letters from Nasdaq regarding minimum Market Value of Listed Securities (MVLS) and bid price, and failure to regain compliance could lead to delisting.
• The company's continuation of its current plan of operations with respect to initiating and conducting the series of human clinical trials for each of our therapeutics requires us to raise additional capital to fund our operations.
• The company may not have access to the full amount available under the Purchase Agreement with the Selling Stockholder within the foreseeable future, if at all.

Risks

• Investing in the Common Stock is highly speculative and involves a high degree of risk.
• The company needs substantial additional funding to finance its operations and complete development to seek FDA approval for AL001 and ALZN002 before commercialization.
• The company may not be able to access the full $25 million available under the Purchase Agreement with the Selling Stockholder if it fails to meet the Milestones.
• The Preferred Shares are convertible into Common Stock at a discount to the market price, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
• The company is not in compliance with the Nasdaq continued listing requirements, and if it is unable to comply, its Common Stock could be delisted.
• Sales of a substantial number of our shares of Common Stock in the public markets, or the perception that such sales could occur, could cause our stock price to fall.

Future Outlook

The company intends to develop and commercialize therapeutics that are better than existing treatments and have the potential to significantly improve the lives of individuals afflicted by Alzheimers, BD, MDD and PTSD.

Industry Context

The company operates in the pharmaceutical industry, specifically focusing on developing treatments for Alzheimers, bipolar disorder, major depressive disorder, and post-traumatic stress disorder.

Related Party Transactions

• The Company agreed to pay Ault Lending, LLC, a related party, an origination fee of five percent (5%) of the total gross proceeds received by the Company from the Selling Stockholder upon each purchase of Preferred Shares.

Stakeholder Impact

• Shareholders may experience dilution due to the potential conversion of Preferred Shares and exercise of Warrants.
• The company's ability to continue operations and develop its product candidates depends on securing additional funding.
• Employees' job security and compensation may be affected by the company's financial performance and ability to raise capital.

Next Steps

• The company needs to regain compliance with Nasdaq listing requirements by September 23, 2024, and July 30, 2024.
• The company intends 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.
• The company expects to initiate a Phase IIB efficacy and safety clinical trial within three months of receiving data from the initial trial.

Key Dates

Keywords

Alzamend Neuro, Orchid Finance LLC, Common Stock, Preferred Shares, Warrants, Resale, Nasdaq, ALZN002, AL001, Dilution, Milestones, Listing Requirements